Accounting Adjusting Entries Quiz

What is the first step in recording adjusting entries at the end of a fiscal year?

• Prepare a corrected trial balance

• Prepare an unadjusted trial balance

• Analyze the general ledger accounts

• Prepare financial statements

Which of the following is NOT a question to be answered to analyze an adjustment?

• What adjusting entries are made?

• How are the entries recorded in the ledger?

• What should the balances be for these accounts?

• What must be done to correct the account balances?

What does the adjusting entry for prepaid insurance typically include?

• A debit to Cash and a credit to Prepaid Insurance

• A debit to Insurance Expense and a credit to Prepaid Insurance

• A debit to Insurance Expense and a credit to Cash

• A debit to Prepaid Insurance and a credit to Insurance Expense

Recording an equal amount of depreciation expense for a plant asset in each year of its useful life.

• Units of production

• Declining Balance

• Straight-line Depreciation

• Sum-of-the-years' digits

Which type of revenue is recorded as accrued when it has been earned but not yet collected?

• Sales Revenue

• Service Revenue

• Interest Income

• Rental Income

What is the purpose of depreciation expense in accounting for plant assets?

• To increase the value of the asset over time

• To account for the reduction in value due to wear or obsolescence

• To adjust the federal income tax owed

• To balance the adjusted trial balance

What does the adjusting entry for depreciation include?

• A credit to Cash and a debit to Depreciation Expense

• A credit to Accumulated Depreciation and a debit to Depreciation Expense

• A debit to Accumulated Depreciation and a credit to Depreciation Expense

• A credit to Revenue and a debit to Depreciation Expense

To calculate the federal income tax adjustment, multiply net income by what %?

• 9%

• 12%

• 21%

• 6%

The supplies-office balance on the unadjusted trial balance is $3,500. The balance on December 31 is $1,200.

What is the journal entry for the supplies adjustment on December 31?

• Debit Supplies Expense-Office and Credit Supplies-Office $2,300.

• Debit Supplies-Office and Credit Supplies Expense-Office $2,300.

• Debit Supplies Expense-Office and Credit Supplies-Office $4,700.

• Debit Supplies-Office and Credit Supplies Expense-Office $1,200.

What is the formula to calculate the adjusting entry for merchandise inventory?

• Beginning Inventory - Ending Inventory

• Ending Inventory - Beginning Inventory