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51.     An adjusted trial balance
          a.     is prepared after the financial statements are completed.
          b.     proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made.
          c.     is a required financial statement under generally accepted accounting principles.
          d.     cannot be used to prepare financial statements.

     52.     Which type of account is always debited during the closing process?
          a.     Dividends.
          b.     Expense.
          c.     Revenue.
          d.     Retained earnings.

     53.     When a company uses a periodic inventory system, the year-end entry to adjust the inventory account will debit and credit inventory as follows:
               Beginning Inventory Amount     Ending Inventory Amount
          a.          Debited     Credited
          b.          Debited     Debited
          c.          Credited     Debited
          d.          Credited     Credited

     54.     If the inventory account at the end of the year is understated, the effect will be to
          a.     overstate the gross profit on sales.
          b.     understate the net purchases.
          c.     overstate the cost of goods sold.
          d.     overstate the goods available for sale.

     *55.     Under the cash basis of accounting, revenues are recorded
          a.     when they are earned and realized.
          b.     when they are earned and realizable.
          c.     when they are earned.
          d.     when they are realized.

     *56.     When converting from cash basis to accrual basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual basis service revenue?
          a.     Subtract ending accounts receivable.
          b.     Subtract beginning unearned service revenue.
          c.     Add ending accounts receivable.
          d.     Add cash sales.

     *57.     When converting from cash basis to accrual basis accounting, which of the following adjustments should be made to cash paid for operating expenses to determine accrual basis operating expenses?
          a.     Add beginning accrued liabilities.
          b.     Add beginning prepaid expense.
          c.     Subtract ending prepaid expense.
          d.     Subtract interest expense.


     *58.     Reversing entries are
                    1.     normally prepared for prepaid, accrued, and estimated items.
                    2.     necessary to achieve a proper matching of revenue and expense.
                    3.     desirable to exercise consistency and establish standardized procedures.
          a.     1
          b.     2
          c.     3
          d.     1 and 2

     *59.     Adjusting entries that should be reversed include those for prepaid or unearned items that
a.     create an asset or a liability account.
b.     were originally entered in a revenue or expense account.
c.     were originally entered in an asset or liability account.
d.     create an asset or a liability account and were originally entered in a revenue or expense account.

     *60.     Adjusting entries that should be reversed include
          a.     all accrued revenues.
          b.     all accrued expenses.
          c.     those that debit an asset or credit a liability.
          d.     all of these.

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