A business pays biweekly salaries of $20,000 every other Friday for a 10-day work period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a

credit to Salaries Payable of $16,000

debit to Salary Expense of $8,000

debit to Salaries Payable of $8,000

credit to Salary Expense of $16,000

Buster Industries pays weekly salaries of $30,000 on Friday for a 5-day workweek ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

debit Salary Expense, $12,000; credit Salaries Payable, $12,000

debit Salaries Payable, $12,000; credit Cash, $12,000

debit Salary Expense, $12,000; credit James Buster, Drawing, $12,000

debit James Buster, Drawing, $12,000; credit Cash, $12,000

The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is:

A. debit Rent Expense,$8,000; credit Prepaid Rent, $8,000.

B. debit Prepaid Rent,$24,000; credit Rent Expense, $8,000.

C. debit Rent Expense,$24,000; credit Prepaid Rent, $8,000.

D. debit Prepaid Rent,$8,000; credit Rent Expense, $8,000.

The following adjusting journal entry is missing an explanation. Select the best explanation for the entry. Taxes Expense 3,850 Taxes Payable 3,850

Record taxes expense incurred and to be paid in next period.

Record tax bill received from government.

The estimated amount of depreciation on office equipment for the current year is $3,500. The correct adjusting entry to journalize this depreciation is

debit Depreciation Expense for $3,500; credit Accumulated Depreciation—Office Equipment for $3,500

debit Depreciation Expense for $3,500; credit Office Equipment for $3,500

debit Accumulated Depreciation—Office Equipment for $3,500; credit Office Equipment for $3,500

debit Office Equipment for $3,500; credit Depreciation Expense for $3,500

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the debit portion of the entry?

decreases the balance of an asset account

increases the balance of a contra expense account

increases the balance of an owner's equity account

decreases the balance of a liability account

Data for an adjusting entry described as 'accrued wages, $2,020' require a

debit to Wages Expense and a credit to Wages Payable

debit to Wages Payable and a credit to Wages Expense

debit to Accounts Receivable and a credit to Wages Expense

debit to Drawing and a credit to Wages Payable

Adjusting entries always include

at least one income statement account and one balance sheet account

A vertical analysis of two income statements for Danielle’s Design Services follows: Which of the following analyses reflects the data given?

Wages expense and rent expense show an unfavorable trend, while supplies expense and miscellaneous expense show a favorable trend.

Wages expense and rent expense show a favorable trend, while supplies expense and miscellaneous expense show an unfavorable trend.

Wages expense and supplies expense show a favorable trend, while rent expense and miscellaneous expense show an unfavorable trend.

Wages expense, miscellaneous expense, rent expense, and supplies expense all show an unfavorable trend.

Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $14,000 and unexpired insurance of $3,000, for the fiscal year ending on April 30?

debit Insurance Expense, $11,000; credit Prepaid Insurance, $11,000

debit Insurance Expense, $3,000; credit Prepaid Insurance, $3,000

debit Insurance Expense, $14,000; credit Prepaid Insurance, $14,000

debit Prepaid Insurance, $11,000; credit Insurance Expense, $11,000

At the end of December, a business has accrued $1,450 of interest on a loan, on which it will not make another payment until the next year. The adjusting entry necessary would be journalized as a

debit to Interest Expense and a credit to Interest Payable of $1,450

debit to Interest Payable and a credit to Interest Expense of $1,450

debit to Prepaid Interest and a credit to Interest Expense of $1,450

debit to Interest Expense and a credit to Prepaid Interest of $1,450

A business pays biweekly salaries of $20,000 every other Friday for a 10-day work period ending on that day. The last payday of December is Friday, December 27. Assume the next pay period begins on Monday, December 30, and the proper adjusting entry is journalized at the end of the fiscal period (December 31). The entry for the payment of the payroll on Friday, January 10, includes a

debit to Salary Expense of $16,000

debit to Salary Expense of $4,000

credit to Salaries Payable of $16,000

credit to Salaries Payable of $4,000

The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting

Records revenues when cash is received and expenses when they are incurred

Records revenues when they are earned and expenses when they are paid

Records revenues and expenses when they are incurred

Records revenues and expenses when the company needs to apply for a loan

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

d) debit Insurance Expense,$1,800; credit Prepaid Insurance, $1,800

a) debit Insurance Expense,$1,500; credit Prepaid Insurance, $1,500

b) debit Insurance Expense,$2,100; credit Prepaid Insurance, $2,100

c) debit Prepaid Insurance,$1,800; credit Cash, $1,800

Which of the following pairs of accounts could not appear in the same adjusting entry?

b. Interest Income and Interest Expense

a. Service Revenue and Unearned Revenue

c. Rent Expense and Prepaid Rent

d. Salaries Payable and Salaries Expense

Which of the following is an example of accrued revenue?

C. snow removal services that have been provided but have not been billed or paid

A. snow removal services that has been provided and paid on the same day

B. an agreement that has been signed for snow removal services for the next three months

D. snow removal services that have been paid for three months in advance

The adjusting entry for accrued revenues

a. is the same journal entry as recording revenue on account.

b. differs from the journal entry to record revenue on account.

c. includes a credit to an asset account.

d. includes a debit to a revenue account

The adjusting entry for accrued expenses includes

b. a debit to an expense account.

a. a credit to an expense account.

c. a credit to an asset account.

d. a debit to a liability account.

Which of the following would be classified as unearned revenue?

c. Cash received for services not yet rendered

b. Insurance paid for the next year

d. Rent revenue earned but not yet received

The balance in the unearned rent account for Jackson Co. as of December 31 is $1,500. If Jackson Co. failed to record the adjusting entry of $500 of rent earned in December, the effect on the balance sheet and income statement for December would be

c. liabilities overstated $500; net income understated $500.

a. liabilities overstated $1,000; net income overstated $1,000.

b. assets understated $500; net income overstated $500.

d. liabilities understated $500; net income understated $500.

The matching principle

b. states that the revenues and related expenses should be reported in the same period

a. determines whether the normal balance of an account is a debit or credit

c. addresses the relationship between the journal and the balance sheet

d. requires that the dollar amount of debits equal the dollar amount of credits on a trial balance

Using accrual accounting, revenue is recorded and reported only

a. when the services are rendered without regard to when cash is received

b. when cash is received at the time services are rendered

c. when cash is received without regard to when the services are rendered

d. if cash is received after the services are rendered

Using accrual accounting, expenses are recorded and reported only

a. when they are incurred, whether or not cash is paid

b. when they are incurred and paid at the same time

c. if they are paid before they are incurred

d. if they are paid after they are incurred

Prior to an adjusting entry, prepaid expenses have

c. not yet been recorded as expenses

a. not yet been recorded as expenses and not been paid

b. been recorded as expenses and paid

d. been incurred and not yet paid

Adjusting entries are

b. needed to bring accounts up to date and match revenue and expense

a. optional under generally accepted accounting principles

c. rarely needed in large companies

d. the same as correcting entries

Which of the following is considered to be an accrued expense?

d. A computer technician has installed the latest software updates, but you have not received an invoice or made payment.

a. A computer technician installed the latest software updates and was paid on the same day.

b. A computer technician has been paid in advance to install software updates as they become available.

c. A computer technician has just signed an agreement with you regarding pricing for future work.

Prepaid expenses are eventually expected to become

a. expenses when their future economic value expires or is used up

b. revenues when the liability is no longer owed

c. revenues when services are performed

d. expenses in the period when they are paid

Principles of Accounting I Module 3 Quiz

Quiz

•

Business

•

University

•

Practice Problem

•

Easy

DeathNote Book

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50 questions

Show all answers

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Prepaid rent, representing rent for the next 6 months' occupancy, would be reported on the tenant's balance sheet as a(n)

asset

liability

owner's equity account

contra liability

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is considered to be unearned revenue?

theater tickets sold last month for yesterday’s performance

theater tickets sold yesterday on credit for yesterday’s performance

theater tickets that were not sold for the current performance

theater tickets sold for next month’s performance

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Accruals are needed when an unrecorded expense has been incurred or an unrecorded revenue has been earned.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

revenues and expenses should be recorded in the period to which they related

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Prepaid advertising, representing payment for the next quarter, would be reported on the balance sheet as

an asset

a liability

a contra asset

owner's equity

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A business depreciates its equipment by $500 per year. The adjusting entry on December 31 is a debit to Depreciation Expense for $500 and a credit to Equipment for $500.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The difference between the balance of a fixed asset account and the balance of its related accumulated depreciation account is termed the book value of the asset.

True

False

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Principles of Accounting I Module 3 Quiz

50 questions

Prepaid rent, representing rent for the next 6 months' occupancy, would be reported on the tenant's balance sheet as a(n)

Which of the following is considered to be unearned revenue?

Accruals are needed when an unrecorded expense has been incurred or an unrecorded revenue has been earned.

revenues and expenses should be recorded in the period to which they related

Prepaid advertising, representing payment for the next quarter, would be reported on the balance sheet as

A business depreciates its equipment by $500 per year. The adjusting entry on December 31 is a debit to Depreciation Expense for $500 and a credit to Equipment for $500.

The difference between the balance of a fixed asset account and the balance of its related accumulated depreciation account is termed the book value of the asset.

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry. Supplies Expense 730 Supplies 730

A business pays biweekly salaries of $20,000 every other Friday for a 10-day work period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a

Buster Industries pays weekly salaries of $30,000 on Friday for a 5-day workweek ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

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