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Exam 3: The Adjusting Process

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Question 71

True/False

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Unearned revenue is a liability.

A) True
B) False

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Question 72

Multiple Choice

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Adjusting entries always include

A) only income statement accounts.
B) only balance sheet accounts.
C) the cash account.
D) at least one income statement account and one balance sheet account.

E) C) and D)
F) B) and D)

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Question 73

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The net book value of a fixed asset is determined by

What effect will the following adjusting journal entry have on the accounting records?

Which of the following is an example of a prepaid expense?

Which account would normally not require an adjusting entry?

At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true?

Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $14,000 and unexpired insurance of $3,000, for the fiscal year ending on April 30?

On January 1st, Great Designs Company had a debit balance of $1,450 in the Office Supplies account. During the month, Great Designs purchased $115 and $160 of office supplies and journalized them to the Office Supplies asset account upon purchasing. On January 31st, an inspection of the office supplies cabinet shows that only $350 of Office Supplies remains in the locker. Prepare the January 31st adjusting entry for Office Supplies.

Prepaid advertising, representing payment for the next quarter, would be reported on the balance sheet as a(n)

Classify the following itemsprepaid expense,unearned revenue,accrued expense, or accrued revenue.

Accrued revenues would appear on the balance sheet as

Which of the following is not true regarding depreciation?

At the end of the fiscal year, the following adjusting entries were omitted: Assuming that financial statements were prepared before the errors were discovered, indicate the effect of each error, considered individually, by inserting the dollar amount in the appropriate spaces. Insert "0" if the error does not affect the item.

The adjusting entry for rent earned that was previously recorded in the unearned rent account is

Vertical analysis compares each item in a financial statement with a total amount from the same statement.

If the debit portion of an adjusting entry is to an asset account, then the credit portion must be to a liability account.

Indicate with a True or False whether or not each of the following accounts would, under normal circumstances, require an adjusting entry.

The general term employed to indicate an expense that has not been paid and has not yet been recognized in the accounts by a routine entry is

The financial statements measure precisely the financial condition and results of operations of a business.