Question 1

Depreciation on Office Equipment is $3,300. The adjusting entry on December 31, 2011 would be:

Accepted Answer

The answer of Depreciation on Office Equipment is $3,300. The...

Question 2

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, not total expenses.

Question 3

Match between columns Premises: Equipment
Depreciation Expense Accounts Payable Accumulated Depreciation Prepaid Expenses Cash

Accepted Answer

The Answer of True and False is...

Question 4

Protonix Corp has a payroll of $8,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. The adjusting entry on December 31, 2015 assuming the year ends on Thursday would be:

Accepted Answer

The answer of Protonix Corp has a payroll of $8,000...

Question 5

Match between columns
                        Premises: unearned revenue
prepaid expense
accrued revenue.
accrued expense

Accepted Answer

The Answer of Paid premium on a one-year insurance policy. is...

Question 6

Two income statements for PS Enterprises are shown below:  Prepare a vertical analysis of PS Enterprises' income statements. Has operating income increased or decreased as a percentage of revenue?
A) Yes, increased by 5%.
B) Yes, increased by 111%.
C) No, decreased by 5%.
D) None are correct.

Accepted Answer

To perform vertical analysis, we need to express each item on the income statement as a percentage of revenue. 
For the year 2 income statement, 
Operating income = 350,000 / 1,500,000 = 23.33% 
Net income = 175,000 / 1,500,000 = 11.67%

For the year 1 income statement, 
Operating income = 300,000 / 1,600,000 = 18.75% 
Net income = 150,000 / 1,600,000 = 9.38%

By comparing the two percentages for operating income, we can see that it has decreased from 23.33% to 18.75%, which is a decrease of about 4.58%. Therefore, the correct answer is C, "No, decreased by 5%."

Question 7

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements 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 owner's 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, net income will be overstated because the expense is not recorded, leading to a higher reported income. The balance sheet will also be misstated because total assets will be overstated due to the equipment's carrying value not being reduced by its accumulated depreciation. The statement of owner's equity will also be affected as it will show a higher reported income, leading to a higher ending owner's equity balance. Total liabilities will not be affected.

Question 8

The adjusting entry to adjust supplies was omitted at the end of the year. This would effect 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

The answer of The adjusting entry to adjust supplies was...

Question 9

At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true?
A) Salary Expense for the year was understated.
B) The total of the liabilities at the end of the year was overstated.
C) Net income for the year was understated.
D) Owner's equity at the end of the year was understated.

Accepted Answer

The answer of At the end of the fiscal year,...

Question 10

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

Accepted Answer

Depreciation Expense would most likely appear on an adjusted trial balance, but probably would not appear on the trial balance because it is a non-cash expense that is recorded through adjusting entries at the end of an accounting period. The other options (Fees Earned, Accounts Receivable, and Unearned Fees) are all balance sheet accounts that would appear on both the trial balance and the adjusted trial balance.

Question 11

A one-year insurance policy was purchased on June 1, 2011 for $1,500. The adjusting entry on December 31, 2011 would be:

Accepted Answer

The answer of A one-year insurance policy was purchased on...

Question 12

Explain the difference between accrual basis accounting and cash basis accounting.

Accepted Answer

The answer of Explain the difference between accrual basis accounting...

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) Owner's 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

The answer of At the end of the fiscal year,...

Question 14

A business pays bi-weekly 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 Salary Payable of $8,000
C) credit to Salary Expense of $16,000
D) credit to Salary Payable of $16,000

Accepted Answer

The answer of A business pays bi-weekly salaries of $20,000...

Question 15

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 16

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 17

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. This is because adjusting entries are made to update accounts for accruals and deferrals, and the trial balance needs to reflect these adjustments. Therefore, the adjusted trial balance cannot be prepared before adjusting entries are posted.

Question 18

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The last pay day of December is Friday, December 27. Assuming 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 Salary Payable of $16,000
D) credit to Salary Payable of $4,000

Accepted Answer

The answer of A business pays bi-weekly salaries of $20,000...

Question 19

For the year ending December 31, Orion, Inc. mistakenly omitted adjusting entries for $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired. For the year ending December 31, what is the effect of these errors on revenues, expenses, and net income?
A) Revenues are overstated by $4,200.
B) Net income is overstated by $2,300.
C) Expenses are overstated by $6,500.
D) Expenses are understated by $3,500.

Accepted Answer

The answer of For the year ending December 31, Orion,...

Question 20

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 answer of Which of the accounting steps in the...

Quiz 3: The Adjusting Process

Depreciation on Office Equipment is $3,300. The adjusting entry on December 31, 2011 would be:

All of the following statements regarding vertical analysis are true except:

Select with a True or False whether or not each of the following accounts would, under normal circumstances, require an adjusting entry.

Protonix Corp has a payroll of $8,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. The adjusting entry on December 31, 2015 assuming the year ends on Thursday would be:

Classify the following items as: (1) prepaid expense, (2) unearned revenue, (3) accrued expense, or (4) accrued revenue.

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

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

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

At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true?

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

A one-year insurance policy was purchased on June 1, 2011 for $1,500. The adjusting entry on December 31, 2011 would be:

Explain the difference between accrual basis accounting and cash basis accounting.

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 business pays bi-weekly 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:

What is the purpose of the adjusted trial balance?

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

When is the adjusted trial balance prepared?

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