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How does the timing of adjusting entries differ from the accounting for daily transactions?


A) Adjustments are made at the discretion of management and are not necessary for each accounting period.
B) Adjustments are made at the beginning of the accounting period to ensure accuracy is maintained during the cycle.
C) Adjustments are made throughout the accounting period as information becomes available.
D) Adjustments are made at the end of the accounting period because making them on a daily basis would be inefficient.

E) None of the above
F) A) and C)

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Which account below is a temporary account?


A) Note Payable
B) Unearned Revenue
C) Accounts Receivable
D) Depreciation Expense

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

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Which of the following statements about adjusting entries is not correct?


A) Adjustments are needed to ensure that the accounting system includes all of the revenues and expenses of the period.
B) Adjustments help to ensure the related accounts on the balance sheet and income statement are up to date and complete.
C) Adjusting entries often affect the cash account.
D) Adjusting entries generally include one balance sheet and one income statement account.

E) None of the above
F) A) and D)

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When should supplies be recorded as an expense?


A) In the period the supplies are purchased, regardless of when cash is paid
B) In the period cash is paid for the supplies, regardless of when the supplies were received
C) In the period the supplies are used, regardless of when they were purchased
D) In the period the supplies are sold, regardless of when they were received

E) A) and B)
F) A) and C)

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Which of the following statements is correct?


A) Financial statements are prepared before adjustments to ensure that debits equal credits before beginning the adjustment process.
B) Financial statements are prepared after adjustments to ensure that all accounts have been brought to their correct balance.
C) Financial statements are prepared before adjustments to ensure that all accounts have been brought to their correct balance.
D) Financial statements are prepared before adjustments to ensure that debits equal credits before concluding the adjustment process.

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

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Which financial statement reports the dividends during the current accounting period?


A) Dividends are reported on the Income Statement.
B) Dividends are reported on the Statement of Retained Earnings.
C) Dividends are reported on the Balance Sheet.
D) Dividends are not reported on any of the financial statements.

E) A) and B)
F) A) and C)

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A company pays salaries and wages every two weeks.Salaries and wages amount to $100 a day and the company has a seven-day work week.On March 31,the company pays wages for the two weeks ending March 24 and recorded the related journal entry.The adjusting journal entry,dated March 31,to record unpaid wages and salaries owed since March 25 will include a debit to:


A) Salaries and Wages Payable and a credit to Salaries and Wages Expense for $1,400.
B) Salaries and Wage Expense and a credit to Salaries and Wages Payable for $700.
C) Salaries and Wages Payable and a credit to Cash for $700.
D) Salaries and Wages Expense and a credit to Salaries and Wages Payable for $1,400.

E) None of the above
F) C) and D)

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The process of allocating the cost of buildings,vehicles,and equipment to the accounting periods in which they are used.is called:


A) accumulated allocation.
B) unearned revenue.
C) depreciation.
D) prepaid expense.

E) B) and D)
F) All of the above

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The deferral adjustment to record the amount of unearned service revenue that is now earned includes a:


A) debit to Unearned Revenue
B) credit to Unearned Revenue
C) debit to Service Revenue
D) credit to Accounts Receivable

E) All of the above
F) None of the above

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Match each transaction with the type of entry that will be required at April 30,the company's year-end. Transaction 1____ .The company has $8,300 in Prepaid Rent at the beginning of April and uses $3,600 of that for its April rent. 2____ .The company provides lawn care in April for customers who will be billed and make payment in May. 3____ .The company owes interest on loans for the month of April and will not pay this interest until May. 4____ .The company uses $1,600 worth of fertilizer from its stock of supplies. 5____ .The company provides lawn care in April for customers who paid in March. 6____ .The company transfers revenues of $50,000 and expenses of $32,000 to Retained Earnings. 7____ .The company makes an entry to allocate the use of equipment during the current account period. 8____ .The company transfers the balance in the Dividends account of $1,200 to Retained Earnings. 9____ .The company records income taxes. 10____ .The weekly payroll of $5,000 to be paid next week is recorded. Type of Entry A - Accrual adjusting entry D - Deferral adjusting entry C - Closing entry

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1.D
2.A
3....

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Which of the following statements about the need for adjustments is not correct?


A) Without adjustments, the financial statements present an incomplete and misleading picture of the company.
B) Adjusting entries are intended to change the operating results to reflect management's objectives for operating performance.
C) Adjustments help the financial statements present the best picture of whether the company's activities were profitable for the period.
D) Adjustments help the financial statements present the economic resources that the company owns and owes at the end of the period.

E) None of the above
F) B) and D)

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Interest earned and receivable on a note receivable equals $50 for the month of March.What adjusting entry,if any,should be recorded as of March 31?


A) Debit Cash $50 and credit Interest Revenue $50.
B) Debit Interest Receivable $50 and credit Interest Revenue $50.
C) Debit Interest Receivable for $150 and credit Interest Revenue $150.
D) No journal entry is needed at this time.

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

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Which of the following will happen if the accrual adjustment entry is not made to record an expense incurred but not yet recorded?


A) Both expenses and liabilities will be overstated.
B) Both expenses and liabilities will be understated.
C) Expenses will be understated and liabilities will be overstated.
D) Expenses will be overstated and liabilities will be understated.

E) A) and D)
F) A) and B)

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As of December 31,$2,500 of interest expense has accrued on a $50,000 note payable.The note payable and the accrued interest will become due and payable next year.How will the interest affect the adjustments at the end of the period?


A) Interest Expense does not affect this period since it will not be paid. The expense will be recorded when the note and interest are paid in full.
B) Interest Expense should be increased, because the cost of interest relates to the current period.
C) Note Payable should be increased to reflect the additional interest that will be due when the note is paid off next year.
D) Interest Receivable should be increased to reflect the accrued interest on the note payable.

E) B) and D)
F) None of the above

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Which of the following trial balances is used as a source for preparing the income statement?


A) Unadjusted trial balance
B) Pre-adjusted trial balance
C) Adjusted trial balance
D) Post-closing trial balance

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

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A company owes rent at a rate of $6,000 per month.The company pays the rent owed on the tenth of each month for the previous month.At the end of each month,what kind of adjustment is required?


A) An accrual adjustment
B) A closing adjustment
C) A deferral adjustment
D) No adjustment

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

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Three months of rent were prepaid on May 1 for $7,200,but two months have now expired,leaving only one month prepaid at June 30.What is the amount of rent expense that will be recorded in the related adjusting entry dated June 30?


A) $0
B) $2,400
C) $4,800
D) $7,200

E) B) and D)
F) A) and B)

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The adjusting entry to record the supplies used during the period will result in a(n) :


A) increase to Supplies and a decrease to Supplies Expense
B) increase to Supplies and an increase to Supplies Expense
C) decrease to Supplies and an increase to Supplies Expense
D) decrease to Supplies and a decrease to Supplies Expense

E) None of the above
F) A) and B)

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Lansing Limited had a beginning balance in its Retained Earnings account of $385,600.During the year,the company declared and paid a $4,700 dividend,and at the end of the year,it reported Retained Earnings of $399,860.The company's net income for the year was:


A) $14,260.
B) $18,960.
C) $9,560.
D) $0.

E) A) and B)
F) All of the above

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Garvey Company's unadjusted trial balance includes the following account balances as of December 31,2015: Garvey Company's unadjusted trial balance includes the following account balances as of December 31,2015: The following data are available to determine adjusting entries: A) Insurance purchased at the beginning of July for $8,700 provided coverage for twelve months (July 2015 through June 2016). The insurance coverage for July through December totaling $4,250 has now been used. B) The company estimates $8,150 in depreciation each year. C) A count showed $85,700 of supplies on hand at the end of the year. D) An additional $260 of interest has been earned but has not yet been uncollected on the outstanding notes receivable. E) Services in the amount of $5,600 were performed for customers who had previously paid in advance. F) Services in the amount of $2,000 were performed; these services have not yet been billed or recorded. The following data are available to determine adjusting entries: A) Insurance purchased at the beginning of July for $8,700 provided coverage for twelve months (July 2015 through June 2016). The insurance coverage for July through December totaling $4,250 has now been used. B) The company estimates $8,150 in depreciation each year. C) A count showed $85,700 of supplies on hand at the end of the year. D) An additional $260 of interest has been earned but has not yet been uncollected on the outstanding notes receivable. E) Services in the amount of $5,600 were performed for customers who had previously paid in advance. F) Services in the amount of $2,000 were performed; these services have not yet been billed or recorded.

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