Exam (elaborations)
Financial Accounting Test 2 (1).
Financial Accounting Test 2 (1).
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Financial Accounting Test 2If certain assets are partially used up during the accounting period then - CORRECT
ANSWER-an asset account is decreased and an expense is recorded
If an expense has been incurred but will be payed later, then: - CORRECT
ANSWER-a liability account is created or increased and an expense is recorded
Adjusting entries affect - CORRECT ANSWER-both income statement and balance
sheet
A company started the year with $3,750 of supplies on hand. During the year the
company purchased additional supplies of $2,000 and recorded them as an increase
to the supplies asset. At the end of the year the company determined that only $750
of supplies are still on hand. What is the adjusting journal entry to be made at the
end of the period? - CORRECT ANSWER-Debit Supplies Expense and credit
Supplies for $5,000
Angela is a tenant of Bruce. On March 1, Angela paid Bruce $2,400 for 3 months of
rent. On March 31, Angela's adjusting entries will include one with a debit to: -
CORRECT ANSWER-Rent Expense for $800 and a credit to prepaid rent for $800
A contra-account - CORRECT ANSWER-offsets, or reduces another account.
Accumulated Depreciation appears on the: - CORRECT ANSWER-balance sheet as
a contra-asset
Sail, Inc. pays its workforce on Fridays for a five-day workweek ending on that day.
The payroll for a week is $165,000. If the accounting year-end falls on a Tuesday,
the adjusting journal entry to record this will include a - CORRECT ANSWER-debit to
salaries and wages expense for $66,000
The balance in the Prepaid Insurance account after the adjusting entries have been
recorded represents the: - CORRECT ANSWER-amount of the insurance
prepayment that remains to benefit future periods.
The adjusting entry to record services earned but not yet billed requires: -
CORRECT ANSWER-a debit to accounts receivable and a credit to service revenue.
The adjusting entry to record interest owed on obligations at the end of the
accounting period includes a debit to: - CORRECT ANSWER-debit interest expense
credit interest payable
, Which of the following statements about adjusting entries is not correct? -
CORRECT ANSWER-Adjusting entries often affect the cash account
Which of the following statements about an adjusted trial balance is correct? -
CORRECT ANSWER-It is used to prepare financial statements
The balance of which of the following accounts appears in the credit column of an
adjusted trial balance? - CORRECT ANSWER-common stock (Not equipment,
dividends or accounts receivable)
Before the closing entries are prepared, the Retained Earnings balance in the
adjusted trial balance is equal to the balance of that account: - CORRECT
ANSWER-at the beginning of the period
First Corporation had Retained Earnings at the end of December 31, 2018 of
$900,000. During 2019, the company had net income of $340,000 and declared
dividends of $40,000. The amount of Retained Earnings reported on the balance
sheet as of December 31, 2019 will be: - CORRECT ANSWER-$1,200,000
At the end of the accounting period - CORRECT ANSWER-temporary accounts are
closed; permanent accounts are not
What is the purpose of the closing process? - CORRECT ANSWER-To prepare the
accounting records so they are ready to track results for the following year
Closing entries; - CORRECT ANSWER-cause the revenue and expense accounts to
have zero balances.
Which account below is a permanent account? - CORRECT ANSWER-Deffered
Revenue
Closing journal entries: - CORRECT ANSWER-transfer net income (or loss) and
Dividends to retained earnings
In the closing process, expenses and dividends are zeroed out by _______ each
account and revenues are zeroed out by _______ each account. - CORRECT
ANSWER-crediting; debiting
Which of the following steps is preformed last at the end of the year? - CORRECT
ANSWER-Prepare a post-closing trial balance.
Which of the following trial balances is used as a source for preparing the income
statement? - CORRECT ANSWER-adjusted trial balance
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