Accounting Adjustments Quiz

Which of the following statements regarding the post-closing trial balance is TRUE?

• It is prepared after all adjusted entries have been recorded.

• It includes only permanent account balances.

• It includes both permanent and temporary account balances.

• It is the same as the adjusted trial balance.

The income statement reports which of the following?

• Revenues and expenses for a specific period

• Assets, liabilities, and equity at a specific point in time.

• Cash flows from operating activities.

• Changes in retained earnings during a specific period.

The statement of owner's equity is prepared to show which of the following?

• The change in cash and cash equivalents during a specific period.

• The changes in the equity accounts during a specific period.

• The changes in retained earnings during a specific period.

• The inflows and outflows of cash during a specific period.

Which of the following describes the situations when no adjustments are made to realize accrued revenues?

• Both assets and revenues are understated.

• Assets are overstated, and revenues are understated.

• Both assets and revenues are overstated.

• Assets are understated, and revenues are overstated.

Which of the following statements describes the purpose of the closing entries in the accounting cycle?

• to transfer net income or net loss to Owner's Equity.

• to adjust revenues and expenses to their proper amounts.

• to record transactions that occurred during the period.

• to update the balance sheet accounts to their proper ending balances.

Closing entries are made at the end of the accounting period to:

• close temporary accounts and transfer their balances to permanent accounts.

• adjust the balances of asset and liability accounts.

• calculate net income or loss for the period.

• prepare the statement of cash flows.

Which of the following accounts are closed at the end of the accounting period?

• Permanent accounts

• Temporary accounts

• Both permanent and temporary accounts

• Neither permanent nor temporary accounts

An advance rental of RM4,500 for three months was paid on 1 May 2022. If the accounting period ended on 30 June 2022, what should be the adjusting entries?

• Rent Expenses RM1,500 Prepaid Rent RM1,500

• Prepaid Rent RM3,000 Rent Expenses RM3,000

• Rent Expenses RM3,000 Prepaid Rent RM3,000

• Prepaid Rent RM4,500 Rent Expenses RM4,500

The following is the adjusting entry to record an accrued revenue of RM800:

• Account Receivable RM800 Fees Earned RM800

• Account Receivable RM800 Unearned Fees RM800

• Account Payable RM800 Prepaid Rent RM800

• Account Payable RM800 Rent Expenses RM800

Which of the following adjusting entries would be made to record the expiration of prepaid insurance?

• Debit Insurance Expense; Credit Prepaid Insurance

• Debit Prepaid Insurance; Credit Insurance Expense

• Debit Prepaid Insurance; Credit Cash

• Debit Cash; Credit Prepaid Insurance