FABM1_Quiz2

A company pays its employees every Friday, but the end of the accounting period falls on a Wednesday. The total weekly payroll expense is 4,000. How would you record the adjusting entry for the accrued payroll expense at the end of the accounting period?

• Debit Accrued Payroll Liability $4,000, Credit Payroll Expense $4,000
• Debit Cash $4,000, Credit Payroll Expense $4,000
• Debit Accrued Payroll Liability $4,000, Credit Cash $4,000
• Debit Payroll Expense $4,000, Credit Accrued Payroll Liability $4,000

A company purchased office supplies worth $500 at the beginning of the accounting period. By the end of the period, $300 worth of supplies remained. How would you analyze and record the adjusting entry for the office supplies expense?

• Debit Office Supplies Expense $300, Credit Office Supplies $300
• Debit Office Supplies $200, Credit Office Supplies Expense $200
• Debit Supplies Expense $300, Credit Office Supplies $300
• Debit Office Supplies Expense $200, Credit Office Supplies $200

A company received a utility bill for 1,200 covering the current month. The bill is due in 30 days, but the end of the accounting period is in three days. How would you analyze and record the adjusting entry for the accrued utility expense?

• Debit Utility Expense $1,200, Credit Accrued Expenses $1,200
• Debit Utility Expense $1,200, Credit Prepaid Expenses $1,200
• Debit Cash $1,200, Credit Accrued Expenses $1,200
• Debit Accrued Expenses $1,200, Credit Utility Expense $1,200

What is the primary purpose of preparing adjusting entries in the accounting cycle?

• To record the payment of expenses and liabilities.

• To update the balances of revenue and expense accounts.

• To adjust the book value of assets and liabilities to their fair market value.

• To ensure that the revenue recognition principle and matching principle are followed.

When is a trial balance typically prepared in the accounting cycle?

• At the beginning of the accounting period.

• After recording adjusting entries.

• Before preparing financial statements.

• Throughout the entire accounting period.

Why is it necessary to prepare adjusting entries in the accounting cycle?

• To correct errors made during the recording of transactions.

• To record regular, recurring transactions that occurs throughout the accounting period.

• To allocate revenues and expenses to the correct accounting period.

• To reconcile the balances of the general ledger and subsidiary ledger.

What does it mean if the trial balance totals are in balance, with debits equaling credits?

• All accounts have been accurately recorded.

• The financial statements will be error-free.

• The trial balance is not necessary.

• There are no errors in the general ledger.

How does the preparation of a trial balance contribute to the overall accuracy of financial reporting in a business?

• It ensures that all transactions have been properly recorded.

• It provides a comprehensive summary of all financial transactions.

• It allows for the identification and correction of errors in the accounting records.

• It calculates the net income of the business for the reporting period.

If a trial balance shows a discrepancy where the debits do not equal the credits, what could be the potential causes of this imbalance?

• Errors in the trial balance calculations.

• Errors in recording transactions in the general ledger.

• Omission of certain ledger accounts from the trial balance.

• All of the above

When are adjusting entries typically prepared in the accounting cycle?

• At the beginning of the accounting period.

• Throughout the entire accounting period.

• Before preparing financial statements.

• After recording closing entries.