Font size
WorksheetsCh12-Accruals, Deferrals, and the Worksheet
Total questions: 95
Worksheet time: 56mins
When the accrual basis of accounting is used, expenses are recognized only in the period during which they are paid.
True
False
The balance of the Merchandise Inventory account that appears in the Trial Balance section of the worksheet represents the stock of goods on hand at the beginning of the current period.
True
False
On July 1, 20X1, a firm purchased equipment for $9,300. Depreciation expense for the year ended December 31, 20X1, given the straight-line method, a 6-year useful life, and a salvage value of $300, is:
$750.
$775.
$1,500.
$1,550.
On May 1, 20X1, a firm paid $3,000 in advance for one year of office rent. The rent expense incurred during the year as of December 31, 20X1 is:
$250.
$1,000
$2,000.
$3,000.
Under a periodic inventory system, the Merchandise Inventory account is debited when goods are purchased for resale and credited when goods are sold and delivered to customers.
True
False
Under a periodic inventory system, Merchandise inventory is adjusted in two steps because both the beginning and ending inventory figures are needed to prepare the income statement.
True
False
Allowance for Doubtful Accounts is:
deducted from Sales in the Revenue section of the income statement.
listed in the Liabilities section of the balance sheet.
subtracted from Accounts Receivable in the Assets section of the balance sheet.
listed in the Liabilities section of the balance sheet.
Under a periodic inventory system, to remove the beginning inventory from the books, the Income Summary account is credited for the amount of the beginning inventory.
True
False
The account "allowance for doubtful accounts" is a contra-revenue account.
True
False
The journal entry to record interest that has been earned but not yet received includes a debit to Interest Receivable and a credit to Interest Income.
True
False
The adjusting entry to record depreciation expense for a recently-purchased piece of equipment would include a:
debit to the Depreciation Expense - Equipment account and a credit to the Allowance for Doubtful Accounts account.
debit to the Accumulated Depreciation - Equipment account and a credit to the Depreciation Expense – Equipment account.
debit to the Depreciation Expense - Equipment account and a credit to the Accumulated Depreciation – Equipment account.
debit to the Allowance for Doubtful Accounts account and a credit to the Depreciation Expense – Equipment account.
Under the accrual basis of accounting, only income that has been earned is included in the revenue total on the income statement.
True
False
The objective of matching revenues and expenses to specific fiscal periods is most nearly attained when revenues and expenses are recognized in the period during which cash related to the transactions is received or paid.
True
False
The balance of the Allowance for Doubtful Accounts account shown in the Adjusted Trial balance section of the worksheet is extended to the Balance Sheet Credit column of the worksheet.
True
False
Net income can be found on the worksheet in an income statement column but cannot be found in a balance sheet column.
True
False
Within which of the following columns of the worksheet would no balance be displayed for the Merchandise Inventory account?
Trial Balance Debit column
Adjustments Debit column
Adjusted Trial Balance Debit column
Income Statement Debit column
The quantity of goods that a business has on hand for sale to customers is called __________.
merchandise inventory
accrued income
property, plant, and equipment
deferred income
Under a periodic inventory system, the adjustment for merchandise inventory is made in __________ step(s).
1
2
3
4
Under a periodic inventory system, the beginning merchandise inventory is removed from the books with a journal entry that includes which of the following?
a debit to purchases
a debit to accounts payable
a debit to merchandise inventory
a debit to income summary
Under the periodic inventory system, the journal entry to record the ending merchandise inventory in the books includes a __________.
credit to purchases
credit to accounts payable
credit to merchandise inventory
credit to income summary
Property, plant, and equipment are long-term, tangible assets that require end-of-period adjustments for__________.
uncollectible accounts
depreciation
merchandise inventory
income summary
Which of the following statements regarding the accrual basis of accounting is accurate?
Revenue is recognized when earned, while expenses are recognized when cash is paid
Revenue is recognized when earned, while expenses are recognized when incurred
Revenue is recognized when cash is received, while expenses are recognized when cash is paid
Revenue is recognized when cash is received, while expenses are recognized when incurred
To determine the amount of the annual depreciation, the depreciable base is divided by the __________.
useful life in years
salvage value
market value
accumulated depreciation
Accrued expenses are:
used in the current period but are not yet paid and are not yet recorded in the accounting records
paid for, recorded, and used in one period.
paid for and recorded in one period but not fully used until a later period.
budgeted but not paid for or used during the period.
The entry to place the ending inventory on the books would include a:
debit to the Merchandise Inventory account and a credit to the Income Summary account.
debit to the Income Summary account and a credit to the Merchandise Inventory account.
debit to the Merchandise Inventory account and a credit to the Cost of Goods Sold account.
None of these are correct.
When an adjusting entry is made for supplies used, the Supplies Expense account is increased and the __________ account is decreased.
fees income
cash
supplies
accumulated depreciation
When a firm experiences a net loss, within how many columns of the worksheet will the net loss be displayed?
1
2
3
4
The adjusting entry for which of the following items would include the Income Summary account?
uncollectible accounts
accrued interest
merchandise inventory
unearned income
Uncollectible Accounts Expense is a(n) __________ account.
liability
asset
expense
revenue
The procedure that most nearly attains the objective of matching revenues and expenses to specific accounting periods is called the __________ basis of accounting.
accrual
cash
deferral
alternative
The adjusting entry to record accrued interest on a note receivable increases the Interest Receivable account and increases the ___________ account.
cash
prepaid interest
interest expense
interest income
For a firm with net income, which of the following calculations from the worksheet would result in the net income amount?
Income Statement Debit column total minus Income Statement Credit column total
Income Statement Debit column total minus Balance Sheet Credit column total
Income Statement Credit column total minus Income Statement Debit column total
Income Statement Credit column total minus Balance Sheet Debit column total
Net income is recorded on the net income line in the __________ of the worksheet.
debit column of the adjustments section
credit column of the adjustments section
debit column of the balance sheet section
credit column of the balance sheet section
What does the inventory sheet list?
the quantity of each type of goods a firm has on order
the quantity of each type of goods a firm has in stock
the quantity of each type of goods a firm has sold during the period
the quantity of each type of goods a firm has returned to the seller during the period
Long-term assets used in business operations are referred to as ___________.
property, plant, and equipment
merchandise inventory
accrued expenses
deferred expenses
Identify the statement below that is true regarding the Allowance for Doubtful Accounts account.
The account has a normal credit balance and is reported on the balance sheet.
The account has a normal debit balance and is reported on the balance sheet.
The account has a normal credit balance and is reported on the Income Statement.
The account has a normal debit balance and is reported on the Income Statement.
Allowance for Doubtful Accounts is
added to Accounts Receivable in the Assets section of the balance sheet.
deducted from Sales in the Revenue section of the income statement.
listed in the Operating Expenses section of the income statement.
subtracted from Accounts Receivable in the Asset section of the balance sheet.
The adjusting entry for uncollectible accounts requires a
a debit to Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.
a debit to Allowance for Doubtful Accounts and a credit to Uncollectible Accounts Expense.
a debit to Uncollectible Accounts Expense and a credit to Accounts Receivable.
a debit to Accounts Receivable and a credit to Uncollectible Accounts Expense.
During the year, Spirit Fun had net credit sales of $800,000. Past experience shows that 1.5 percent of the firm's net credit sales will be uncollectible. Determine the adjusting entry needed to recognize the estimated expense for these uncollectible accounts.
debit Allowance for Doubtful Accounts $12.000 and credit Accounts Receivable $12,000.
debit Uncollectible Accounts Expense $12,000 and credit Allowance for Doubtful Accounts $12,000.
debit Uncollectible Accounts Expense $12,000 and credit Accounts Receivable $12,000
debit Uncollectible Accounts Expense $120,000 and credit Allowance for Doubtful Accounts $120,000
Which of the following statements is not correct?
Uncollectible Accounts Expense is a contra asset account.
The cost less the salvage value equals the depreciable base of a long-term asset.
Each adjustment for an accrued expense includes a credit to a liability account.
If a firm records prepaid expense items in an expense account when they pay for them, their adjustment at the end of the period to record the unexpired portion would include a debit to an asset account and a credit to an expense account.
The adjusting entry to record accrued interest on a note payable requires a
debit to Interest Income and a credit to Notes Payable.
debit to Interest Expense and a credit to Interest Payable.
debit to Interest Expense and a credit to Cash.
debit to Interest Payable and a credit to Interest Expense.
On June 1, 20X1, Mighty Fast Flooring issued a 10-month, 9 percent note for $5,000. The note was recorded in the Notes Payable-Trade account. The adjusting entry on December 31 to record the interest accrued (owed) on the note is:
a debit to Interest Expense for $450.00 and a credit to Interest Payable for $450.00
a debit to Interest Income for $450.00 and a credit to Interest Receivable for $450.00
a debit to Interest Expense for $262.50 and a credit to Interest Payable for $262.50
a debit to Interest Expense for $262.50 and a credit to Notes Payable-Trade for $262.50
Allowance for Doubtful Accounts is reported in the
Operating Expenses section of the income statement.
Assets section of the balance sheet.
Liabilities section of the balance sheet.
Cost of Goods Sold section of the income statement.
On September 1, 20X1, a firm purchased a 1-year insurance policy for $8,700 and paid the full premium in advance. The insurance expense associated with this policy for the year ending December 31, 20X1, is
$725
$2,900
$5,800
$8,700
On September 1, 20X1, a firm purchased a 1-year insurance policy for $6,000 and paid the full premium in advance. The insurance expense associated with this policy for the year ending December 31, 20X1, is
$500.
$2,000.
$4,000.
$6,000.
On June 1, 20X1, a firm purchased a 1-year insurance policy for $7,800 and paid the full premium in advance. The insurance expense associated with this policy for the year ending December 31, 20X1, is
$7,800
$5,200
$2,600
$4,550
On June 1, 20X1, a firm purchased a 1-year insurance policy for $2,400 and paid the full premium in advance. The insurance expense associated with this policy for the year ending December 31, 20X1, is
$1,000.
$200.
$2,400.
$1,400.
On October 1, 20X1, a firm purchased a 1-year insurance policy for $2,400 and paid the full premium in advance. The adjustment needed on December 31, 20X1, to report the amount of insurance that had expired, would be:
a debit to Prepaid Insurance for $600 and a credit to Insurance Expense for $600.
a debit to Insurance Expense for $600 and a credit to Prepaid Insurance for $600.
a debit to Insurance Expense for $2,400 and a credit to Cash for $2,400.
a debit to Insurance Expense for $1,800 and a credit to Prepaid Insurance for $1,800.
On January 2, 20X1, a firm purchased equipment for $9,000. Depreciation expense for the year ending December 31, 20X1, given the straight-line method, a 4-year useful life, and a salvage value of $1,600, is
$1,600
$2,250
$1,200
$1,850
On January 2, 20X1, a firm purchased equipment for $10,000. Depreciation expense for the year ending December 31, 20X1, given the straight-line method, a 5-year useful life, and a salvage value of $1,200, is
$2,000.
$1,760.
$1,800.
$1,400.
On January 1, 20X1, a firm purchased machinery for $20,500. Depreciation expense for the year ending December 31, 20X1, given the straight-line method, a 4-year useful life, and a salvage value of $3,700, is
$3,700
$5,125
$4,200
$2,775
On January 1, 20X1, a firm purchased machinery for $28,000. Depreciation expense for the year ending December 31, 20X, given the straight-line method, a 10-year useful life, and a salvage value of $3,000, is
$1,250.
$2,500.
$2,800.
$3,000.
On October 1, 20X1, Fairbanks Company accepted from a customer a four-month, 15 percent note for $1,000. As of December 31, 20X1, the adjusting entry to record the accrued interest on the note receivable would include a debit to Interest Receivable for:
$37.50.
$333.33.
$1,000.
$1,250.
Accrued expenses are
paid for in one period but not fully used until a later period.
paid for, recorded, and used in one period.
used in one period but not paid for until a later period.
budgeted but not paid for or used during the period.
An adjusting entry is usually not required for revenue that is
earned, recorded and paid for by the customer in one period.
budgeted, paid for, and partially earned in one period but not fully earned until a later period.
paid for by the customer and recorded in one period but not fully earned until a later period.
earned in one period but not paid for by the customer or recorded until a later period.
Which of the following statements is correct?
Income that has been earned but not yet received is called accrued income.
Unearned Subscription Income is a liability account.
Under the accrual basis of accounting, revenue is recognized and recorded in the period when it is earned regardless of when cash related to the transaction is received.
All of these statements are correct.
On November 1, 20X1, a firm accepted a 4 month, 10 percent note for $540 from a customer with an overdue balance. The accrued interest recorded for this note for the year ended December 31, 20X1, is
$54
$4
$45
$9
On November 1, 20X1, a firm accepted a 7 month, 11 percent note for $6,300 from a customer with an overdue balance. The accrued interest recorded for this note for the year ended December 31, 20X1, is
$57.75
$99.00
$115.50
$693.00
On December 1, 20X1, a firm accepted a 6-month, 12 percent note for $10,000 from a customer. The adjusting entry on December 31 to record the interest earned on the note is:
a debit to Interest Receivable for $100 and a credit to Interest Income for $100.
a debit to Interest Income for $100 and a credit to Interest Receivable for $100.
a debit to Interest Receivable for $600 and a credit to Interest Income for $600.
a debit to Interest Receivable for $1,200 and a credit to Interest Income for $1,200.
On April 1, 20X1, a firm accepted a 3-month, 9 percent note for $2,400 from a customer with an overdue balance. The interest income on this note for the year ended June 30, 20X1, is
$54
$216
$198
$18
On April 1, 20X1, a firm accepted a 10-month, 8 percent note for $3,000 from a customer with an overdue balance. The interest income on this note for the year ended June 30, 20X1, is
$20
$24
$60
$240
With the accrual basis of accounting, revenue from a credit sale is recognized
on the date the account is collected in full.
on the date of the sale.
each time a payment on an account balance is received.
either on the date of the sale or when the amount of the sale is collected.
Accrued income is income that has been
received but not earned.
earned and received.
earned but not received.
budgeted for the fiscal period.
Which of the following statements is correct?
On the worksheet, the amount of the ending merchandise inventory is shown in the Income Statement Credit column in the account Income Summary and the Balance Sheet Debit column in the account Merchandise Inventory
On the worksheet, the totals of the Income Statement columns should equal the totals of the Balance Sheet columns.
On the worksheet, if debits exceed credits in the Adjusted Trial Balance section, the difference represents a net loss.
All of these statements are correct.
If an account has a debit balance of $860 in the Trial Balance section of a worksheet and there is a credit of $520 in the Adjustments section, the account balance in the Adjusted Trial Balance section of the worksheet is a
$1,380 debit.
$340 debit.
$340 credit.
$520 credit.
If an account has a debit balance of $2,000 in the Trial Balance section of a worksheet and there is a credit of $600 in the Adjustments section, the account balance in the Adjusted Trial Balance section of the worksheet is a
$1,400 debit.
$2,600 debit.
$1,400 credit.
$600 credit.
A publishing company publishes a monthly magazine and receives all subscription payments from customers in advance. At the end of the year, the Unearned Subscription Income account had a balance of $150,000. During the year, $100,000 of magazines were delivered and income was earned. After the adjusting entry to recognize income is recorded, the Unearned Subscription Income account will have a:
debit balance of $50,000.
credit balance of $50,000.
debit balance of $100,000.
credit balance of $250,000.
If an account has a credit balance of $900 in the Trial Balance section of a worksheet and there is a credit of $600 in the Adjustments section, the account balance in the Adjusted Trial Balance section of the worksheet is
$1,500 debit.
$300 debit.
$1,500 credit.
$300 credit.
If an account has a credit balance of $8,400 in the Trial Balance section of a worksheet and there is a credit of $700 in the Adjustments section, the account balance in the Adjusted Trial Balance section of the worksheet is
$9,100 debit.
$7,700 debit.
$9,100 credit.
$7,700 credit.
If an account has a debit balance of $780 in the Trial Balance section of a worksheet and there is a debit of $360 in the Adjustments section, the account balance in the Adjusted Trial Balance section of the worksheet is a
$420 debit.
$1,140 debit.
$420 credit.
$1,140 credit.
If an account has a debit balance of $1,600 in the Trial Balance section of a worksheet and there is a debit of $300 in the Adjustments section, the account balance in the Adjusted Trial Balance section of the worksheet is a
$1,300 debit.
$1,900 debit.
$1,300 credit.
$1,900 credit.
The net income for an accounting period appears on the worksheet in the
Income Statement Debit column only.
Income Statement Credit column only.
Income Statement Debit and the Balance Sheet Credit columns.
Income Statement Credit and the Balance Sheet Debit columns.
The net loss can be found on a worksheet in which of the following worksheet columns?
Adjustments Debit column
Adjusted Trial Balance Debit column
Income Statement Credit column
Balance Sheet Credit column
The ending merchandise inventory is recorded on the worksheet in the
Income Statement Credit and the Balance Sheet Debit columns.
Income Statement Credit column only.
Balance Sheet Debit column only.
Income Statement Debit column only.
On October 1, 20X1, Paige Turner Publishing received $61,200 in cash for monthly subscriptions covering one year, recording the entry as a debit to Cash and a credit to Unearned Subscriptions. The correct adjusting entry at December 31, 20X1, is
Debit Subscriptions Income$15,300; credit Unearned Subscriptions $15,300.
Debit Unearned Subscriptions $61,200; credit Subscriptions Income $61,200.
Debit Unearned Subscriptions$15,300; credit Subscriptions Income $15,300.
Debit Unearned Subscriptions $5,100 credit Subscriptions Income $5,100.
On October 1, 20X1, Paige Turner Publishing received $5,400 in cash for monthly subscriptions covering one year, recording the entry as a debit to Cash and a credit to Unearned Subscriptions. The correct adjusting entry at December 31, 20X1, is
Debit Subscriptions Income $1,350; credit Unearned Subscriptions $1,350.
Debit Unearned Subscriptions $5,400; credit Subscriptions Income $5,400.
Debit Unearned Subscriptions $1,350; credit Subscriptions Income $1,350.
Debit Unearned Subscriptions $450; credit Subscriptions Income $450.
The Supplies account has a balance of $3,226. A year-end inventory shows $1,752 worth of supplies left at the end of the year. The correct adjusting entry is:
debit Supplies $3,226; credit Supplies Expense $3,226.
debit Supplies $1,474; credit Supplies Expense $1,474.
debit Supplies Expense $1,474; credit Supplies $1,474.
The Supplies account has a balance of $4,700. A year-end inventory shows $1,400 worth of supplies left at the end of the year. The correct adjusting entry is:
debit Supplies Expense $1,400; credit Prepaid Supplies $1,400
debit Supplies $3,300; credit Supplies Expense $3,300
debit Supplies Expense $4,700; credit Supplies $4,700
debit Supplies Expense $3,300; credit Supplies $3,300
Hugh Morris Company pays weekly wages of $19,500 every Friday for a five day week ending on that day. If the last day of the year is on Tuesday, the adjusting entry to record the accrued wages is:
debit Wages Expense $7,800; credit Wages Payable $7,800
debit Wages Expense $19,500; credit Cash $19,500.
debit Wages Expense $11,700; credit Wages Payable $11,700.
debit Wages Expense $7,800; credit Drawing $7,800.
Hugh Morris Company pays weekly wages of $15,000 every Friday for a five day week ending on that day. If the last day of the year is on Tuesday, the adjusting entry to record the accrued wages is:
debit Wages Expense $6,000; credit Wages Payable $6,000
debit Wages Expense $15,000; credit Cash $15,000
debit Wages Expense $9,000; credit Wages Payable $9,000
debit Wages Expense $6,000; credit Drawing $6,000
Robin Banks, Incorporated owns an armored truck which was purchased for $82,000. The Accumulated Depreciation on the truck is $57,000. The book value of the armored truck is
$25,000
$82,000
$57,000
$139,000
Robin Banks, Incorporated owns an armored truck which was purchased for $80,000. The Accumulated Depreciation on the truck is $55,000. The book value of the armored truck is
$25,000
$80,000
$55,000
$135,000
After both of the entries for the inventory adjustment have been posted, the debit in the Income Summary account represents:
Net Income
Cost of Goods Sold
Ending Inventory
Beginning Inventory
The trial balance of Premier Lighting Company shows Merchandise Inventory of $35,000. The company uses the periodic inventory system. Based on a count taken on December 31, merchandise inventory at the end of the year actually totaled $28,000. The adjusting entry to remove the old merchandise inventory balance would be:
a debit to Income Summary of $28,000 and a credit to Merchandise Inventory for $28,000.
a debit to Merchandise Inventory of $28,000 and a credit to Income Summary for $28,000.
a debit to Purchases of $35,000 and a credit to Merchandise Inventory for $35,000.
a debit to Income Summary of $35,000 and a credit to Merchandise Inventory for $35,000.
The trial balance of Premier Lighting Company shows Merchandise Inventory of $35,000. Based on a count taken on December 31, merchandise inventory at the end of the year actually totaled $28,000. The adjusting entry to record the new merchandise inventory balance assuming the company uses the periodic inventory system would be:
a debit to Income Summary of $28,000 and a credit to Merchandise Inventory for $28,000.
a debit to Merchandise Inventory of $28,000 and a credit to Income Summary for $28,000.
a debit to Purchases of $35,000 and a credit to Merchandise Inventory for $35,000.
a debit to Income Summary of $35,000 and a credit to Merchandise Inventory for $35,000.
The trial balance of Marley Motorcycles shows Merchandise Inventory of $80,000. Based on a count taken on December 31, merchandise inventory at the end of the year actually totaled $92,000. The company uses a periodic inventory system. The adjusting entry to record the new merchandise inventory balance would be:
a debit to Merchandise Inventory of $12,000 and a credit to Purchases for $12,000.
a debit to Merchandise Inventory of $92,000 and a credit to Income Summary for $92,000.
a debit to Purchases of $92,000 and a credit to Income Summary for $92,000.
a debit to Merchandise Inventory of 80,000 and a credit to Income Summary for $80,000.
Rose Bush Nursery purchased a delivery truck on July 1, 20X1, for $79,000. The truck is expected to have a useful life of 5 years and a residual value of $10,000. The company uses the straight-line method of depreciation. What is the amount of depreciation expense on the truck for the year ended December 31, 20X1?
6,900
8,050
13,800
10,000
Rose Bush Nursery purchased a delivery truck on July 1, 20X1, for $82,000. The truck is expected to have a useful life of 6 years and a residual value of $10,000. The company uses the straight-line method of depreciation. What is the amount of depreciation expense on the truck for the year ended December 31, 20X1?
6,000
6,833.33
12,000
13,666.67
Stan Still Stationery Store's employees are paid every Friday for a five day work week and are paid a total of $1,650 per day. If December 31, 20X1, is on a Wednesday, the amount of the adjusting entry for accrued wages is:
1,650
3,300
4,950
8,250
Millie's Bakery employees earn $4,500 a week for a five-day work week and are paid every Friday. If December 31 falls on a Wednesday, calculate the amount that is owed and select the adjusting entry needed to record the owed but unpaid salaries as of December 31.
a debit to Income Summary for $2,700 and a credit to Salaries Payable for $2,700.
a debit to Salaries Expense for $2,700 and a credit to Salaries Payable for $2,700.
a debit to Salaries Expense for $4,500 and a credit to Salaries Payable for $4,500.
a debit to Salaries Payable for $900 and a credit to Salaries Expense for $900.
On September 1, 20X1, a firm accepted a 6-month, 9% note for $44,000 from a customer with an overdue account balance. The accrued interest recorded for this note on December 31, 20X1, is
3,000
1,000
750
No accrual is necessary
On September 1, 20X1, a firm accepted a 6-month, 8% note for $12,000 from a customer with an overdue account balance. The accrued interest recorded for this note on December 31, 20X1, is
960
320
240
No accrual is necessary
Abe & Anna Split Ice Cream Parlor paid $2,300 cash for a 5-month advertising contract on September 30, 20X1. The amount of advertising expense reported on the Income Statement for the year ending December 31, 20X1, for this advertising contract is
1,380
460
2,300
1,840
After the two adjusting entries for merchandise inventory for Marley Motorcycles have been entered on the worksheet, the Income Summary account in the Adjusted Trial Balance section has a debit of $65,000 and a credit of $73,000. The amount of merchandise inventory at the end of the year is:
$73,000.
$65,000.
$138,000.
$8,000.
After the two adjusting entries for merchandise inventory for Marley Motorcycles have been entered on the worksheet, the Income Summary account in the Adjusted Trial Balance section has a debit of $41,000 and a credit of $46,000. The amount of merchandise inventory at the beginning of the year is:
$46,000.
$41,000.
$87,000.
$5,000.
