Question 1

A company's fiscal year must correspond with the calendar year.

Accepted Answer

A) True 
 B)False

Question 2

Accrued revenues:

Accepted Answer

A)  At the end of one accounting period often result in cash receipts from customers in the next period.
B)  At the end of one accounting period often result in cash payments in the next period.
C)  Are also called unearned revenues.
D)  Are listed on the balance sheet as liabilities.
E)  Are recorded at the end of an accounting period because cash has already been received for revenues earned.F) A) and B)
G) B) and E)

Question 3

Which of the following assets is not depreciated?

Accepted Answer

A)  Store fixtures.
B)  Computers.
C)  Land.
D)  Buildings.
E)  All of these are depreciated.F) B) and D)
G) A) and C)

Question 4

On November 1,Jay Company loaned an affiliate $100,000 at a 9.0% interest rate.The note receivable plus interest will not be collected until March 1 of the following year.The company's annual accounting period ends on December 31.The adjusting entry needed on December 31 is:

Accepted Answer

A)  Debit Interest Receivable, $750; credit Interest Revenue, $750.
B)  Debit Interest Expense, $750; credit Interest Payable, $750.
C)  Debit Interest Expense, $1,500; credit Interest Payable, $1,500.
D)  Debit Interest Receivable, $2,250; credit Interest Revenue, $2,250.
E)  Debit Interest Receivable, $1,500; credit Interest Revenue, $1,500.F) A) and D)
G) A) and C)

Question 5

If a company records prepayment of expenses in an asset account,the adjusting entry would:

Accepted Answer

A)  Result in a debit to an expense and a credit to an asset account.
B)  Cause an adjustment to prior expense to be overstated and assets to be understated.
C)  Cause an accrued liability account to exist.
D)  Result in a debit to a liability and a credit to an asset account.
E)  Decrease cash.F) A) and B)
G) B) and C)

Question 6

On March 31,Phoenix,Inc.paid Melanie Publishing Company $15,480 for a 3-year subscription for five different magazines.The subscriptions started immediately.What is the adjusting entry that should be recorded by Melanie Publishing Company on December 31 of the first year if the credit to record the collection was made to Unearned Fees?

Accepted Answer

A)  debit Unearned Fees, $15,480; credit Fees Earned, $15,480.
B)  debit Unearned Fees, $5,160; credit Fees Earned, $5,160.
C)  debit Unearned Fees, $11,610; credit Fees Earned, $11,610.
D)  debit Unearned Fees, $1,290; credit Fees Earned, $1,290.
E)  debit Unearned Fees, $3,870; credit Fees Earned, $3,870.F) C) and E)
G) B) and E)

Question 7

On March 31,Phoenix,Inc.paid Melanie Publishing Company $15,480 for a 3-year subscription for five different magazines.The subscriptions started immediately.What amount should appear in the Prepaid Subscription account for Phoenix Company after adjustments on December 31 each year assuming Phoenix using a calendar reporting period?

Accepted Answer

A)  $15,480; $11,610; $6,540; $1,290.
B)  $3,870; $5,160; $5,160; $1,290.
C)  $5,160; $5,160; $5,160.
D)  $11,610; $6,450; $1,290; $0.
E)  The answer cannot be determined based on the information given.F) B) and D)
G) All of the above

Question 8

Two accounting principles that are relied on in the adjusting process are:

Accepted Answer

A)  Revenue recognition and monetary unit.
B)  Revenue recognition and going-concern.
C)  Matching and cost.
D)  Matching and business entity.
E)  Revenue recognition and matching.F) A) and B)
G) B) and D)

Question 9

A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31.On February 9,it paid its employees $7,000 for these accrued salaries and for other salaries earned through February 9.The January 31 and February 9 journal entries are:

Accepted Answer

A)  1/31 Salaries Expense ………………………… 1,400 Salaries Payable …………................1,4002/9 Salaries Payable ………………………….7,000Salaries Expense ………………………… 1,400Cash..………………………………… 7,000
B)  1/31 Salaries Payable …………………………..1,400 Salaries Expense……………………...1,4002/9 Salaries Expense…………………………..5,600Salaries Payable…………………………...1,400Cash…………………………………...7,000
C)  1/31 Salaries Expense…………………………..1,400 Cash…………………………………..1,4002/9 Salaries Expense………………………….7,000Cash………………………………….7,000
D)  1/31 Salaries Expense………………………….1,400 Salaries Payable……………………...1,4002/9 Salaries Expense…………………………..7,000Cash…………………………………...7,000
E)  1/31 Salaries Expense………………………….1,400 Salaries Payable……………………… 1,4002/9 Salaries Expense…………………………..5,600Salaries Payable…………………………...1,400Cash…………………………………...7,000F) D) and E)
G) All of the above

Question 10

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________________________ year.

Accepted Answer

The answer of Companies experiencing seasonal variations in sales often...

Question 11

Profit margin = ___________________ divided by net sales.

Accepted Answer

The answer of Profit margin = ___________________ divided by net...

Question 12

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Accepted Answer

A)  Accrual basis accounting.
B)  Operating cycle accounting.
C)  Cash basis accounting.
D)  Revenue recognition accounting.
E)  Current basis accounting.F) B) and D)
G) D) and E)

Question 13

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Accepted Answer

A)  Recognition principle.
B)  Cost principle.
C)  Cash basis of accounting.
D)  Matching principle.
E)  Time period principle.F) None of the above
G) B) and C)

Exam 3: Adjusting Accounts and Preparing Financial Statements

Accrued revenues:

Correct Answer
verified

A company's fiscal year must correspond with the calendar year.

Correct Answer
verified

Correct Answer
verified

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Correct Answer
verified

Correct Answer
verified

On November 1,Jay Company loaned an affiliate $100,000 at a 9.0% interest rate.The note receivable plus interest will not be collected until March 1 of the following year.The company's annual accounting period ends on December 31.The adjusting entry needed on December 31 is:

Correct Answer
verified

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________________________ year.

Correct Answer
verified

Profit margin = ___________________ divided by net sales.

Correct Answer
verified

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Correct Answer
verified

If a company records prepayment of expenses in an asset account,the adjusting entry would:

Correct Answer
verified

Two accounting principles that are relied on in the adjusting process are:

Correct Answer
verified

A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31.On February 9,it paid its employees $7,000 for these accrued salaries and for other salaries earned through February 9.The January 31 and February 9 journal entries are:

Correct Answer
verified

Which of the following assets is not depreciated?

Correct Answer
verified

Exam 3: Adjusting Accounts and Preparing Financial Statements

Accrued revenues:

Correct AnswerverifiedShow Answer

A company's fiscal year must correspond with the calendar year.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

On November 1,Jay Company loaned an affiliate $100,000 at a 9.0% interest rate.The note receivable plus interest will not be collected until March 1 of the following year.The company's annual accounting period ends on December 31.The adjusting entry needed on December 31 is:

Correct AnswerverifiedShow Answer

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________________________ year.

Correct AnswerverifiedShow Answer

Profit margin = ___________________ divided by net sales.

Correct AnswerverifiedShow Answer

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Correct AnswerverifiedShow Answer

If a company records prepayment of expenses in an asset account,the adjusting entry would:

Correct AnswerverifiedShow Answer

Two accounting principles that are relied on in the adjusting process are:

Correct AnswerverifiedShow Answer

A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31.On February 9,it paid its employees $7,000 for these accrued salaries and for other salaries earned through February 9.The January 31 and February 9 journal entries are:

Correct AnswerverifiedShow Answer

Which of the following assets is not depreciated?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified