Question 1

Before an adjusting entry is made to recognize the cost of expired insurance for the period,Prepaid Insurance and Insurance Expense are both overstated.

Accepted Answer

A) True 
 B)False

Question 2

The cash basis of accounting is a system in which revenues are recorded when earned and expenses are recorded when incurred.

Accepted Answer

A) True 
 B)False

Question 3

Interim financial statements report a company's business activities for a one-year period.

Accepted Answer

A) True 
 B)False

Question 4

Because it is a necessary financial statement,the work sheet must be prepared according to specified accounting procedures.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following accounts could not be classified as a current liability?

Accepted Answer

A)  Unearned revenues.
B)  Accounts payable.
C)  Notes payable (due in 11 months) .
D)  Current portion of long-term note payable.
E)  Notes payable (due in 5 years) .F) B) and C)
G) None of the above

Question 6

Closing entries result in the Dividends account being transferred into net income or net loss for the period ending.

Accepted Answer

A) True 
 B)False

Question 7

A company purchased $6,000 worth of supplies in August and recorded the purchase in the Supplies account.On August 31,the fiscal year-end,the physical count of supplies indicates the cost of unused supplies is $3,200.The adjusting entry would include a $2,800 debit to Supplies.

Accepted Answer

A) True 
 B)False

Question 8

All of the following regarding the current ratio are true except:

Accepted Answer

A)  Current ratio is calculated by dividing current assets by current liabilities.
B)  Current ratio helps to assess a company's ability to pay its debts in the near future.
C)  Current ratio does not affect a creditor's decision on whether to allow a company to buy on credit.
D)  Current ratio can affect a creditor's decision about whether to lend money to a company.
E)  Current ratio can reveal challenges in covering short-term obligations if it is less than 1.F) None of the above
G) B) and D)

Question 9

When there is a net loss,the Income Summary account would have a credit balance.

Accepted Answer

A) True 
 B)False

Question 10

The following information is available for Hatter Co.
  From the information provided,calculate Hatter's profit margin ratio for each of the three years.In 2016,economic conditions and a slowing economy impacted the results of operations.Comment on the results,assuming that the industry average for the profit margin ratio is 7% for each of the three years.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Hatter Co.did rebound from the slowing ...

Question 11

Glisten Co.leases an office to a tenant at the rate of $3,000 per month.The tenant contacted Glisten and arranged to pay the rent for December on January 8 of the following year.Glisten agrees to this arrangement.
a.)Prepare the journal entry that Glisten must make at year ended December 31 to record the accrued rent revenue.
b.)Prepare the journal entry to record the receipt of the rent on January 8 of the following year (Assume no reversing entries were made).

Accepted Answer

The answer of Glisten Co.leases an office to a tenant...

Question 12

The Income Summary account is used to:

Accepted Answer

A)  Adjust and update asset and liability accounts.
B)  Close the revenue and expense accounts.
C)  Determine the appropriate dividend amount.
D)  Replace the income statement under certain circumstances.
E)  Replace the Retained earnings account in some businesses.F) D) and E)
G) C) and E)

Question 13

The Retained earnings account has a credit balance of $37,000 before closing entries are made.Total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000.What is the correct closing entry for the revenue accounts?

Accepted Answer

A)  Debit Income Summary $55,200; credit Revenue accounts $55,200.
B)  Debit Revenue accounts $37,000; credit Retained earnings $37,000.
C)  Debit Revenue accounts $55,200; credit Retained earnings $37,000.
D)  Debit Revenue accounts $55,200; credit Income Summary $55,200.
E)  Debit Income Summary $37,000; credit Retained earnings $37,000.F) A) and D)
G) D) and E)

Question 14

Which of the following is classified as a plant asset?

Accepted Answer

A)  Office equipment.
B)  Patent.
C)  Cash.
D)  Office supplies.
E)  Merchandise inventory.F) B) and D)
G) A) and B)

Question 15

Statements that show the financial statements as if proposed transactions had already occurred are called:

Accepted Answer

A)  Pro forma statements.
B)  Professional statements.
C)  Simplified statements.
D)  Temporary statements.
E)  Interim statements.F) C) and D)
G) A) and B)

Question 16

On April 1,Garcia Publishing Company received $1,548 from Otisco,Inc.for 36-month subscriptions to several different magazines.The company credited Unearned Fees for the amount received and the subscriptions started immediately.Assuming adjustments are only made at year-end,What is the adjusting entry that should be recorded by Garcia Publishing Company on December 31 of the first year?

Accepted Answer

A)  debit Unearned Fees,$1,548; credit Fees Earned,$1,548.
B)  debit Unearned Fees,$516; credit Fees Earned,$516.
C)  debit Unearned Fees,$1,161; credit Fees Earned,$1,161.
D)  debit Unearned Fees,$129; credit Fees Earned,$129.
E)  debit Unearned Fees,$387; credit Fees Earned,$387.F) C) and D)
G) B) and E)

Question 17

Describe a work sheet and explain why it is useful.

Accepted Answer

A work sheet is a useful tool that prepa...

Question 18

Adjusting entries are made after the preparation of financial statements.

Accepted Answer

A) True 
 B)False

Question 19

The accrual basis of accounting requires adjustments to recognize revenues in the periods they are earned and to match expenses with revenues.

Accepted Answer

A) True 
 B)False

Question 20

High Step Shoes had annual revenues of $185,000,expenses of $103,700,and dividends of $18,000 during the current year.The retained earnings account before closing had a balance of $297,000.The entry to close the Income Summary account at the end of the year,after revenue and expense accounts have been closed,is:

Accepted Answer

A)  Debit Retained earnings $297,000; credit Income Summary $297,000
B)  Debit Retained earnings $63,300; credit Income Summary $63,300
C)  Debit Income Summary $63,300; credit Retained earnings $63,300
D)  Debit Income Summary $81,300,credit Retained earnings $81,300
E)  Debit Retained earnings $81,300; credit Income Summary $81,300F) A) and C)
G) A) and E)

Exam 3: Adjusting Accounts for Financial Statements

Correct Answer
verified
Hatter Co.did rebound from the slowing ...
View Answer

When there is a net loss,the Income Summary account would have a credit balance.

Correct Answer
verified

A company purchased $6,000 worth of supplies in August and recorded the purchase in the Supplies account.On August 31,the fiscal year-end,the physical count of supplies indicates the cost of unused supplies is $3,200.The adjusting entry would include a $2,800 debit to Supplies.

Correct Answer
verified

Correct Answer
verified

Statements that show the financial statements as if proposed transactions had already occurred are called:

Correct Answer
verified

Describe a work sheet and explain why it is useful.

Correct Answer
verified
A work sheet is a useful tool that prepa...
View Answer

Which of the following is classified as a plant asset?

Correct Answer
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The Retained earnings account has a credit balance of $37,000 before closing entries are made.Total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000.What is the correct closing entry for the revenue accounts?

Correct Answer
verified

Before an adjusting entry is made to recognize the cost of expired insurance for the period,Prepaid Insurance and Insurance Expense are both overstated.

Correct Answer
verified

Because it is a necessary financial statement,the work sheet must be prepared according to specified accounting procedures.

Correct Answer
verified

Correct Answer
verified

The accrual basis of accounting requires adjustments to recognize revenues in the periods they are earned and to match expenses with revenues.

Correct Answer
verified

Which of the following accounts could not be classified as a current liability?

Correct Answer
verified

Closing entries result in the Dividends account being transferred into net income or net loss for the period ending.

Correct Answer
verified

Interim financial statements report a company's business activities for a one-year period.

Correct Answer
verified

Correct Answer
verified

The cash basis of accounting is a system in which revenues are recorded when earned and expenses are recorded when incurred.

Correct Answer
verified

Adjusting entries are made after the preparation of financial statements.

Correct Answer
verified

The Income Summary account is used to:

Correct Answer
verified

All of the following regarding the current ratio are true except:

Correct Answer
verified

Exam 3: Adjusting Accounts for Financial Statements

Correct Answerverified Hatter Co.did rebound from the slowing ...View AnswerShow Answer

When there is a net loss,the Income Summary account would have a credit balance.

Correct AnswerverifiedShow Answer

A company purchased $6,000 worth of supplies in August and recorded the purchase in the Supplies account.On August 31,the fiscal year-end,the physical count of supplies indicates the cost of unused supplies is $3,200.The adjusting entry would include a $2,800 debit to Supplies.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Statements that show the financial statements as if proposed transactions had already occurred are called:

Correct AnswerverifiedShow Answer

Describe a work sheet and explain why it is useful.

Correct AnswerverifiedA work sheet is a useful tool that prepa...View AnswerShow Answer

Which of the following is classified as a plant asset?

Correct AnswerverifiedShow Answer

The Retained earnings account has a credit balance of $37,000 before closing entries are made.Total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000.What is the correct closing entry for the revenue accounts?

Correct AnswerverifiedShow Answer

Before an adjusting entry is made to recognize the cost of expired insurance for the period,Prepaid Insurance and Insurance Expense are both overstated.

Correct AnswerverifiedShow Answer

Because it is a necessary financial statement,the work sheet must be prepared according to specified accounting procedures.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The accrual basis of accounting requires adjustments to recognize revenues in the periods they are earned and to match expenses with revenues.

Correct AnswerverifiedShow Answer

Which of the following accounts could not be classified as a current liability?

Correct AnswerverifiedShow Answer

Closing entries result in the Dividends account being transferred into net income or net loss for the period ending.

Correct AnswerverifiedShow Answer

Interim financial statements report a company's business activities for a one-year period.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The cash basis of accounting is a system in which revenues are recorded when earned and expenses are recorded when incurred.

Correct AnswerverifiedShow Answer

Adjusting entries are made after the preparation of financial statements.

Correct AnswerverifiedShow Answer

The Income Summary account is used to:

Correct AnswerverifiedShow Answer

All of the following regarding the current ratio are true except:

Correct AnswerverifiedShow Answer

Correct Answer
verified
Hatter Co.did rebound from the slowing ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A work sheet is a useful tool that prepa...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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