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A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is Answer debit Salaries Payable, $8,000; credit Cash, $8,000 debit Salary Expense, $8,000; credit Drawing, $8,000 debit Salary Expense, $8,000; credit Salaries Payable, $8,000 debit Drawing, $8,000; credit Cash, $8,000 2 points Question 2 Accrued expenses are ordinarily reported on the balance sheet as Answer assets liabilities fixed assets prepaid expenses 2 points Question 3 Accrued revenues would appear on the balance sheet as Answer assets liabilities capital prepaid expenses 2 points Question 4 Adjusting entries affect at least one Answer income statement account and one balance sheet account revenue and the drawing account asset and one owner’s equity account revenue and one capital account 2 points Question 5 Adjusting entries are Answer the same as correcting entries needed to bring accounts up to date and match revenue and expense optional under generally accepted accounting principles rarely needed in large companies 2 points Question 6 As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called Answer equipment allocation depreciation accumulation matching 2 points Question 7 Austin, Inc. made a Prepaid Rent payment of $2,800 on January 1st. The company’s monthly rent is $700. The amount of Prepaid Rent that would appear on the January 31 balance sheet after adjustment is: Answer $2,100 $700 $3,500 $1,400 2 points Question 8 By matching revenues and expenses in the same period in which they incur Answer net income or loss will always be underestimated. net income or loss will always be overestimated. net income or loss will be properly reported on the income statement net income or loss will not be determined. 2 points Question 9 Depreciation Expense and Accumulated Depreciation are classified, respectively, as Answer expense, contra asset asset, contra liability revenue, asset contra asset, expense 2 points Question 10 Generally accepted accounting principles requires that companies use the ____ of accounting. Answer cash basis deferral basis accrual basis account basis 2 points Question 11 Prepaid expenses are eventually expected to Answer become expenses when their future economic value expires. become revenues when services are performed. become expenses in the period when they are paid. become revenues when the liability is no longer owed. 2 points Question 12 The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed Answer historical cost contra asset book value market value 2 points Question 13 The entry to adjust for the cost of supplies used during the accounting period is Answer debit Supplies Expense; credit Supplies debit Owner Capital; credit Supplies debit Accounts Payable; credit Supplies debit Supplies; credit Owner Capital 2 points Question 14 Which of the following is considered to be unearned revenue? Answer Concert tickets sold for tonight’s performance. Concert tickets sold yesterday on credit. Concert tickets that were not sold for the current performance. Concert tickets sold for next month’s performance. Question 15 Which of the following is an example of an accrued expense? Answer Salary owed but not yet paid Fees received but not yet earned Supplies on hand A two-year premium paid on a fire insurance policy 2 points Question 16 Which of the following is an example of accrued revenue? Answer Swimming pool cleaning that has been paid for three months in advance. Swimming pool cleaning that has been provided but has not been billed or paid. An agreement has been signed for swimming pool cleaning for the next three months. Swimming pool cleaning that has been provided and paid on the same day. 2 points Question 17 Which of the accounting steps in the accounting process below would be completed last? Answer preparing the adjusted trial balance posting preparing the financial statements journalizing 2 points Question 18 When is the adjusted trial balance prepared? Answer Before adjusting journal entries are posted After adjusting journal entries are posted. After the adjusting journal entries are journalized Before the adjusting journal entries are journalized. 2 points Question 19 What is the purpose of the adjusted trial balance? Answer to verify that all of the adjusting entries have been posted to verify that the net income is correctly reported to verify that no adjusting journal entry has been omitted. to verify that the debits and credits balance 2 points Question 20 What is the proper adjusting entry at April 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $16,000, and unexpired amounts per analysis of policies, $6,000? Answer debit Insurance Expense, $6,000; credit Prepaid Insurance, $6,000 debit Insurance Expense, $16,000; credit Prepaid Insurance, $16,000 debit Prepaid Insurance, $10,000; credit Insurance Expense, $10,000 debit Insurance Expense, $10,000; credit Prepaid Insurance, $10,000 2 points Question 21 Using accrual accounting, revenue is recorded and reported only Answer when cash is received without regard to when the services are rendered when the services are rendered without regard to when cash is received when cash is received at the time services are rendered if cash is received after the services are rendered 2 points Question 22 Using accrual accounting, expenses are recorded and reported only Answer when they are incurred, whether or not cash is paid when they are incurred and paid at the same time if they are paid before they are incurred if they are paid after they are incurred 2 points Question 23 The net book value of a fixed asset is determined by Answer Original cost less accumulated depreciation Original cost less depreciation expense Original cost less accumulated depreciation plus depreciation expense Original cost plus accumulated depreciation 2 points Question 24 Which one of the following accounts below would likely be included in a deferral adjusting entry? Answer Interest Revenue Unearned Revenue Salaries Payable Accounts Receivable 2 points Question 25 The type of account and normal balance of Accumulated Depreciation is Answer asset, credit asset, debit contra asset, credit contra asset, debit

A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is
Answer

debit Salaries Payable, $8,000; credit Cash, $8,000

debit Salary Expense, $8,000; credit Drawing, $8,000

debit Salary Expense, $8,000; credit Salaries Payable, $8,000

debit Drawing, $8,000; credit Cash, $8,000

2 points
Question 2

Accrued expenses are ordinarily reported on the balance sheet as
Answer

assets

liabilities

fixed assets

prepaid expenses

2 points
Question 3

Accrued revenues would appear on the balance sheet as
Answer

assets

liabilities

capital

prepaid expenses
2 points

Question 4

Adjusting entries affect at least one
Answer

income statement account and one balance sheet account

revenue and the drawing account

asset and one owner’s equity account

revenue and one capital account

2 points
Question 5

Adjusting entries are
Answer

the same as correcting entries

needed to bring accounts up to date and match revenue and expense

optional under generally accepted accounting principles

rarely needed in large companies

2 points
Question 6

As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called
Answer

equipment allocation

depreciation

accumulation

matching
2 points

Question 7

Austin, Inc. made a Prepaid Rent payment of $2,800 on January 1st. The company’s monthly rent is $700. The amount of Prepaid Rent that would appear on the January 31 balance sheet after adjustment is:
Answer

$2,100

$700

$3,500

$1,400
2 points

Question 8

By matching revenues and expenses in the same period in which they incur
Answer

net income or loss will always be underestimated.

net income or loss will always be overestimated.

net income or loss will be properly reported on the income statement

net income or loss will not be determined.
2 points
Question 9

Depreciation Expense and Accumulated Depreciation are classified, respectively, as
Answer

expense, contra asset

asset, contra liability

revenue, asset

contra asset, expense
2 points
Question 10

Generally accepted accounting principles requires that companies use the ____ of accounting.
Answer

cash basis

deferral basis

accrual basis

account basis

2 points
Question 11

Prepaid expenses are eventually expected to
Answer

become expenses when their future economic value expires.

become revenues when services are performed.

become expenses in the period when they are paid.

become revenues when the liability is no longer owed.
2 points
Question 12

The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed
Answer

historical cost

contra asset

book value

market value

2 points
Question 13

The entry to adjust for the cost of supplies used during the accounting period is
Answer

debit Supplies Expense; credit Supplies

debit Owner Capital; credit Supplies

debit Accounts Payable; credit Supplies

debit Supplies; credit Owner Capital

2 points
Question 14

Which of the following is considered to be unearned revenue?
Answer

Concert tickets sold for tonight’s performance.

Concert tickets sold yesterday on credit.

Concert tickets that were not sold for the current performance.

Concert tickets sold for next month’s performance.

Question 15

Which of the following is an example of an accrued expense?
Answer

Salary owed but not yet paid

Fees received but not yet earned

Supplies on hand

A two-year premium paid on a fire insurance policy

2 points
Question 16

Which of the following is an example of accrued revenue?
Answer

Swimming pool cleaning that has been paid for three months in advance.

Swimming pool cleaning that has been provided but has not been billed or paid.

An agreement has been signed for swimming pool cleaning for the next three months.

Swimming pool cleaning that has been provided and paid on the same day.

2 points
Question 17

Which of the accounting steps in the accounting process below would be completed last?
Answer

preparing the adjusted trial balance

posting

preparing the financial statements

journalizing

2 points
Question 18

When is the adjusted trial balance prepared?
Answer

Before adjusting journal entries are posted

After adjusting journal entries are posted.

After the adjusting journal entries are journalized

Before the adjusting journal entries are journalized.

2 points
Question 19

What is the purpose of the adjusted trial balance?
Answer

to verify that all of the adjusting entries have been posted

to verify that the net income <loss> is correctly reported

to verify that no adjusting journal entry has been omitted.

to verify that the debits and credits balance

2 points
Question 20

What is the proper adjusting entry at April 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $16,000, and unexpired amounts per analysis of policies, $6,000?
Answer

debit Insurance Expense, $6,000; credit Prepaid Insurance, $6,000

debit Insurance Expense, $16,000; credit Prepaid Insurance, $16,000

debit Prepaid Insurance, $10,000; credit Insurance Expense, $10,000

debit Insurance Expense, $10,000; credit Prepaid Insurance, $10,000

2 points
Question 21

Using accrual accounting, revenue is recorded and reported only
Answer

when cash is received without regard to when the services are rendered

when the services are rendered without regard to when cash is received

when cash is received at the time services are rendered

if cash is received after the services are rendered

2 points
Question 22

Using accrual accounting, expenses are recorded and reported only
Answer

when they are incurred, whether or not cash is paid

when they are incurred and paid at the same time

if they are paid before they are incurred

if they are paid after they are incurred

2 points
Question 23

The net book value of a fixed asset is determined by
Answer

Original cost less accumulated depreciation

Original cost less depreciation expense

Original cost less accumulated depreciation plus depreciation expense

Original cost plus accumulated depreciation

2 points
Question 24

Which one of the following accounts below would likely be included in a deferral adjusting entry?
Answer

Interest Revenue

Unearned Revenue

Salaries Payable

Accounts Receivable

2 points
Question 25

The type of account and normal balance of Accumulated Depreciation is
Answer

asset, credit

asset, debit

contra asset, credit

contra asset, debit

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