Deck 11: Work Sheet and Adjusting Entries

Question 1

At the time a firm adjusts Merchandise Inventory, the Income Summary account

A)contains two closing entries.
B)has no balance.
C)contains an adjusting entry for unearned revenue.
D)contains the last fiscal period's adjusting entry for Merchandise Inventory.
E)contains an adjusting entry for expired prepaid insurance.

Answer 1

B

Question 2

In the completed work sheet, which of the following sets of columns would contain the two balances in the Income Summary account representing beginning and ending inventory when using the periodic inventory system?

A)Adjustments and Balance Sheet columns
B)Trial Balance and Adjustments columns
C)Adjustments and Income Statement columns
D)Trial Balance and Income Statement columns
E)Trial Balance and Balance Sheet columns

Answer 2

C

Question 3

On the work sheet, the amount of the beginning merchandise inventory appears in the

A)Balance Sheet Credit column.
B)Adjustments Credit column.
C)Balance Sheet Debit column.
D)Trial Balance Credit column.
E)Adjustments Debit column.

Answer 3

B

Question 4

A baseball team records ticket revenue received in advance as Unearned Revenue. On the team's work sheet, the required adjusting entry is

A)debit Cash; credit Unearned Revenue.
B)debit Revenue; credit Unearned Revenue.
C)debit Unearned Revenue; credit Cash.
D)debit Unearned Revenue; credit Revenue.
E)debit Cash; credit Unearned Revenue Income.

Question 5

Wages Expense has a balance of $55,400 in the Trial Balance Debit column of a work sheet. The Adjustments Credit column contains a $500 credit to Wages Payable. The Adjusted Trial Balance columns will show

A)Wages Expense with a debit balance of $54,900.
B)Wages Expense with a debit balance of $500.
C)Wages Payable with a credit balance of $55,900.
D)Wages Expense with a debit balance of $55,900.
E)Wages Expense with a credit balance of $55,900.

Question 6

The ending merchandise inventory (using the periodic system) is placed on the books by an adjusting entry

A)debiting Merchandise Inventory and crediting Sales.
B)debiting Income Summary and crediting Merchandise Inventory.
C)debiting Merchandise Inventory and crediting Income Summary.
D)debiting Purchases and crediting Merchandise Inventory.
E)debiting Merchandise Inventory and crediting Purchases.

Question 7

In the Adjustments columns of the work sheet, the credit to the Merchandise Inventory account (using the periodic system) represents

A)beginning inventory.
B)ending inventory.
C)the difference between the beginning and the ending inventory.
D)the balance owed to creditors for inventory.
E)net income.

Question 8

Net income appears on the work sheet in the

A)Adjusted Trial Balance Debit column.
B)Balance Sheet Debit column.
C)Income Statement Debit column.
D)Income Statement Credit column.
E)Adjustments Debit column.

Question 9

If the Unearned Revenue account had an unadjusted normal balance of $3,800, and an adjustment was made debiting the account for $500, the amount would appear in the Adjusted Trial Balance columns of the work sheet as a

A)$4,300 debit.
B)$4,300 credit.
C)$3,300 debit.
D)$3,300 credit.
E)$3,800 debit.

Question 10

The Income Statement Debit column exceeds the Income Statement Credit column on a work sheet. This indicates

A)a net income for the company.
B)a net loss for the company.
C)that mistakes were made in the preparation of the work sheet.
D)the owner's Capital account increased during the year.
E)the inventory increased during the year.

Question 11

Unearned Revenue appears in the

A)Trial Balance Credit column, Adjustments Debit column, Income Statement Debit column, and Balance Sheet Debit column of a work sheet.
B)Trial Balance Debit column, Adjustments Credit column, Adjusted Trial Balance Debit column, and Balance Sheet Credit column of a work sheet.
C)Trial Balance Credit column, Adjustments Debit column, Adjusted Trial Balance Credit column, and Balance Sheet Credit column of a work sheet.
D)Trial Balance Credit column, Adjustments Debit column, Adjusted Trial Balance Credit column, and Income Statement Credit column of a work sheet.
E)Trial Balance Debit column, Adjustments Debit column, Adjusted Trial Balance Debit column, and Balance Sheet Debit column of a work sheet.

Question 12

Unearned Revenue is classified as a(n)

A)revenue account.
B)expense account.
C)liability account.
D)contra revenue account.
E)asset account.

Question 13

The Unearned Revenue account would be used when a company

A)collects cash and earns the revenue in the same fiscal period.
B)collects cash and earns the revenue over two fiscal periods.
C)pays cash for services not yet earned.
D)pays cash for services earned in two fiscal periods.
E)does none of these.

Question 14

If a painting company receives $80,000 in advance for services to be performed in both the present fiscal period and the following fiscal period, the best entry would be

A)debit Cash; credit Painting Revenue.
B)debit Cash; credit Accounts Payable.
C)debit Cash; credit Unearned Painting Revenue.
D)debit Cash; credit Other Income.
E)debit Painting Revenue; credit Unearned Painting Revenue.

Question 15

Adjusting entries are journalized and posted in a noncomputerized system

A)after the closing entries have been journalized.
B)after the trial balance is prepared but before the work sheet is completed.
C)after the worksheet is completed but before the financial statements are prepared.
D)after the adjustments are entered in the work sheet but before the work sheet is completed.
E)at none of these times.

Question 16

Royal Theater credited Unearned Revenue of $35,000 for tickets sold for its season of four plays, which will be presented at the end of one fiscal period and the beginning of the next. As of December 31, the end of their fiscal period, Royal Theater had earned $16,000. The adjusting entry is

A)debit Cash, $16,000; credit Ticket Income, $16,000.
B)debit Unearned Revenue, $19,000; credit Ticket Income, $19,000.
C)debit Unearned Revenue, $16,000; credit Ticket Income, $16,000.
D)debit Ticket Income, $19,000; credit Unearned Ticket Revenue, $19,000.
E)debit Cash, $16,000; credit Unearned Ticket Revenue, $16,000.

Question 17

The Prepaid Insurance account has a balance of $200 less in the work sheet's Balance Sheet Debit column than in the work sheet's Trial Balance Debit column. This would be the result of a

A)$200 entry to Prepaid Insurance in the work sheet's Adjustments Credit column.
B)$200 entry to Prepaid Insurance in the work sheet's Adjustments Debit column.
C)$200 entry to Insurance Expense in the work sheet's Adjustments Credit column.
D)$400 entry to Insurance Expense in the work sheet's Adjustments Credit column.
E)$400 entry to Prepaid Insurance in the work sheet's Adjustments Credit column.

Question 18

If the Prepaid Insurance account had an unadjusted normal balance of $3,400, and an adjustment was made crediting the account for $800, then the account would appear on the work sheet as a(n)

A)$2,600 debit balance in the Balance Sheet columns.
B)$800 credit balance in the Income Statement columns.
C)$2,600 credit balance in the Adjusted Trial Balance columns.
D)$800 credit balance in the Balance Sheet columns.
E)$2,600 debit balance in the Income Statement columns.

Question 19

On the work sheet, the adjusted balance of Unearned Revenue appears in the

A)Income Statement Debit column.
B)Income Statement Credit column.
C)Balance Sheet Debit column.
D)Balance Sheet Credit column.
E)Trial Balance Debit column.

Question 20

If the trial balance amount of Unearned Pest Spray Revenue is $50,000, and $40,000 has been earned by the end of the fiscal period, the adjustment would be

A)debit Accounts Payable; credit Unearned Pest Spray Revenue.
B)debit Unearned Pest Spray Revenue; credit Pest Spray Revenue.
C)debit Pest Spray Revenue; credit Unearned Pest Spray Revenue.
D)debit Unearned Pest Spray Revenue; credit Cash.
E)debit Cash; credit Unearned Pest Spray Revenue.

Question 21

On the work sheet, Purchases Discounts appears in the

A)Trial Balance Debit column and the Income Statement Credit column.
B)Trial Balance Credit column and the Balance Sheet Credit column.
C)Trial Balance Debit column and the Income Statement Debit column.
D)Trial Balance Credit column and the Income Statement Credit column.
E)Adjustments Debit column and the Income Statement Credit column.

Question 22

The inventory system that makes an adjustment to the Merchandise Inventory account only when an actual physical inventory is taken

A)Physical Inventory Method
B)Periodic Inventory System
C)Perpetual Inventory System
D)Count of Stock Method

Question 23

The appropriate journal for recording the adjusting entry for Merchandise Inventory is

A)the cash payments journal.
B)the purchases journal.
C)the sales journal.
D)the general journal.
E)either the cash payments journal or the purchases journal.

Question 24

Which of the following accounts are NOT located on the worksheet income statement?

A)Merchandise Inventory
B)Sales
C)Sales Discounts
D)Purchases

Question 25

On a work sheet, the Income Statement Debit column equals $90,800, and the Income Statement Credit column equals $105,600. From this data, it can be determined that the company had a

A)net loss of $14,800 added to the Income Statement Debit column.
B)net income of $14,800 added to the Income Statement Debit column.
C)net loss of $14,800 added to the Balance Sheet Credit column.
D)net income of $14,800 added to the Balance Sheet Debit column.
E)net income of $14,800 added to the Adjusted Trial Balance Credit column.

Question 26

At the end of the accounting period, the following should occur with supplies

A)No action is required
B)An adjusting entry should be made to expense the used supplies at the end of the period
C)A physical inventory should be taken
D)Both b and c

Question 27

The Income Summary account line on the work sheet

A)has a debit and a credit side.
B)relates to adjusting merchandise inventory.
C)is the only account in which we don't combine the debit and credit figures.
D)is all of these.
E)is none of these.

Question 28

Which of the following accounts would appear in the Balance Sheet Credit column of a work sheet?

A)Equipment
B)Wages Payable
C)Cash
D)Insurance Expense
E)Sales

Question 29

Unearned revenues are classified ________ as and have a normal balance of ________.

A)Liabilities, CR
B)Revenues, CR
C)Assets, DR
D)Equity, CR

Question 30

Cash received in advance for goods to be delivered or services to be provided later

A)Revenues
B)Sales
C)Unearned Revenues
D)Prepaid Revenues

Question 31

The inventory system where a business continually maintains a cost record of each item in stock

A)Periodic Inventory System
B)Perpetual Inventory System
C)Inventory Cost Control System
D)None of the above.

Question 32

If the physical inventory is less than the amount in the accounting inventory records, this is known as

A)Inventory Short/Over
B)Inventory Shrinkage
C)Inventory Adjustment
D)Inventory Discrepancy

Question 33

Which of the following does NOT require an adjusting entry?

A)Inventory discrepancies
B)Expired Insurance
C)Collection of money on account
D)Depreciation of Equipment

Question 34

An example of unearned revenues

A)Collecting 3 months rent in advance
B)Paying 3 months rent in advance
C)Collecting the current month's rent
D)Paying the current month's rent

Question 35

Under a perpetual inventory system, a shortage in inventory requires an adjusting entry that

A)debits Cost of Goods Sold and credits Accounts Payable.
B)debits Merchandise Inventory and credits Cost of Goods Sold.
C)debits Cost of Goods Sold and credits Merchandise Inventory.
D)debits Accounts Payable and credits Merchandise Inventory.
E)debits Accounts Payable and credits Cost of Goods Sold.

Question 36

The work sheet for a merchandising business is

A)exactly the same as for a service business.
B)very different from that for a service business.
C)slightly different from that for a service business.
D)much shorter than that for a service business.
E)much longer than that for a service business.

Question 37

The Service Income account is classified as a(n)

A)asset.
B)liability.
C)revenue.
D)expense.
E)contra liability account.

Question 38

Which of the following account types are NOT located on the worksheet's balance sheet?

A)Assets
B)Drawing
C)Purchase Discounts
D)Liabilities

Question 39

Adjusting entries can be used for all of the following except:

A)Capital
B)Supplies
C)Unearned Revenues
D)Merchandise Inventory

Question 40

On the work sheet, ending merchandise inventory will appear on the

A)credit side of the Trial Balance column.
B)debit side of the Balance Sheet column.
C)debit side of the Income Statement column.
D)credit side of the Balance Sheet column.
E)credit side of the Adjustments column.

Question 41

The physical count of inventory may be less than the accounting records due to the following:

A)Receiving Errors
B)Shoplifting
C)Accounting Errors
D)All of the above

Question 42

Using this inventory method the Merchandise Inventory account is adjusted only at the end of the fiscal period and the adjustment is based on a physical inventory.

A)Periodic Inventory
B)Perpetual Inventory
C)Inventory Shrinkage
D)Inventory Adjustment

Question 43

If the physical count of inventory is more than the amount on the accounting records, what account is debited?

A)Merchandise Inventory
B)Cost of Goods Sold
C)Sales
D)Misc.Expense

Question 44

Purchase Discounts appear under which column of the worksheet, with the following normal balance?

A)Income Statement, CR
B)Income Statement, DR
C)Balance Sheet, CR
D)Balance Sheet, DR

Question 45

This liability account is credited when cash is received for goods and/or services in advance of being earned

A)Pre-earned Revenues
B)Unearned Revenues
C)Advanced Revenues
D)Prepaid Revenues

Question 46

A company used a perpetual inventory system. By physical count, ending Merchandise Inventory is $90,200. The balance in the Merchandise Inventory account is $93,700. The adjusting entry is

A)debit to Income Summary, $3,500; credit Merchandise Inventory, $3,500.
B)debit to Merchandise Inventory, $3,500; credit Income Summary, $3,500.
C)debit to Cost of Goods Sold, $3,500; credit Merchandise Inventory, $3,500.
D)debit to Income Summary, $3,500; credit Cost of Goods Sold, $3,500.
E)debit to Merchandise Inventory, $3,500; credit Cost of Goods Sold, $3,500.

Question 47

The Accounts Receivable balance would appear in which column of the worksheet

A)Income Statement, DR
B)Income Statement, CR
C)Balance Sheet, DR
D)Balance Sheet, CR

Question 48

The account adjusted with a credit to set up accrued payroll is

A)Wages Expense
B)Wages Payable
C)Wages Receivable
D)Either A or B

Question 49

Sales appear under which worksheet column and has the following normal balance:

A)Income Statement, DR
B)Income Statement, CR
C)Balance Sheet, CR
D)Balance Sheet, DR

Question 50

Cash appears in which worksheet column and has the following normal balance:

A)Balance Sheet, DR
B)Balance Sheet, CR
C)Income Statement, DR
D)Income Statement, CR

Question 51

Interest Income would appear under which column of the worksheet

A)Income Statement, DR
B)Balance Sheet, DR
C)Income Statement, CR
D)Balance Sheet, CR

Question 52

This account is debited in a periodic inventory system, when goods are bought for resale.

A)Merchandise Inventory
B)Purchases
C)Purchase Discounts
D)Sales

Question 53

Wages Payable is an example of

A)Unearned Revenues
B)Expense
C)Liability
D)Prepaid Revenue

Question 54

Prepaid Insurance appears in which column of the worksheet and has the following normal balance:

A)Balance Sheet, CR
B)Balance Sheet, DR
C)Income Statement, DR
D)Income Statement, CR

Question 55

Accumulated Depreciation, Equipment appears in which column of the worksheet?

A)Income Statement, DR
B)Income Statement, CR
C)Balance Sheet, DR
D)Balance Sheet, CR

Question 56

The temporary account used when adjusting Merchandise Inventory using the periodic inventory system

A)Inventory Clearing Account
B)Inventory Holding Account
C)Income Summary Account
D)None of the above

Question 57

When a company performs an actual count of goods on hand, this is called a

A)Physical Inventory
B)Inventory Shrinkage
C)Inventory Count
D)Inventory Take

Question 58

An adjusting entry to record expired or used insurance is

A)Increase Insurance Expense with a DR
B)Increase Insurance Expense with a CR
C)Increase Prepaid Insurance with a CR
D)Increase Prepaid Insurance with a DR

Question 59

This inventory system will debit Purchases when goods are bought

A)Periodic Inventory System
B)Purchase Inventory System
C)Perpetual Inventory System
D)All of the above

Question 60

Inventory shortages are debited to

A)Merchandise Inventory
B)Cost of Goods Sold
C)Inventory Short/Over
D)Sales

Question 61

The adjusting entry for expired or used insurance will increase the Insurance Expense account.

Question 62

If Income Summary has a debit of $80,000 and a credit of $85,000 in the Adjustments columns of the work sheet, these will be combined into a debit of $5,000 in the Income Statement Debit or Credit column.

Question 63

The first adjusting entry for merchandise inventory with the periodic inventory system is a credit to Merchandise Inventory and a debit to Income Summary.

Question 64

The Salaries Payable account is an example of an unearned revenue account.

Question 65

The amount of the beginning merchandise inventory appears in the Balance Sheet Credit column of the work sheet.

Question 66

The amount of ending merchandise inventory appears in the Balance Sheet Debit column of the work sheet.

Question 67

The adjustment for salaries owed but not yet paid to employees will decrease the balance in the Salary Expense account.

Question 68

Unearned Subscriptions is classified as a liability account.

Question 69

The Income Summary account is used to adjust inventory (with the perpetual inventory system) and record closing entries.

Question 70

If revenue is earned over two fiscal periods, one should initially credit the Unearned Revenue account.

Question 71

In the Income Statement columns of the work sheet, Income Summary is shown as the net balance of the two amounts in the Adjustments column.

Question 72

The second adjusting entry for merchandise inventory with the periodic inventory system is to debit Merchandise Inventory for the amount of the beginning inventory.

Question 73

The adjusting entry for depreciation will decrease the Accumulated Depreciation account.

Question 74

The Unearned Revenue account normally has a debit balance.

Question 75

The adjusting entry for unearned revenue involves a debit to Accounts Payable.

Question 76

Rent received in advance by a landlord is called unearned revenue if the rental income will be earned in more than one fiscal period.

Question 77

An actual count of a stock of goods on hand is called a physical inventory.

Question 78

Taking a physical count of the merchandise is optional under a periodic inventory system.

Question 79

The Unearned Revenue adjustment can occur only in merchandising businesses.

Question 80

The first adjusting entry for merchandise inventory causes a zero balance in the Merchandise Inventory account when using the periodic inventory system.