Question 1

Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the unadjusted trial balance?
A)Fees Earned
B)Accounts Receivable
C)Unearned Fees
D)Depreciation Expense

Accepted Answer

Depreciation expense is an example of an adjusting entry that would likely appear on an adjusted trial balance but not on an unadjusted trial balance. This is because depreciation is recorded at the end of an accounting period to allocate the cost of a long-term asset to the periods in which it is used, whereas the unadjusted trial balance only includes transactions that have been recorded up to a certain point in time. The other accounts listed (fees earned, accounts receivable, and unearned fees) are all examples of accounts that would appear on both the unadjusted and adjusted trial balances.

Question 2

Two income statements for Toby Sam Enterprises are shown below:  Prepare a vertical analysis of Toby Sam Enterprises' income statements. Has operating income increased or decreased as a percentage of revenue?
A)increased by 5%
B)increased by 111%
C)decreased by 5%
D)decreased by 111%

Accepted Answer

The answer of Two income statements for Toby Sam Enterprises...

Question 3

Match the type of account (a - e) with the business transactions that follow.
-Services provided that have not been recorded.
A)Prepaid expense
B)Accrued expense
C)Unearned revenue
D)Accrued revenue
E)None of these

Accepted Answer

Services provided that have not been recorded are considered accrued revenue because the company has earned the revenue by providing the services, but it has not yet been recorded in the financial statements.

Question 4

A business pays biweekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The last payday of December is Friday, December 27. Assume the next pay period begins on Monday, December 30, and the proper adjusting entry is journalized at the end of the fiscal period (December 31). The entry for the payment of the payroll on Friday, January 10, includes a
A)debit to Salary Expense of $16,000
B)debit to Salary Expense of $4,000
C)credit to Salaries Payable of $16,000
D)credit to Salaries Payable of $4,000

Accepted Answer

Salary expense per day = $20,000 / 10 = $2,000
Number of working days till January 10 from the previous pay day, December 27 = 2 days in December + 8 days in January = 10 days
Salary expense on January 10 = $2,000 × 8 days = $16,000
Salaries payable = $2,000 × 2 days = $4,000
January 10 Debit Credit
Salary Expense 16,000
Salaries Payable 4,000
$\quad $  $\quad $  $\quad $  $\quad $  $\quad $  $\quad $  Cash 20,000

Question 5

All of the following statements regarding vertical analysis are true except
A)vertical analysis may be prepared for several periods to analyze changes in relationships over time
B)in a vertical analysis of a balance sheet, each asset item is stated as a percent of total assets
C)in a vertical analysis of an income statement, each item is stated as a percent of total expenses
D)major differences between a company's vertical analysis and industry averages should be investigated

Accepted Answer

In a vertical analysis of an income statement, each item is stated as a percent of total revenue or sales, not total expenses.

Question 6

A business pays biweekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a
A)debit to Salary Expense of $8,000
B)debit to Salaries Payable of $8,000
C)credit to Salary Expense of $16,000
D)credit to Salaries Payable of $16,000

Accepted Answer

Salary expense per day = $20,000 / 10 = $2,000
Salary expense accrued on the second Wednesday of the pay period = $2,000 × 8 days = $16,000
Debit Credit
Salary Expense 16,000
$\quad $  $\quad $  $\quad $  $\quad $  Salaries Payable 16,000

Question 7

Match the type of account (a - e) with the business transactions that follow.
-Retainer fee received from a client for future legal representation.
A)Prepaid expense
B)Accrued expense
C)Unearned revenue
D)Accrued revenue
E)None of these

Accepted Answer

A retainer fee received from a client is a payment made in advance for services that will be provided in the future. It represents a liability for the business until the services are performed, making it an example of unearned revenue.

Question 8

Match the type of account (a - e) with the business transactions that follow.
-Paid for one year's insurance policy.
A)Prepaid expense
B)Accrued expense
C)Unearned revenue
D)Accrued revenue
E)None of these

Accepted Answer

When a company pays for an expense in advance, such as an insurance policy, it is considered a prepaid expense. This means that the expense has not yet been incurred, but will be over the course of the insurance coverage period.

Question 9

The adjusting entry to adjust supplies was omitted at the end of the year. This would affect the income statement by having
A)expenses understated and therefore net income overstated
B)revenues understated and therefore net income understated
C)expenses understated and therefore net income understated
D)expenses overstated and therefore net income understated

Accepted Answer

When the adjusting entry for supplies is omitted, expenses are understated because the cost of supplies used is not recorded. Consequently, net income is overstated because expenses are not properly accounted for, leading to an inflated profit figure.

Question 10

When is the adjusted trial balance prepared?
A)before adjusting journal entries are posted
B)after adjusting journal entries are posted
C)after the adjusting journal entries are journalized
D)before the adjusting journal entries are journalized

Accepted Answer

The adjusted trial balance is prepared after adjusting journal entries are posted because it reflects the updated account balances after adjusting entries have been made.

Question 11

What is the purpose of the adjusted trial balance?
A)to verify that all of the adjusting entries have been posted
B)to verify that the net income (loss) is correctly reported
C)to verify that no adjusting journal entry has been omitted
D)to verify that the debits and credits balance

Accepted Answer

The answer of What is the purpose of the adjusted...

Question 12

Match the type of account (a - e) with the business transactions that follow.
-Provided tutoring for a student that will be invoiced next month.
A)Prepaid expense
B)Accrued expense
C)Unearned revenue
D)Accrued revenue
E)None of these

Accepted Answer

Provided tutoring for a student that will be invoiced next month is an example of accrued revenue, as the service has been provided but payment has not yet been received.

Question 13

At the end of the fiscal year, the usual adjusting entry to prepaid insurance to record expired insurance was omitted. Which of the following statements is true?
A)total assets at the end of the year will be understated.
B)stockholders' equity at the end of the year will be understated.
C)net income for the year will be overstated.
D)insurance expense will be overstated

Accepted Answer

Omitting the adjustment for expired insurance results in not recording the expense for the insurance that has been used up during the period. This means that expenses are understated, and as a result, net income is overstated because expenses are deducted from revenues to calculate net income.

Question 14

Match the type of account (a - e) with the business transactions that follow.
-Received payment covering a 6-month magazine subscription.
A)Prepaid expense
B)Accrued expense
C)Unearned revenue
D)Accrued revenue
E)None of these

Accepted Answer

The answer of Match the type of account (a -...

Question 15

Match the type of account (a - e) with the business transactions that follow.
-Paid for a 6-month magazine subscription.
A)Prepaid expense
B)Accrued expense
C)Unearned revenue
D)Accrued revenue
E)None of these

Accepted Answer

The answer of Match the type of account (a -...

Question 16

Match the type of account (a - e) with the business transactions that follow.
-Electric bill to be paid next month.
A)Prepaid expense
B)Accrued expense
C)Unearned revenue
D)Accrued revenue
E)None of these

Accepted Answer

An electric bill that will be paid next month represents an expense that has been incurred but not yet paid, so it is an accrued expense.

Question 17

Which of the accounting steps in the accounting process below would be completed last?
A)preparing the adjusted trial balance
B)posting
C)preparing the financial statements
D)journalizing

Accepted Answer

The financial statements are prepared last in the accounting process as they depend on the accuracy of the preceding steps such as journalizing, posting, and preparing an adjusted trial balance.

Question 18

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is
A)$56,700
B)$58,000
C)$55,800
D)$54,500

Accepted Answer

The answer of The net income reported on the income...

Question 19

Match the type of account (a - e) with the business transactions that follow.
-Annual property taxes that are paid at the end of the year.
A)Prepaid expense
B)Accrued expense
C)Unearned revenue
D)Accrued revenue
E)None of these

Accepted Answer

Annual property taxes paid at the end of the year are considered an accrued expense because the expense accumulates over time but is not paid until the end of the period.

Question 20

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following is true?
A)total assets will be understated at the end of the current year
B)the balance sheet and income statement will be misstated but the statement of stockholders' equity will be correct for the current year
C)net income will be overstated for the current year
D)total liabilities and total assets will be understated

Accepted Answer

If the adjusting entry for depreciation on equipment is omitted, the net income will be overstated as the expense will not be recorded. Therefore, choice C is correct. Option A and D are incorrect as assets and liabilities will not be affected by this adjusting entry. Option B is also incorrect as both the balance sheet and income statement will be misstated.

Quiz 3: The Adjusting Process

Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the unadjusted trial balance?

Two income statements for Toby Sam Enterprises are shown below: Prepare a vertical analysis of Toby Sam Enterprises' income statements. Has operating income increased or decreased as a percentage of revenue?

Match the type of account (a - e) with the business transactions that follow. -Services provided that have not been recorded. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

All of the following statements regarding vertical analysis are true except

A business pays biweekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a

Match the type of account (a - e) with the business transactions that follow. -Retainer fee received from a client for future legal representation. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

Match the type of account (a - e) with the business transactions that follow. -Paid for one year's insurance policy. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

The adjusting entry to adjust supplies was omitted at the end of the year. This would affect the income statement by having

When is the adjusted trial balance prepared?

What is the purpose of the adjusted trial balance?

Match the type of account (a - e) with the business transactions that follow. -Provided tutoring for a student that will be invoiced next month. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

At the end of the fiscal year, the usual adjusting entry to prepaid insurance to record expired insurance was omitted. Which of the following statements is true?

Match the type of account (a - e) with the business transactions that follow. -Received payment covering a 6-month magazine subscription. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

Match the type of account (a - e) with the business transactions that follow. -Paid for a 6-month magazine subscription. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

Match the type of account (a - e) with the business transactions that follow. -Electric bill to be paid next month. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

Which of the accounting steps in the accounting process below would be completed last?

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

Match the type of account (a - e) with the business transactions that follow. -Annual property taxes that are paid at the end of the year. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following is true?