Question

1- Clever Computers has a five-day work week and pays the office staff $3,050 each week. If the month ends on a Thursday, the adjusting entry will credit Wages Payable for

a.$610.

b.$3,050.

c.$1,220.

d.$2,440.

2-

A month-end review of work performed during the month at an accounting firm for tax clients indicates there are a total of 50 tax returns completed for which customers owe $196 each. They remain unbilled at the end of the period. The adjusting journal entry should include a

a.credit to Cash for $9,800.

b.debit to Cash for $9,800.

c.credit to Tax Preparation Revenue for $9,800.

d.debit to Tax Preparation Revenue for $9,800.

3- The cash payment for accrued revenues occurs __________ the adjusting entry to record the accrued revenue.

a.before

b.after

c.at the same time

d.concurrently with

4- Barry Company received $8,000 full payment in advance for services that are 60% complete at the end of the period. The adjusting entry will

a.debit Service Revenue for $4,800 and credit Unearned Revenue for $4,800.

b.debit Unearned Revenue for $4,800 and credit Service Revenue for $4,800.

c.debit Unearned Revenue for $8,000 and credit Service Revenue for $8,000.

d.debit Cash for $4,800 and credit Service Revenue for $4,800.

5- When recording an adjusting entry for a prepaid expense,

a.an asset account is debited.

b.a liability account is debited.

c.an expense account is credited.

d.an asset account is credited.

6-

If an entry to adjust unearned rent and rent revenue is not recorded at the end of the period, Rent Revenue and Net Income on the income statement will be

a.understated.

b.overstated.

c.unaffected because these items are not on the income statement.

d.unaffected because the omitted entry affects two accounts that cancel each other out.

7-

The accumulated depreciation account is called a(n)

a.contra asset account.

b.prepaid asset account.

c.expense account.

d.liability account.

8-

The accumulated depreciation account is called a(n)

a.contra asset account.

b.prepaid asset account.

c.expense account.

d.liability account.

9-

If an entry to adjust depreciation is not recorded at the end of the period, Depreciation Expense on the income statement will be

a.understated.

b.overstated.

c.unaffected because Depreciation Expense is reported on the balance sheet, not on the income statement.

d.unaffected because the omitted entry affects two accounts that cancel each other out

10 -

If the beginning balance of the Accumulated Depreciation—Equipment account is $10,000 and an adjusting journal entry for depreciation on the equipment for $2,500 is omitted at the end of the period, Accumulated Depreciation on the income statement will

a.be understated by $2,500.

b.be overstated by $2,500.

c.be overstated by $10,000.

d.not be impacted because Accumulated Depreciation is reported on the balance sheet.

11-

If an adjustment for $7,500 in accrued revenues is omitted, how will this affect the financial statements?

a.Net income will be understated by $7,500.

b.Net income will be overstated by $7,500.

c.There will be no effect on the financial statements.

d.Accounts Receivable will be overstated by $7,500.

12-

If the following adjusting entry is omitted, what effect will it have on the financial statements?

Unearned Rent	1,900
Rent Revenue		1,900

a.Revenues will be overstated by $1,900.

b.Revenues will be understated by $1,900.

c.There will be no effect on liabilities.

d.There will be no effect on net income.

13-

An adjusting entry debiting Supplies Expense and crediting Supplies is an example of adjusting a(n)

a.prepaid expense.

b.accrued expense.

c.deferred revenue.

d.prepaid revenue.

14-

The adjusted trial balance is prepared

a.to determine the net income or loss.

b.to verify the equality of total debit and credit balances.

c.to determine whether the balance sheet is in balance.

d.for all of these reasons.

15 -

Once the adjusted trial balance is balanced, it can be used to prepare

a.the income statement, the statement of owner's equity, and the classified balance sheet.

b.the classified balance sheet only.

c.the classified balance sheet and the income statement only.

d.None of these financial statements are prepared with the adjusted trial balance.

16 -

The adjusted trial balance

a.does not have a date.

b.is at a specific date.

c.is for a period of time.

d.None of these choices are correct.

Answer 1

1. Clever Computers has a five-day work week and pays the office staff $3,050 each week. If the month ends on a Thursday, the adjusting entry will credit Wages Payable for
   

d.$2,440.

3050 = 5 days, Monday to Thursday = 4 days. Hence amount = 3050 x (4 days/5 days) = $ 2440

2- A month-end review of work performed during the month at an accounting firm for tax clients indicates there are a total of 50 tax returns completed for which customers owe $196 each. They remain unbilled at the end of the period. The adjusting journal entry should include a

c.credit to Tax Preparation Revenue for $9,800.

Revenue to be recorded by crediting Tax preparation revenue by $ 196 x 50 = $ 9800

3- The cash payment for accrued revenues occurs __________ the adjusting entry to record the accrued revenue.

b. after

The cash is received after the adjusting entry is recorded to bill the client or customer.

4- Barry Company received $8,000 full payment in advance for services that are 60% complete at the end of the period. The adjusting entry will

b.debit Unearned Revenue for $4,800 and credit Service Revenue for $4,800.

Service revenue to be recognised = revenue earned = $ 8000 x 60% = 4800

5- When recording an adjusting entry for a prepaid expense,

d.an asset account is credited.

Asset account credited = Prepaid expense account

6-If an entry to adjust unearned rent and rent revenue is not recorded at the end of the period, Rent Revenue and Net Income on the income statement will be

a.understated.

Adjusting entry increases revenue earned and net income when revenue account is credited. Without this entry, the revenue would be understated.

7-The accumulated depreciation account is called a(n)

a.contra asset account.

The Credit balance of the account is deducted on the Asset side.

8-

The accumulated depreciation account is called a(n)

a.contra asset account.

The Credit balance of the account is deducted on the Asset side.

9-If an entry to adjust depreciation is not recorded at the end of the period, Depreciation Expense on the income statement will be

a.understated.

Because, depreciation expenses get debited (increased) when adjusting entry is recorded.

10 - If the beginning balance of the Accumulated Depreciation—Equipment account is $10,000 and an adjusting journal entry for depreciation on the equipment for $2,500 is omitted at the end of the period, Accumulated Depreciation on the income statement will

d. not be impacted because Accumulated Depreciation is reported on the balance sheet.

11-If an adjustment for $7,500 in accrued revenues is omitted, how will this affect the financial statements?

a.Net income will be understated by $7,500.

Because revenue would be understated by $ 7500, hence Net Income would be understated too.

12-If the following adjusting entry is omitted, what effect will it have on the financial statements?

Unearned Rent	1,900
Rent Revenue		1,900

b.Revenues will be understated by $1,900.

Rent revenue are getting credited (increased) without this entry they would be understated.

13-

An adjusting entry debiting Supplies Expense and crediting Supplies is an example of adjusting a(n)

c.deferred revenue.

14-

The adjusted trial balance is prepared

d.for all of these reasons.

15 -

Once the adjusted trial balance is balanced, it can be used to prepare

a.the income statement, the statement of owner's equity, and the classified balance sheet.

16 -

The adjusted trial balance

b.is at a specific date.

Example: Adjusted trial Balance as at 31 dec 2018