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QUESTION 6

Which of the following statements is not true regarding prepaidexpenses?

Prepaid expenses represent assets.

Prepaid expenses are shown in a special section of the incomestatement.

Prepaid expenses become expenses only as goods or services areused up.

Prepaid expenses appear in the balance sheet.

4 points

QUESTION 7

The balance of an unearned revenue account:

Appears in the balance sheet as a component of stockholders'equity.

Appears in the income statement along with other revenueaccounts.

Appears in a separate section of the income statement forrevenue not yet earned.

Appears in the liability section of the balance sheet.

4 points

QUESTION 8

As of January 31, Hudson Corporation owes $600 to U-Rent-It forequipment used during January. If no adjustment is made for thisitem at January 31, how will Hudson's financial statements beaffected?

Cash will be overstated at January 31.

Net income for January will be overstated.

Stockholders' equity will be understated.

The financial statements will be accurate since the $600 doesnot have to be paid yet.

4 points

QUESTION 9

The accountant for the Linville Company forgot to make anadjusting entry to record revenue earned but not yet billed tocustomers. The effect of this error is:

An overstatement of assets.

An overstatement of stockholders' equity.

Understatement of both assets and stockholders' equity

Overstatement of both assets and stockholders' equity.

4 points

QUESTION 10

An adjusting entry involving recognition of unrecorded revenueis necessary at the end of March in which of the followingsituations?

Financial Consultants received payment in February forconsulting services rendered in March.

Financial Consultants began working for a client on March 15;bills will be sent monthly beginning April 15.

Financial Consultants made payment in January for office rentfor the first three months of the year.

On March 31, a major customer paid his bill for a consulting jobcompleted in February.

4 points

QUESTION 11

Which of the following entries causes an immediate decrease inassets and in stockholders' equity?

The entry to record depreciation expense.

The entry to record revenue earned but not yet received.

The entry to record the earned portion of rent received inadvance.

The entry to record accrued wages payable.

4 points

QUESTION 12

The CPA firm auditing Greer Company found that net income hadbeen overstated. Which of the following errors could be thecause?

Failure to record depreciation expense for the period.

No entry made to record purchase of land for cash on the lastday of the year.

Failure to record payment of an account payable on the last dayof the year.

Failure to make an adjusting entry to record revenue which hadbeen earned but not yet billed to customers.

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Trinidad Tremblay
Trinidad TremblayLv2
28 Sep 2019

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Question text

Assessing Financial Statement Effects of Transactions andAdjustments
Selected accounts of Piotroski Properties, a real estate managementfirm, are shown below as of January 31, before any accounts havebeen adjusted.

Debits Credits
Prepaid Insurance $6,660
Supplies 1,930
Office Equipment 5,952
Unearned Rent Revenue $5,250
Salaries Expense 3,100
Rent Revenue 15,000


Piotroski Properties prepares monthly financial statements. Usingthe following information, adjust the accounts as necessary onJanuary 31 using the financial statements effect template.
(a) Prepaid insurance represents a three-year premium paid onJanuary 1.
(b) Supplies of $950 were still available on January 31.
(c) Office equipment is expected to last eight years (or 96months).
(d) Earlier this month, on January 1, Piotroski collected $5,250for six months' rent in advance from a tenant renting space for$875 per month.
(e) Salaries of $490 have been earned by employees but yet notrecorded as of January 31.

Balance Sheet
Transaction CashAsset + NoncashAssets = Liabilities + ContributedCapital + EarnedCapital
(a) Answer Answer Answer Answer Answer
(b) Answer Answer Answer Answer Answer
(c) Answer Answer Answer Answer Answer
(d) Answer Answer Answer Answer Answer
(e) Answer Answer Answer Answer Answer

Income Statement


Revenue
-
Expenses
=
Net Income
Answer Answer Answer
Answer Answer Answer
Answer Answer Answer
Answer Answer Answer
Answer Answer Answer

1. Which of the following identifies the proper order of theaccounting cycle?

A. Analyze, Journalize, Unadjusted Trial Balance

B. Analyze, Post, Unadjusted Trial Balance

C. Journalize, Post, Adjusted Trial Balance

D. Unadjusted Trial Balance, Adjusted Trial Balance, Close

E. Adjusted Trial Balance, Adjustments, Financial Statements

2. Interim financial statements refer to financial reports:

A. That cover less than one year, usually spanning one, three orsix-month periods

B. That are prepared before any adjustments have beenrecorded

C. That show the assets above the liabilities and theliabilities above the equity

D. Where revenues are reported on the income statement when cashis received and expenses are reported when cash is paid

E. Where the adjustment process is used to assign revenues tothe periods in which they are earned and to match expenses withrevenues

3. The accounting principle that requires revenue to be reportedwhen earned is the:

A. Matching principle

B. Revenue recognition principle

C. Time period principle

D. Accrual reporting principle

E. Going-concern principle

4. Adjusting entries:

A. Affect only income statement accounts

B. Affect only balance sheet accounts

C. Affect both income statement and balance sheet accounts

D. Affect only cash flow statement accounts

E. Affect only equity accounts

5. The system of preparing financial statements based onrecognizing revenues when the cash is received and reportingexpenses when the cash is paid is called:

A. Accrual basis accounting

B. Operating cycle accounting

C. Cash basis accounting

D. Revenue recognition accounting

E. Current basis accounting

6. If throughout an accounting period the fees for legalservices paid in advance by clients are recorded in an accountcalled Unearned Legal Fees, the end-of-period adjusting entry torecord the portion of those fees that has been earned is:

A. Debit Cash and credit Legal Fees Earned

B. Debit Cash and credit Unearned Legal Fees

C. Debit Unearned Legal Fees and credit Legal Fees Earned

D. Debit Legal Fees Earned and credit Unearned Legal Fees

E. Debit Unearned Legal Fees and credit Accounts Receivable

7. A company had no office supplies available at the beginningof the year. During the year, the company purchased $250 worth ofoffice supplies. On December 31, $75 worth of office suppliesremained. How much should the company report as office suppliesexpense for the year? A. $75 B. $125 C. $175 D. $250 E. $325 8. OnJanuary 1 a company purchased a five-year insurance policy for$1,800 with coverage starting immediately. If the purchase wasrecorded in the Prepaid Insurance account and the company recordsadjustments only at year-end, the adjusting entry at the end of thefirst year is:

A. Debit Prepaid Insurance, $1,800; credit Cash, $1,800

B. Debit Prepaid Insurance, $1,440; credit Insurance Expense,$1,440

C. Debit Prepaid Insurance, $360; credit Insurance Expense,$360

D. Debit Insurance Expense, $360; credit Prepaid Insurance,$360

E. Debit Insurance Expense, $360; credit Prepaid Insurance,$1,440

9. Unearned revenue is reported on the financial statementsas:

A. A revenue on the balance sheet

B. A liability on the balance sheet

C. An unearned revenue on the income statement

D. An asset on the balance sheet

E. An operating activity on the statement of cash flows

10. Which of the following assets is not depreciated?

A. Store fixtures

B. Computers

C. Land

D. Buildings

E. Vehicles

11. On April 30, 2011, a three-year insurance policy waspurchased for $18,000 with coverage to begin immediately. What isthe amount of insurance expense that would appear on the company'sincome statement for the year ended December 31, 2011? A. $500 B.$4,000 C. $6,000 D. $14,000 E. $18,000 12. Expenses incurred butunpaid that are recorded during the adjusting process with a debitto an expense and a credit to a liability are:

A. Intangible expenses

B. Prepaid expenses

C. Unearned expenses

D. Net expenses

E. Accrued expenses

13 The difference between the cost of an asset and theaccumulated depreciation for that asset is called

A. Depreciation Expense

B. Unearned Depreciation

C. Prepaid Depreciation

D. Depreciation Value

E. Book Value

14. A company purchased a new truck at a cost of $42,000 on July1, 2011. The truck is estimated to have a useful life of 6 yearsand a salvage value of $3,000. How much depreciation expense willbe recorded for the truck for the year ended December 31, 2011?

A. $3,250

B. $3,500

C. $4,000

D. $6,500

E. $7,000

15. A company's Office Supplies account shows a beginningbalance of $600 and an ending balance of $400. If office suppliesexpense for the year is $3,100, what amount of office supplies waspurchased during the period?

A. $2,700

B. $2,900

C. $3,300

D. $3,500

E. $3,700

HELP WITH THESE QUESTIONS!

1.Which basic principle of accounting states that assets areinitially recorded at the amounts paid to acquire the assets?

Select one:

A. Objectivity principle

B. Cost principle

C. Measuring unit concept

D. Going concern concept

E. None of the above

2.Urbana Company signed a one-year lease on April 1, 2016, andpaid the $22,800 total year’s rent in advance. Urbana recorded thetransaction as a debit to Prepaid Rent and a credit toCash.

What adjusting entry should Urbana make on December 31, 2016 (noprevious adjustment has been made)?

Select one:

A.

Rent Expense

17,100
Prepaid Rent

17,100

B.

Prepaid Rent

17,100
Rent Expense

17,100

C.

Rent Expense

5,700
Prepaid Rent

5,700

D.

Prepaid Rent

5,700
Rent Expense

5,700

3.On January 1, 2016, Sirius Black Corporation's retainedearnings account had a balance of $1,570,000. During 2016 thecompany had revenues of $270,000 and expenses of $186,000. OnDecember 31, the company’s retained earnings had a balance of$1,601,000.

Determine the amount of dividends paid during 2016.

Select one:

A. $85,000

B. $53,000

C. $26,500

D. $61,500

4.Which one of the following is not a reason for whichadjusting entries are made?

Select one:

A. To accrue expenses to reflect expenses incurred in the periodthat are not yet paid or recorded

B. To allocate the earned portion of unearned revenue to reflectrevenues earned during the period

C. To close the income statement accounts and prepare them forthe following year's activity

D. To allocate used or expired assets to reflect expensesincurred in the period

5.A trial balance that balances is useful because it indicateswith certainty that:

Select one:

A. All entries into accounts during the period were madecorrectly.

B. All accounts have normal balances.

C. Total debits in the general ledger equal total credits.

D. All of the above

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