Question 1

In the case of unearned revenue, the adjusting entry at the end of the period includes a credit to Service Revenue. Assume the unearned revenue is initially recorded as a liability.

Accepted Answer

A) True 
 B)False

Question 2

GAAP requires a public company to prepare a worksheet for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 3

Prepaid rent is an expense account, and hence it appears on the income statement.

Accepted Answer

A) True 
 B)False

Question 4

If a company is using the accrual basis accounting method, when should it record its earned revenue?

Accepted Answer

A)   When cash is received, even though services may be rendered at a later date
B)   When services are rendered, even though cash may be received at a later date
C)   When services are completely rendered and cash is received
D)   When cash is received, 30 days after the completion of the servicesE) All of the above
F) A) and C)

Question 5

The advance cash payments of future expenses are called:

Accepted Answer

A)   accrued revenues.
B)   prepaid expenses.
C)   unearned revenues.
D)   accrued expenses.E) C) and D)
F) A) and C)

Question 6

An adjusted trial balance does not list the revenues and expenses of a business.

Accepted Answer

A) True 
 B)False

Question 7

Revenue that has been earned but not yet collected in cash is called a(n) :

Accepted Answer

A)   accrued revenue.
B)   prepaid expense.
C)   unearned revenue.
D)   accrued expense.E) A) and D)
F) All of the above

Question 8

Real Weight Losers, a diet magazine, collected $480,000 in subscription revenue in May. Each subscriber will receive an issue of the magazine for each of the next 12 months, beginning with the June issue. The company uses the accrual method of accounting. Provide the adjusting entry needed on June 30. Assume the magazine initially records a liability for the subscription revenue.

Accepted Answer

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Question 9

The salaries are $6,000 per week of 5 working days and are paid weekly at the end of Fridays. The end of the month falls on a Thursday. Patricia made the appropriate accrual adjustment and posted it to the ledger. The final adjusted balance of Salaries Payable, as shown on the adjusted trial balance, will be a: (Assume that there was no beginning balance in the Salaries Payable account.)

Accepted Answer

A)   credit balance of $4,800.
B)   debit balance of $1,200.
C)   debit balance of $4,800.
D)   credit balance of $1,200.E) B) and D)
F) None of the above

Question 10

What type of account is Prepaid Rent and what is its normal balance?

Accepted Answer

A)   expense and debit
B)   liability and credit
C)   revenue and credit
D)   asset and debitE) A) and B)
F) B) and C)

Question 11

An internal document that helps summarize data for the preparation of financial statements is called a:

Accepted Answer

A)   journal.
B)   ledger.
C)   worksheet.
D)   chart of accounts.E) B) and C)
F) A) and D)

Question 12

Robert Rogers, CPA, performed accounting services for a client in December. A bill was mailed to the client on December 30. Roberts received a check by mail on January 5. As per the revenue recognition principle, the related account that should appear on the balance sheet as of December 31 is:

Accepted Answer

A)   Prepaid Expense.
B)   Accounts Receivable.
C)   Unearned Revenue.
D)   Accounts Payable.E) All of the above
F) B) and C)

Exam 3: The Adjusting Process

The advance cash payments of future expenses are called:

Correct Answer
verified

An adjusted trial balance does not list the revenues and expenses of a business.

Correct Answer
verified

If a company is using the accrual basis accounting method, when should it record its earned revenue?

Correct Answer
verified

GAAP requires a public company to prepare a worksheet for financial reporting purposes.

Correct Answer
verified

An internal document that helps summarize data for the preparation of financial statements is called a:

Correct Answer
verified

What type of account is Prepaid Rent and what is its normal balance?

Correct Answer
verified

In the case of unearned revenue, the adjusting entry at the end of the period includes a credit to Service Revenue. Assume the unearned revenue is initially recorded as a liability.

Correct Answer
verified

Revenue that has been earned but not yet collected in cash is called a(n) :

Correct Answer
verified

Robert Rogers, CPA, performed accounting services for a client in December. A bill was mailed to the client on December 30. Roberts received a check by mail on January 5. As per the revenue recognition principle, the related account that should appear on the balance sheet as of December 31 is:

Correct Answer
verified

Prepaid rent is an expense account, and hence it appears on the income statement.

Correct Answer
verified

Correct Answer
verified
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View Answer

Correct Answer
verified

Exam 3: The Adjusting Process

The advance cash payments of future expenses are called:

Correct AnswerverifiedShow Answer

An adjusted trial balance does not list the revenues and expenses of a business.

Correct AnswerverifiedShow Answer

If a company is using the accrual basis accounting method, when should it record its earned revenue?

Correct AnswerverifiedShow Answer

GAAP requires a public company to prepare a worksheet for financial reporting purposes.

Correct AnswerverifiedShow Answer

An internal document that helps summarize data for the preparation of financial statements is called a:

Correct AnswerverifiedShow Answer

What type of account is Prepaid Rent and what is its normal balance?

Correct AnswerverifiedShow Answer

In the case of unearned revenue, the adjusting entry at the end of the period includes a credit to Service Revenue. Assume the unearned revenue is initially recorded as a liability.

Correct AnswerverifiedShow Answer

Revenue that has been earned but not yet collected in cash is called a(n) :

Correct AnswerverifiedShow Answer

Robert Rogers, CPA, performed accounting services for a client in December. A bill was mailed to the client on December 30. Roberts received a check by mail on January 5. As per the revenue recognition principle, the related account that should appear on the balance sheet as of December 31 is:

Correct AnswerverifiedShow Answer

Prepaid rent is an expense account, and hence it appears on the income statement.

Correct AnswerverifiedShow Answer

Correct Answerverified\[\begin{array} { | c | r | r | } \hlin...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
\[\begin{array} { | c | r | r | }
\hlin...
View Answer

Correct Answer
verified