Question 1

A company had $7,000,000 in net income for the year.Its net sales were $15,200,000 for the same period.Calculate its profit margin.

Accepted Answer

A)  85.4%.
B)  117.1%.
C)  53.9%.
D)  217.1%.
E)  46.1%.F) A) and E)
G) C) and E)

Question 2

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Accepted Answer

A)  Both U.S.GAAP and IFRS include guidance for adjusting entries.
B)  Both U.S.GAAP and IFRS prepare the same four financial statements.
C)  U.S.GAAP does not require items to be separated by current and noncurrent classifications on the balance sheet.
D)  U.S.GAAP balance sheets report current items first.
E)  IFRS balance sheets normally present noncurrent items first.F) D) and E)
G) A) and D)

Question 3

A company pays its employees $4,000 each Friday,which amounts to $800 per day for the five-day workweek that begins on Monday.If the monthly accounting period ends on Thursday and the employees worked through Thursday,the amount of salaries earned but unpaid at the end of the accounting period is:

Accepted Answer

A)  $4,000.
B)  $800.
C)  $1,600.
D)  $2,400.
E)  $3,200.F) A) and C)
G) B) and C)

Question 4

On December 31,2015 Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000.The insurance was purchased on July 1 of the same year for one year of insurance coverage.The adjusting entry needed on December 31 is:

Accepted Answer

A)  Debit Prepaid Insurance $6,000;credit Cash $6,000.
B)  Debit Insurance Expense $3,000;credit Accounts Payable $3,000.
C)  Debit Insurance Expense $3,000;credit Prepaid Insurance $3,000.
D)  Debit Cash $6,000;credit Prepaid Insurance $6,000.
E)  Debit Insurance Expense $6,000;credit Accounts Payable $6,000.F) B) and D)
G) B) and E)

Question 5

A balance sheet that places the assets above the liabilities and equity is called a(n) :

Accepted Answer

A)  Report form balance sheet.
B)  Account form balance sheet.
C)  Classified balance sheet.
D)  Unadjusted balance sheet.
E)  Unclassified balance sheet.F) D) and E)
G) A) and E)

Question 6

If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be ___________________ and equity would be ___________________.

Accepted Answer

overstated...

Question 7

On December 14 Branch Company received $3,100 cash for consulting services that will be completed on January 12.Branch records all such prepayments by customers in a liability account.Prepare the January 12 adjusting journal entry.

Accepted Answer

The answer of On December 14 Branch Company received $3,100...

Question 8

On January 1,Eastern College received $1,200,000 from its students for the spring semester that it recorded in Unearned Tuition and Fees.The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term.What amount of tuition revenue should the college recognize on February 28?

Accepted Answer

A)  $300,000.
B)  $600,000.
C)  $800,000.
D)  $900,000.
E)  $1,200,000.F) C) and D)
G) None of the above

Question 9

Fragmental Co.leased a portion of its store to another company for eight months beginning on October 1,at a monthly rate of $800.Fragmental collected the entire $6,400 cash on October 1 and recorded it as unearned revenue.The journal entry made by Fragmental Co.at year-end on December 31 would be:

Accepted Answer

A)  A debit to Rent Revenue and a credit to Cash for $2,400.
B)  A debit to Rent Revenue and a credit to Unearned Rent for $2,400.
C)  A debit to Cash and a credit to Rent Revenue for $6,400.
D)  A debit to Unearned Rent and a credit to Rent Earned for $2,400.
E)  A debit to Unearned Rent and a credit to Rent Earned for $4,000.F) C) and D)
G) A) and E)

Question 10

An _______________________ is a listing of all of the accounts in the ledger with their account balances after adjustments are made.

Accepted Answer

adjusted t...

Question 11

______________________ are required at the end of the accounting period because certain internal transactions and events remain unrecorded.

Accepted Answer

The answer of ______________________ are required at the end of...

Question 12

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 physical count of supplies indicates the cost of unused supplies is $3,200.The adjusting entry would include a $2,800 debit to Supplies.

Accepted Answer

A) True 
 B)False

Question 13

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period,the financial statements prepared at that time would show:

Accepted Answer

A)  Assets overstated and equity understated.
B)  Assets and equity both understated.
C)  Assets overstated,net income understated,and equity overstated.
D)  Assets,net income,and equity understated.
E)  Assets,net income,and equity overstated.F) A) and B)
G) None of the above

Question 14

The adjusted trial balance contains information pertaining to:

Accepted Answer

A)  Asset accounts only.
B)  Balance sheet accounts only.
C)  Income statement accounts only.
D)  All general ledger accounts.
E)  Revenue accounts only.F) A) and B)
G) C) and E)

Question 15

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees,the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Accepted Answer

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.F) B) and E)
G) B) and D)

Question 16

Wilson Company paid insurance premiums for four months in advance on November 1.The balance in the prepaid insurance account before adjustment at the end of the year is $4,800 and no adjustments had been made previously.The adjusting entry required on December 31 is:

Accepted Answer

A)  Debit Insurance Expense,$2,400;credit Prepaid Insurance,$2,400.
B)  Debit Prepaid Insurance,$2,400;credit Insurance Expense,$2,400.
C)  Debit Insurance Expense,$1,200;credit Prepaid Insurance,$1,200.
D)  Debit Prepaid Insurance,$1,200;credit Insurance Expense,$1,200.
E)  Debit Cash,$4,800;Credit Prepaid Insurance,$4,800.F) A) and D)
G) B) and D)

Question 17

Which of the following statements is incorrect?

Accepted Answer

A)  An income statement reports revenues earned less expenses incurred.
B)  An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments.
C)  Interim financial reports can be based on one-month or three-month accounting periods.
D)  The fiscal year is any 12 consecutive months (or 52 weeks) used by a business as its annual accounting period.
E)  Property,plant,and equipment are referred to as plant assets.F) C) and E)
G) D) and E)

Question 18

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation.How much depreciation expense will be recorded for the furniture for the first year ended December 31?

Accepted Answer

A)  $437.50
B)  $375.00
C)  $1,500.00
D)  $500
E)  $1,750F) D) and E)
G) C) and D)

Question 19

The 12-month period that ends when a company's sales activities are at their lowest level is called the:

Accepted Answer

A)  Fiscal year.
B)  Calendar year.
C)  Natural business year.
D)  Accounting period.
E)  Interim period.F) None of the above
G) A) and B)

Question 20

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

Accepted Answer

A)  Balance sheet.
B)  Adjusted trial balance.
C)  Unadjusted trial balance.
D)  Classified balance sheet.
E)  Unclassified balance sheet.F) None of the above
G) A) and B)

Exam 3: Adjusting Accounts and Preparing Financial Statements

Wilson Company paid insurance premiums for four months in advance on November 1.The balance in the prepaid insurance account before adjustment at the end of the year is $4,800 and no adjustments had been made previously.The adjusting entry required on December 31 is:

Correct Answer
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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 physical count of supplies indicates the cost of unused supplies is $3,200.The adjusting entry would include a $2,800 debit to Supplies.

Correct Answer
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If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period,the financial statements prepared at that time would show:

Correct Answer
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The adjusted trial balance contains information pertaining to:

Correct Answer
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If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees,the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Correct Answer
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A company pays its employees $4,000 each Friday,which amounts to $800 per day for the five-day workweek that begins on Monday.If the monthly accounting period ends on Thursday and the employees worked through Thursday,the amount of salaries earned but unpaid at the end of the accounting period is:

Correct Answer
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On December 14 Branch Company received $3,100 cash for consulting services that will be completed on January 12.Branch records all such prepayments by customers in a liability account.Prepare the January 12 adjusting journal entry.

Correct Answer
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A trial balance prepared after adjustments have been recorded is called a(n) :

Correct Answer
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Correct Answer
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An _______________________ is a listing of all of the accounts in the ledger with their account balances after adjustments are made.

Correct Answer
verified
adjusted t...
View Answer

Fragmental Co.leased a portion of its store to another company for eight months beginning on October 1,at a monthly rate of $800.Fragmental collected the entire $6,400 cash on October 1 and recorded it as unearned revenue.The journal entry made by Fragmental Co.at year-end on December 31 would be:

Correct Answer
verified

A balance sheet that places the assets above the liabilities and equity is called a(n) :

Correct Answer
verified

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Correct Answer
verified

______________________ are required at the end of the accounting period because certain internal transactions and events remain unrecorded.

Correct Answer
verified

On December 31,2015 Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000.The insurance was purchased on July 1 of the same year for one year of insurance coverage.The adjusting entry needed on December 31 is:

Correct Answer
verified

Which of the following statements is incorrect?

Correct Answer
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If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be _ and equity would be _.

Correct Answer
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overstated...
View Answer

The 12-month period that ends when a company's sales activities are at their lowest level is called the:

Correct Answer
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Correct Answer
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A company had $7,000,000 in net income for the year.Its net sales were $15,200,000 for the same period.Calculate its profit margin.

Correct Answer
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Exam 3: Adjusting Accounts and Preparing Financial Statements

Wilson Company paid insurance premiums for four months in advance on November 1.The balance in the prepaid insurance account before adjustment at the end of the year is $4,800 and no adjustments had been made previously.The adjusting entry required on December 31 is:

Correct AnswerverifiedShow Answer

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 physical count of supplies indicates the cost of unused supplies is $3,200.The adjusting entry would include a $2,800 debit to Supplies.

Correct AnswerverifiedShow Answer

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period,the financial statements prepared at that time would show:

Correct AnswerverifiedShow Answer

The adjusted trial balance contains information pertaining to:

Correct AnswerverifiedShow Answer

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees,the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Correct AnswerverifiedShow Answer

A company pays its employees $4,000 each Friday,which amounts to $800 per day for the five-day workweek that begins on Monday.If the monthly accounting period ends on Thursday and the employees worked through Thursday,the amount of salaries earned but unpaid at the end of the accounting period is:

Correct AnswerverifiedShow Answer

On December 14 Branch Company received $3,100 cash for consulting services that will be completed on January 12.Branch records all such prepayments by customers in a liability account.Prepare the January 12 adjusting journal entry.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An _______________________ is a listing of all of the accounts in the ledger with their account balances after adjustments are made.

Correct Answerverifiedadjusted t...View AnswerShow Answer

Fragmental Co.leased a portion of its store to another company for eight months beginning on October 1,at a monthly rate of $800.Fragmental collected the entire $6,400 cash on October 1 and recorded it as unearned revenue.The journal entry made by Fragmental Co.at year-end on December 31 would be:

Correct AnswerverifiedShow Answer

A balance sheet that places the assets above the liabilities and equity is called a(n) :

Correct AnswerverifiedShow Answer

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Correct AnswerverifiedShow Answer

______________________ are required at the end of the accounting period because certain internal transactions and events remain unrecorded.

Correct AnswerverifiedShow Answer

On December 31,2015 Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000.The insurance was purchased on July 1 of the same year for one year of insurance coverage.The adjusting entry needed on December 31 is:

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be ___________________ and equity would be ___________________.

Correct Answerverifiedoverstated...View AnswerShow Answer

The 12-month period that ends when a company's sales activities are at their lowest level is called the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A company had $7,000,000 in net income for the year.Its net sales were $15,200,000 for the same period.Calculate its profit margin.

Correct AnswerverifiedShow Answer

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adjusted t...
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If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be _ and equity would be _.

Correct Answer
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overstated...
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