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Question(s) / Instruction(s):

A work sheet is a substitute for the set of financial statements.

a)            True

b)            False


 

 

22.          A trial balance prepared after adjustments have been recorded is called a(n)

a)            Balance sheet.

b)            Adjusted trial balance.

c)            Classified balance sheet

d)            Unclassified balance sheet.

e)            Unadjusted trial balance.


 

23.          Use the information in the adjusted trial balance presented below to calculate the current ratio for Jones Company:

Account Title                                                                     Dr.                          Cr.

Cash                                                                                      $23000

Account Receivable                                                        $16000

Prepaid Insurance                                                           $6600

Equipment                                                                          $100000

Accumulated –Depreciation                                                                        $50000

Land                                                                                      $95000

Account Payable                                                                                              $17000

Interest Payable                                                                                               $2400

Unearned Revenue                                                                                        $5000

Long Term Note Payable                                                                              $30000

J. Jones, Capital                                                                                                                $136200

Total                                                                                      $240600                                $240600

a)            1.60.

b)            1.87.

c)            .54.

d)            3.92.

e)            1.77.


24.          Income Summary is a temporary account only used for the closing process.

a)            True

b)            False


25.          Closing entries are designed to transfer the end-of-period balances in the revenue accounts, the expense accounts, and the withdrawals account to owner\'s capital.

a)            True

b)            False


26.          A salary owed to employees is an example of an accrued expense.

a)            True

b)            False


 

27.          Assuming unearned revenues are originally recorded in balance sheet accounts, the adjusting entry to record earning of unearned revenue is:

a)            Increase an expense; increase a liability.

b)            Increase an asset; increase revenue.

c)            Increase an expense; decrease an asset.

d)            Decrease a liability; increase revenue.

e)            Increase an expense; decrease a liability.


 

28.          Adjusting entries result in a better matching of revenues and expenses for the period.

a)            True

b)            False


29.          A company purchased $6,000 worth of supplies in August and recorded the purchase in the Supplies account. On August 31, the fiscal year-end, the supplies count equaled $3,200. The adjusting entry would include a $2,800 debit to Supplies.

a)            True

b)            False


 

30.          Two common subgroups for liabilities on a classified balance sheet are:

a)            Current liabilities and long-term liabilities.

b)            Intangible liabilities and long-term liabilities.

c)            Current liabilities and intangible liabilities.

d)            General liabilities and specific liabilities.

e)            Present liabilities and operating liabilities.


 

31.          Accounts that appear in the balance sheet are often called temporary (nominal) accounts.

a)            True

b)            False


 

32.          The withdrawals account is normally closed by debiting Withdrawals account and crediting Capital account.

a)            True

b)            False


 

33.          A company performs 20 days work on a 30-day contract before the end of the year. The total contract is valued at $6,000 and payment is not due until the contract is fully completed. The adjusting entry includes a $4,000 credit to unearned revenue.

a)            True

b)            False


34.          If a company records prepayment of expenses in an asset account, the adjusting entry would:

a)            Decrease cash.

b)            Cause an accrued liability account to exist.

c)            Result in a debit to an expense and a credit to an asset account.

d)            Cause an adjustment to prior expense to be overstated and assets to be understated.

e)            Result in a debit to a liability and a credit to an asset account.


 

 

35.          At the beginning of the year, Beta Company\'s balance sheet reported Total Assets of $195,000 and Total Liabilities of $75,000. During the year, the company reported total revenues of $226,000 and expenses of $175,000. Also, owner withdrawals during the year totaled $48,000. Assuming no other changes to owner\'s capital, the balance in the owner\'s capital account at the end of the year would be:

 a)           $120,000.

b)            $78,000.

c)            $123,000.

d)            $174,000.


 

36.          Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

a)            True

b)            False


 

37.          Prior to recording adjusting entries, the Office Supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is:

a)            Debit Office Supplies Expense $105 and credit Office Supplies $105.

b)            Debit Office Supplies $105 and credit Supplies Expense $254.

c)            Debit Office Supplies Expense $254 and credit Office Supplies $254.

d)            Debit Office Supplies $254 and credit Office Supplies Expense $254.

e)            Debit Office Supplies $105 and credit Office Supplies Expense $105.


 

38.          Closing entries are required at the end of each accounting period to close all ledger accounts.

a)            True

b)            False


39.          On October 1, Haslip Company rented warehouse space to a tenant for $2,500 per month. The tenant paid five months\' rent in advance on that date. The payment was recorded to the Unearned Rent account. The company\'s annual accounting period ends on December 31. The adjusting entry needed on December 31 is:

 

a)            Debit Unearned Rent, $7,500; credit Rent Earned, $7,500.

b)            Debit Rent Receivable, $12,500; credit Rent Earned, $12,500.

c)            Debit Rent Receivable, $7,500; credit Rent Earned, $7,500.

d)            Debit Unearned Rent, $12,500; credit Rent Earned, $12,500.

e)            Debit Unearned Rent, $5,000; credit Rent Earned, $5,000.


 

40.          Earned but uncollected revenues are recorded during the adjusting process with a credit to a revenue and a debit to an expense.

a)            True

b)            False


 

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