Adjusting entries can be classified as

1 Question: Adjusting entries can be classified as

A    Postponements and advances

B    Accruals and deferrals

C    Deferrals and postponements

D    Accruals and advances

2 Question: Daly Investments purchased an 18-month insurance policy on May 31, 2010 for $3,600. The December 31, 2010 balance sheet would report Prepaid Insurance of

A    $0 because Prepaid Insurance is reported on the Income Statement

B    $1,400

C    $2,200

D    $3,600

3 Question: Daly Investments purchased an 18-month insurance policy on May 31, 2010 for $3,600. The December 31, 2010 balance sheet would report Prepaid Insurance of

A    $0 because Prepaid Insurance is reported on the Income Statement

B    $1,400

C    $2,200

D    $3,600

4 Question: Southwestern City College sold season tickets for the 2010 football season for $160,000. A total of 8 games will be played during September, October and November. Assuming all the games are played, the Unearned Revenue balance that will be reported on the December 31 balance sheet will be

A    $0

B    $60,000

C    $100,000

D    $160,000

5 Question: The operating cycle of a company is the average time that is required to go from cash to

A    Sales in producing revenues

B    Cash in producing revenues

C    Inventory in producing revenues

D    Accounts receivable in producing revenues

6 Question: The income statement for the month of June, 2010 of Ramirez Enterprises contains the following information:

The entry to close Income Summary to Ramirez, Capital includes

A    A debit to Revenue for $7,000

B    Credits to Expenses totaling $3,600

C    A credit to Income Summary for $3,400

D    A credit to Ramirez, Capital for $3,400

7 Question: Joyce’s Gifts signs a three-month note payable to help finance increases in inventory for the Christmas shopping season. The note is signed on November 1 in the amount of $50,000 with annual interest of 12%. What is the adjusting entry to be made on December 31 for the interest expense accrued to that date, if no entries have been made previously for the interest? A

A

B

C

D

8 Question: All of the following statements about the post-closing trial balance are correct except it

A    Shows that the accounting equation is in balance

B    Provides evidence that the journalizing and posting of closing entries have been properly completed

C    Contains only permanent accounts

D    Proves that all transactions have been recorded

9 Question: The following items are taken from the financial statements of Dinkel Company for the year ending December 31, 2010:

What is the company’s net income for the year ending December 31, 2010?

A    $133,000

B    $42,000

C    $28,000

D    $12,000

10 Question: O.K.C. Company collected $8,400 in May of 2010 for four months of service which would take place from October of 2010 through January of 2011. The revenue reported from this transaction during 2010 would be

A    0

B    $6,300

C    $8,400

D    $2,010

11 Question: The following information is for Benton Office Supplies:

The total dollar amount of assets to be classified as property, plant, and equipment is

A    $320,000

B    $170,000

C    $245,000

D    $190,000

12 Question: Henry-K Company purchased a computer system for $3,600 on January 1, 2010. The company expects to use the computer system for 3 years. It has no salvage value. Monthly depreciation expense on the asset is

A    $0

B    $100

C    $1,200

D    $3,600

13 Question: What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $15,500, and unexpired amounts per analysis of policies of $4,500?

A    Debit Insurance Expense, $4,500; Credit Prepaid Insurance, $4,500

B    Debit Insurance Expense, $15,500; Credit Prepaid Insurance, $15,500

C    Debit Prepaid Insurance, $11,000; Credit Insurance Expense, $11,000

D    Debit Insurance Expense, $11,000; Credit Prepaid Insurance, $11,000

14 Question: The following items are taken from the financial statements of Dinkel Company for the year ending December 31, 2010:

The sub-classifications for assets on the company’s classified balance sheet would include all of the following except

A    Current Assets

B    Property, Plant, and Equipment

C    Intangible Assets

D    Long-term Assets

15 Question: Can financial statements be prepared directly from the adjusted trial balance?

A    They cannot. The general ledger must be used

B    Yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts

C    No, the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose

D    They can because that is the only reason that an adjusted trial balance is prepared

16 Question: The following information is for Acme Auto Supplies:

The total dollar amount of assets to be classified as current assets is

A    220,000

B    $150,000

C    $300,000

D    $180,000

17 Question: A post-closing trial balance is prepared

A    After closing entries have been journalized and posted

B    Before closing entries have been journalized and posted

C    After closing entries have been journalized but before the entries are posted

D    Before closing entries have been journalized but after the entries are posted

18 Question: The following information is for Acme Auto Supplies:

The total dollar amount of assets to be classified as investments is

A    $0

B    $150,000

C    $80,000

D    $180,000

19 Question: The following selected account balances appear on the December 31, 2010 balance sheet of Chen Co.

Land (location of the corporation’s office building)     $150,000
Land (held for future use)     225,000
Corporate Office Building     900,000
Inventory     300,000
Equipment     675,000
Office Furniture     150,000
Accumulated Depreciation     450,000

What is the total amount of property, plant, and equipment that will be reported on the balance sheet?

A    $1,950,000

B    $1,650,000

C    $2,400,000
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D    $1,425,000

20 Question: A post-closing trial balance should be prepared

A    Before closing entries are posted to the ledger accounts

B    After closing entries are posted to the ledger accounts

C    Before adjusting entries are posted to the ledger accounts

D    Only if an error in the accounts is detected

21 Question: The balance in the Prepaid Rent account before adjustment at the end of the year is $15,000, which represents three months’ rent paid on December 1. The adjusting entry required on December 31 is to

A    Debit Rent Expense, $5,000; credit Prepaid Rent, $5,000

B    Debit Rent Expense, $10,000; credit Prepaid Rent $10,000

C    Debit Prepaid Rent, $5,000; credit Rent Expense, $5,000

D    Debit Prepaid Rent, $10,000; credit Rent Expense, $10,000

22 Question: Closing entries

A    Are prepared before the financial statements

B    Reduce the number of permanent accounts

C    Cause the revenue and expense accounts to have zero balances

D    Summarize the activity in every account

23 uestion: On January 1, 2010, Masters and Masters Company purchased equipment for $30,000. The company is depreciating the equipment at the rate of $700 per month. The book value of the equipment at December 31, 2010 is

A    $0

B    $8,400

C    $21,600

D    $30,000

24 Question: James Corporation purchased a one-year insurance policy in January 2010 for $48,000. The insurance policy is in effect from May 2010 through April 2011. If the company neglects to make the proper year-end adjustment for the expired insurance

A Net income and assets will be understated by $32,000
B Net income and assets will be overstated by $32,000
C Net income and assets will be understated by $16,000
D Net income and assets will be overstated by $16,000

 

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