Ch 3 Quiz

Adjusting entries:

• Affect only income statement accounts.

• Affect only balance sheet accounts.

• Affect both income statement and balance sheet accounts.

• Affect cash accounts.

• Affect only equity accounts.

The approach to preparing financial statements based on recording revenues when products and services are delivered and recording expenses when incurred is:

• Cash basis accounting.

• The expense recognition (Matching) principle.

• The time period assumption.

• Accrual basis accounting.

• Revenue basis accounting.

Prepaid expenses, depreciation expense, accrued expenses, unearned revenues, and accrued revenues are all examples of:

• Items that require contra accounts.

• Items that require adjusting entries.

• Asset and equity accounts.

• Asset accounts.

• Income statement accounts.

Which of the following items does not require an adjusting entry?

• Prepaid expenses.

• Depreciation.

• Cash.

• Unearned revenues.

• Accrued expenses.

The adjusting entry at the end of an accounting period to record the unpaid salaries of employees for work provided is:

• Debit Cash and credit Salaries Payable.

• Debit Salaries Payable and credit Salaries Expense.

• Debit Salaries Expense and credit Cash.

• Debit Salaries Expense and credit Salaries Payable.

• Debit Cash and credit Salaries Expense.

A physical count of supplies on hand at the end of May for Masters, Incorporated indicated $1,260 of supplies available. The general ledger balance before any adjustment is $2,200. What is the adjusting entry for supplies that should be recorded on May 31?

• Debit Supplies Expense $2,200 and credit Supplies $2,200.

• Debit Supplies Expense $940 and credit Supplies $940.

• Debit Supplies $1,251 and credit Cash $1,251.

• Debit Supplies Expense $1,260 and credit Supplies $1,260.

• Debit Prepaid Supplies $940 and credit Supplies Expense $940.

Which of the following accounts is a permanent account?

• Services revenue.

• Office supplies expense.

• Interest revenue.

• Accounts payable.

• Salaries expense.

The following information is available for Cubic Company before closing the accounts. After all closing entries are made, what will be the balance in the Retained earnings account? Net income $98,900 Retained earnings $96,000 Dividends $34,000

• $823,100.

• $225,800.

• $98,900.

• $160,900.

• $194,900.

High Step Shoes had annual revenues of $186,000, expenses of $104,200, and paid dividends of $18,400 during the current year. The retained earnings account before closing had a balance of $298,000. The Net Income for the year is:

• $379,800

• $63,400

• $81,800

• $361,400

• $186,000

Financial statements can be prepared directly from a(n):

• Adjusted trial balance.

• Source document.

• Opening entry.

• Cash sheet.

• Asset sheet.