Question 1

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Accepted Answer

A)  Both U.S.GAAP and IFRS include guidance for adjusting entries.
B)  Both U.S.GAAP and IFRS prepare the same four financial statements.
C)  U.S.GAAP does not require items to be separated by current and noncurrent classifications on the balance sheet.
D)  U.S.GAAP balance sheets report current items first.
E)  IFRS balance sheets normally present noncurrent items first.F) B) and C)
G) D) and E)

Question 2

In the process of completing a work sheet,the accountant determines that the Income Statement debit column totals $83,000,while the Income Statement credit column totals $65,000.To enter net income (or net loss) for the period into the work sheet would require an entry to

Accepted Answer

A)  the Adjustments debit column and the Adjustments credit column.
B)  the Unadjusted Trial Balance debit column and the Adjustments credit column.
C)  it is not practical to enter Net Income (or Net Loss) on the work sheet.
D)  the Balance Sheet & Statement of Retained Earnings debit column and the Income Statement credit column.
E)  the Income Statement debit column and the Balance Sheet & Statement of Retained Earnings credit column.F) B) and C)
G) B) and D)

Question 3

Income Summary is a temporary account only used for the closing process.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following assets is not depreciated?

Accepted Answer

A)  Store fixtures.
B)  Computers.
C)  Land.
D)  Buildings.
E)  Equipment.F) All of the above
G) C) and D)

Question 5

The total amount of depreciation recorded against an asset over the entire time the asset has been owned:

Accepted Answer

A)  Is referred to as depreciation expense.
B)  Is referred to as accumulated depreciation.
C)  Is shown on the income statement of the final period.
D)  Is only recorded when the asset is disposed of.
E)  Is referred to as an accrued asset.F) C) and D)
G) B) and C)

Question 6

The balances in the unadjusted columns of a work sheet will agree with:

Accepted Answer

A)  the balances reflected in the company's financial statements.
B)  the balances reflected in the company's unadjusted trial balance.
C)  whatever balances management has decided to report.
D)  the balances in the company's post-closing trial balance.
E)  the balances management budgeted for the accounting period.F) B) and C)
G) A) and B)

Question 7

Use the information in the adjusted trial balance presented below to calculate current assets for Wicked Wicker Company:

Accepted Answer

A)  $21,200.
B)  $45,600.
C)  $24,400.
D)  $95,600.
E)  $41,200.F) A) and E)
G) B) and E)

Question 8

A company had $6,992,000 in net income for the year.Its net sales were $15,200,000 for the same period.Calculate its profit margin.

Accepted Answer

A)  85.4%.
B)  117.1%.
C)  53.9%.
D)  217.1%.
E)  46.0%.F) C) and D)
G) B) and E)

Question 9

How is profit margin calculated? Discuss its use in analyzing a company's performance.

Accepted Answer

Profit margin is calculated by dividing ...

Question 10

Net income for a period will be understated if accrued revenues are not recorded at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 11

On December 31,Jacoby Company received a $385 bill for the purchase of supplies in December that it will not pay for until January 15.Jacoby follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.The adjusting entry needed on December 31 to accrue this cost is:

Accepted Answer

A)  Debit Supplies $385; credit Accounts Payable $385.
B)  Debit Accounts Payable $385; credit Supplies $385.
C)  Debit Accounts Payable $385; credit Cash $385.
D)  Debit Supplies Expense $385; credit Cash $385.
E)  Debit Supplies Expense $385; credit Supplies $385.F) C) and D)
G) B) and D)

Question 12

The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Accepted Answer

A) True 
 B)False

Question 13

The assets section of a classified balance sheet usually includes the subgroups:

Accepted Answer

A)  Current assets,long-term investments,plant assets,and intangible assets.
B)  Current assets,long-term assets,revenues,and intangible assets.
C)  Current assets,long-term investments,plant assets,and equity.
D)  Current liabilities,long-term investments,plant assets,and intangible assets.
E)  Current assets,liabilities,plant assets,and intangible assets.F) A) and C)
G) None of the above

Question 14

Accrued revenues:

Accepted Answer

A)  At the end of one accounting period result in cash receipts in a future period.
B)  At the end of one accounting period often result in cash payments in the next period.
C)  Are also called unearned revenues.
D)  Are listed on the balance sheet as liabilities.
E)  Are recorded at the end of an accounting period because cash has already been received for revenues earned.F) C) and E)
G) None of the above

Question 15

Adjusting entries are designed primarily to correct accounting errors.

Accepted Answer

A) True 
 B)False

Question 16

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Accepted Answer

A)  Recognition principle.
B)  Cost principle.
C)  Cash basis of accounting.
D)  Expense recognition (Matching) principle.
E)  Time period principle.F) C) and D)
G) A) and E)

Question 17

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees,the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Accepted Answer

A)  Debit Cash and credit Legal Fees Earned.
B)  Debit Cash and credit Unearned Legal Fees.
C)  Debit Unearned Legal Fees and credit Legal Fees Earned.
D)  Debit Legal Fees Earned and credit Unearned Legal Fees.
E)  Debit Unearned Legal Fees and credit Accounts Receivable.F) A) and B)
G) B) and E)

Question 18

Castillo Services paid K.Castillo,the sole shareholder of Castillo Services,$5,700 in dividends during the current year.The entry to close the dividends account at the end of the year is:

Accepted Answer

A)  Debit Dividends $5,700; credit Cash,$5,700
B)  Debit Retained earnings $5,700; credit Dividends $5,700
C)  Debit Dividends $5,700; credit Retained earnings $5,700
D)  Debit Retained earnings $5,700,credit Salary Expense $5,700
E)  Debit Income Summary $5,700; credit Retained earnings $5,700F) C) and D)
G) A) and E)

Question 19

All plant assets,including land,are depreciated.

Accepted Answer

A) True 
 B)False

Question 20

A company had revenues of $75,000 and expenses of $62,000 for the accounting period.Dividends of $8,000 were paid in cash during the same period.Which of the following entries could not be a closing entry?

Accepted Answer

A)  Debit Income Summary $13,000; credit Retained earnings $13,000.
B)  Debit Income Summary $75,000; credit Revenues $75,000.
C)  Debit Revenues $75,000; credit Income Summary $75,000.
D)  Debit Income Summary $62,000,credit Expenses $62,000.
E)  Debit Retained earnings $8,000,credit Dividends $8,000.F) C) and E)
G) D) and E)

Exam 3: Adjusting Accounts for Financial Statements

The balances in the unadjusted columns of a work sheet will agree with:

Correct Answer
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A company had $6,992,000 in net income for the year.Its net sales were $15,200,000 for the same period.Calculate its profit margin.

Correct Answer
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Use the information in the adjusted trial balance presented below to calculate current assets for Wicked Wicker Company:

Correct Answer
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How is profit margin calculated? Discuss its use in analyzing a company's performance.

Correct Answer
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Profit margin is calculated by dividing ...
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If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees,the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Correct Answer
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The total amount of depreciation recorded against an asset over the entire time the asset has been owned:

Correct Answer
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Accrued revenues:

Correct Answer
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Income Summary is a temporary account only used for the closing process.

Correct Answer
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Which of the following assets is not depreciated?

Correct Answer
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Net income for a period will be understated if accrued revenues are not recorded at the end of the accounting period.

Correct Answer
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The assets section of a classified balance sheet usually includes the subgroups:

Correct Answer
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The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Correct Answer
verified

All plant assets,including land,are depreciated.

Correct Answer
verified

Adjusting entries are designed primarily to correct accounting errors.

Correct Answer
verified

Correct Answer
verified

A company had revenues of $75,000 and expenses of $62,000 for the accounting period.Dividends of $8,000 were paid in cash during the same period.Which of the following entries could not be a closing entry?

Correct Answer
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Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Correct Answer
verified

Castillo Services paid K.Castillo,the sole shareholder of Castillo Services,$5,700 in dividends during the current year.The entry to close the dividends account at the end of the year is:

Correct Answer
verified

In the process of completing a work sheet,the accountant determines that the Income Statement debit column totals $83,000,while the Income Statement credit column totals $65,000.To enter net income (or net loss) for the period into the work sheet would require an entry to

Correct Answer
verified

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Correct Answer
verified

Exam 3: Adjusting Accounts for Financial Statements

The balances in the unadjusted columns of a work sheet will agree with:

Correct AnswerverifiedShow Answer

A company had $6,992,000 in net income for the year.Its net sales were $15,200,000 for the same period.Calculate its profit margin.

Correct AnswerverifiedShow Answer

Use the information in the adjusted trial balance presented below to calculate current assets for Wicked Wicker Company:

Correct AnswerverifiedShow Answer

How is profit margin calculated? Discuss its use in analyzing a company's performance.

Correct AnswerverifiedProfit margin is calculated by dividing ...View AnswerShow Answer

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees,the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Correct AnswerverifiedShow Answer

The total amount of depreciation recorded against an asset over the entire time the asset has been owned:

Correct AnswerverifiedShow Answer

Accrued revenues:

Correct AnswerverifiedShow Answer

Income Summary is a temporary account only used for the closing process.

Correct AnswerverifiedShow Answer

Which of the following assets is not depreciated?

Correct AnswerverifiedShow Answer

Net income for a period will be understated if accrued revenues are not recorded at the end of the accounting period.

Correct AnswerverifiedShow Answer

The assets section of a classified balance sheet usually includes the subgroups:

Correct AnswerverifiedShow Answer

The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Correct AnswerverifiedShow Answer

All plant assets,including land,are depreciated.

Correct AnswerverifiedShow Answer

Adjusting entries are designed primarily to correct accounting errors.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A company had revenues of $75,000 and expenses of $62,000 for the accounting period.Dividends of $8,000 were paid in cash during the same period.Which of the following entries could not be a closing entry?

Correct AnswerverifiedShow Answer

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Correct AnswerverifiedShow Answer

Castillo Services paid K.Castillo,the sole shareholder of Castillo Services,$5,700 in dividends during the current year.The entry to close the dividends account at the end of the year is:

Correct AnswerverifiedShow Answer

In the process of completing a work sheet,the accountant determines that the Income Statement debit column totals $83,000,while the Income Statement credit column totals $65,000.To enter net income (or net loss) for the period into the work sheet would require an entry to

Correct AnswerverifiedShow Answer

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Correct AnswerverifiedShow Answer

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Profit margin is calculated by dividing ...
View Answer

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