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    Chapter 03 - Adjusting The Accounts: Multiple Choice Questions

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    VIERENT 502020052
    This document contains 10 multiple choice questions about adjusting accounting entries. Adjusting entries are necessary to follow revenue recognition and expense recognition principles, account for accruals and deferrals, and ensure financial statements are accurate. Examples of adjusting entries include recording depreciation expense, adjusting prepaid and accrued accounts, and adjusting supply and inventory accounts.

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    Chapter 03 - Adjusting The Accounts: Multiple Choice Questions

    Uploaded by

    VIERENT 502020052
    110 views11 pages
    This document contains 10 multiple choice questions about adjusting accounting entries. Adjusting entries are necessary to follow revenue recognition and expense recognition principles, account for accruals and deferrals, and ensure financial statements are accurate. Examples of adjusting entries include recording depreciation expense, adjusting prepaid and accrued accounts, and adjusting supply and inventory accounts.

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    Ch 3 Adjusting the Accounts (2)

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    This document contains 10 multiple choice questions about adjusting accounting entries. Adjusting entries are necessary to follow revenue recognition and expense recognition principles, account for accruals and deferrals, and ensure financial statements are accurate. Examples of adjusting entries include recording depreciation expense, adjusting prepaid and accrued accounts, and adjusting supply and inventory accounts.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    110 views11 pages

    Chapter 03 - Adjusting The Accounts: Multiple Choice Questions

    Uploaded by

    VIERENT 502020052
    This document contains 10 multiple choice questions about adjusting accounting entries. Adjusting entries are necessary to follow revenue recognition and expense recognition principles, account for accruals and deferrals, and ensure financial statements are accurate. Examples of adjusting entries include recording depreciation expense, adjusting prepaid and accrued accounts, and adjusting supply and inventory accounts.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 11

    Chapter 03 – Adjusting the

    Accounts
    Multiple Choice Questions
    1.
    Management usually desires ________ financial statements and the
    taxing authorities require all businesses to file _________ tax returns.
    a. annual, annual
    b. monthly, annual
    c. quarterly, monthly
    d. monthly, monthly
    2.
    Expenses sometimes make their contribution to revenue in a different
    period than when they are paid. When wages are incurred in one
    period and paid in the next period, this often leads to which account
    appearing on the statement of financial position at the end of the time
    period?
    a. Due from Employees.
    b. Due to Employer.
    c. Salaries and Wages Payable.
    d. Salaries and Wages Expense.
    3.
    A company must make adjusting entries
    a. to ensure that the revenue recognition and expense recognition
    principles are followed.
    b. each time it prepares an income statement and a statement of
    financial position.
    c. to account for accruals or deferrals.
    d. all of these answer choices are correct.
    4.
    Which of the following reflect the balances of prepayment accounts prior
    to adjustment?
    a. Statement of financial position accounts are understated and income
    statement accounts are understated.
    b. Statement of financial position accounts are overstated and income
    statement accounts are overstated.
    c. Statement of financial position accounts are overstated and income
    statement accounts are understated.
    d. Statement of financial position accounts are understated and income
    statement accounts are overstated.
    5.
    A new accountant working for Unitas Company records $800 Depreciation
    Expense on store equipment as follows:
    Depreciation Expense 800
    Cash 800
    The effect of this entry is to
    a. adjust the accounts to their proper amounts on December 31.
    b. understate total assets on the statement of financial position as of
    December 31.
    c. overstate the book value of the depreciable assets at December 31.
    d. understate the book value of the depreciable assets as of December 31.
    6.
    At March 1, 2014, Jupiter Corp. had supplies on hand of $500. During
    the month, Jupiter purchased supplies of $1,200 and used supplies of
    $1,000. The March 31 adjusting journal entry should include a
    a. debit to the supplies account for $1,000.
    b. credit to the supplies account for $500.
    c. debit to the supplies account for $1,200.
    d. credit to the supplies account for $1,000.
    7.
    Cara, Inc. purchased a building on January 1, 2014 for ₤ 800,000. The
    useful life of the building is 10 years. What impact will the appropriate
    adjusting entry at December 31, 2014 have on its statement of financial
    position at December 31, 2014?
    a. Increased Equity ₤ 80,000.
    b. Increased Liabilities ₤ 80,000.
    c. Decreased Assets ₤ 80,000.
    d. Since the adjusting entry has offsetting debits and credits, there is
    no impact on the statement of financial position.
    8.
    Sherman Air Charter signed a four-month note payable in the amount
    of $12,000 on September 1. The note requires interest at an annual
    rate of 6%. The amount of interest to be accrued at the end of
    September is
    a. $240.
    b. $60.
    c. $720.
    d. $180.
    9.
    Cara, Inc. purchased supplies costing $2,500 on January 1, 2014 and
    recorded the transaction by debiting an expense. At the end of the year
    $1,000 of the supplies are still on hand. If Cara, Inc. does not make the
    appropriate adjusting entry, what is the impact on its statement of
    financial position at December 31, 2014?
    a. Assets understated by $1,500.
    b. Equity understated by $1,500.
    c. Equity overstated by $1,000.
    d. Assets understated by $1,000.
    10.
    Characteristics associated with relevant accounting information are
    a. comparability and timeliness.
    b. predictive value and confirmatory value.
    c. neutral and verifiable.
    d. consistency and understandability.

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