Question 1

The accountant for Belden Jewelry Repair Services forgot to make an adjusting entry for Depreciation Expense for the current year. Which of the following is an effect of this error?
A) Total assets are understated.
B) Revenues are overstated.
C) Total assets are overstated.
D) Net income is understated.

Accepted Answer

The answer of The accountant for Belden Jewelry Repair Services...

Question 2

The worksheet is NOT a journal, a ledger, or a financial statement.

Accepted Answer

A worksheet is a working document used by accountants to organize and summarize data for financial statements, but it is not a journal, ledger, or financial statement itself.

Question 3

Paramount Event Planning Services collects fees from its customers in advance. On January 1, 2017, the balance of its Unearned Revenue account was $6,000 (CR). During January and February, the company collected $3,000 and $800 as advance fees. During the two-month period, it performed services of $7,500 related to the deferred revenue. What is the balance in Unearned Revenue at the end of February?
A) debit balance of $6,000
B) credit balance of $6,000
C) debit balance of $2,300
D) credit balance of $2,300

Accepted Answer

- On January 1, 2017: Unearned Revenue = $6,000 (CR)
- In January, the company collected $3,000 as advance fees → Unearned Revenue increases by $3,000 (CR) → Unearned Revenue balance = $9,000 (CR)
- In February, the company collected $800 as advance fees → Unearned Revenue increases by $800 (CR) → Unearned Revenue balance = $9,800 (CR)
- During January and February, the company performed services of $7,500 related to deferred revenue → Unearned Revenue decreases by $7,500 (DR) → Unearned Revenue balance = $2,300 (CR)
Therefore, the balance in Unearned Revenue at the end of February is a credit balance of $2,300.

Question 4

The accountant of Barnes Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense. Which of the following statements is true?
A) The total revenue will be overstated.
B) The total revenue will be understated.
C) The total expenses will be overstated.
D) The total expenses will be understated.

Accepted Answer

The failure to record depreciation expense will result in an understatement of total expenses.

Question 5

During December 2016, Carroll Service Company performed $1,500 of services, but as of December 31, 2016, Carroll has not yet billed the clients. If Carroll fails to make an adjusting entry on December 31, 2016, indicate the effect on assets, liabilities, equity, and net income.

Accepted Answer

The answer of During December 2016, Carroll Service Company performed...

Question 6

The accountant of Zeus Legal Services failed to make an adjusting entry for supplies that had been used for the year. Assume the supplies were initially recorded as an asset. Which of the following statements is true?
A) The total liabilities will be overstated.
B) The equity will be understated.
C) The total assets will be overstated.
D) The total assets will be understated.

Accepted Answer

The answer of The accountant of Zeus Legal Services failed...

Question 7

The accountant for Sparks Electric failed to make an adjusting entry to record $3,000 of telephone expenses for the last two months of the year. Which of the following statements is true?
A) The total liabilities will be overstated.
B) The total liabilities will be understated.
C) The total assets will be overstated.
D) The total assets will be understated.

Accepted Answer

The answer of The accountant for Sparks Electric failed to...

Question 8

The accountant of Delta Company failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned. Assume the deferred revenue was initially recorded as a liability. Which of the following statements is true?
A) The total revenue will be overstated.
B) The total revenue will be understated.
C) The total expenses will be overstated.
D) The total expenses will be understated.

Accepted Answer

Since the unearned service revenue was recorded as a liability, failure to adjust it will result in an understatement of revenue. This is because the initial recording resulted in an increase in liabilities instead of revenue. Therefore, the financial statements will not reflect the $6,000 of earned revenue, resulting in an understatement of total revenue.

Question 9

The accounting records for Patricia Event Planning Services include the following select unadjusted balances on December 31, 2016: Salaries Expense, $6,000; Service Revenue: $19,000; Unearned Revenue, $400; Supplies Expense, $600; Rent Expense, $300; Depreciation Expense-Equipment, $200. During December, the company worked with a new client and provided event planning services for an upcoming event. It will receive the full amount of $2,100 when the event is completed in January 2017. As of the end of December 2016, it performed one-third of the services covered by the contract. The company made the accrual adjustments. The balance of Service Revenue, as shown on the adjusted trial balance, should be a ________.
A) debit balance of $21,100
B) credit balance of $19,000
C) debit balance of $2,100
D) credit balance of $19,700

Accepted Answer

The unadjusted balance of Service Revenue is $19,000. However, the company provided services worth $2,100 in December for which it has not received payment yet. Therefore, the company needs to accrue revenue for the services rendered but not yet paid. One-third of the services were rendered in December, which means the company needs to accrue 1/3 * $2,100 = $700 in revenue. This will increase the Service Revenue account by $700, making the adjusted balance $19,000 + $700 = $19,700. Since revenue has a credit balance, the adjusted balance of Service Revenue will also have a credit balance. Therefore, the correct answer is D) credit balance of $19,700.

Question 10

The accountant for Hobson Electrical Repair failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year. Which of the following statements is true?
A) The total revenue will be overstated.
B) The total revenue will be understated.
C) The total expenses will be overstated.
D) The total expenses will be understated.

Accepted Answer

The failure to record unpaid salaries will result in an understatement of expenses, specifically salaries expense, which will cause an understatement of total expenses. This will have an impact on the net income, which will be overstated.

Question 11

The accountant for Noble Jewelry Repair Services forgot to make an adjusting entry for Depreciation Expense for the current year. Which of the following is an effect of this error?
A) Revenues are understated.
B) Total assets are understated.
C) Net income is overstated.
D) Total liabilities are understated.

Accepted Answer

The answer of The accountant for Noble Jewelry Repair Services...

Question 12

The accountant of Skyscrapers Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense. Which of the following statements is true?
A) The total liabilities will be overstated.
B) The equity will be understated.
C) The total assets will be overstated.
D) The total assets will be understated.

Accepted Answer

The answer of The accountant of Skyscrapers Architectural Services failed...

Question 13

On December 31, 2016, interest of $1,500 has accrued on a bank note. This interest payment is due on January 20, 2017. If no adjusting entry is made on December 31, 2016, indicate the effect on assets, liabilities, equity, and net income.

Accepted Answer

The answer of On December 31, 2016, interest of $1,500...

Question 14

At the end of the current year, the accountant for Colorful Graphics forgot to make an adjusting entry to accrue Wages Payable to the company's employees for the last week in December. The wages will be paid to the employees in January. Which of the following is an effect of this error?
A) Net income is overstated.
B) Liabilities are overstated.
C) Net income is understated.
D) Expenses are overstated.

Accepted Answer

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

Question 15

A worksheet is an external document that forms a part of the financial statements.

Accepted Answer

A worksheet is not an external document but an internal tool used to help prepare financial statements.

Question 16

What is the effect of the adjusting entry for Depreciation Expense?
A) It increases total liabilities and increases total expenses.
B) It increases total assets and increases total expenses.
C) It decreases total assets and increases total expenses.
D) It decreases total liabilities and increases total expenses.

Accepted Answer

The adjusting entry for Depreciation Expense decreases the value of the asset over time (decreases total assets) while increasing the expense for that period (increases total expenses). It has no effect on liabilities.

Question 17

Salaries are $4,500 per week for five working days and are paid weekly at the end of the day Fridays. The end of the month falls on a Thursday. The accountant for Dayton Company made the appropriate accrual adjustment and posted it to the ledger. The 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.)
A) credit balance of $3,600
B) debit balance of $900
C) debit balance of $3,600
D) credit balance of $900

Accepted Answer

A)Salaries per day = $4,500 / 5 days = $900 per day 11ea8a42_4f21_057c_8b44_0d08e4149a43_TB5024_00

Question 18

On October 1, 2016, Smith Service Company paid $5,000 in rent for the next five months, beginning with October 2016. On that date, Smith debited Prepaid Rent and credited Cash. If Smith fails to make an adjusting entry on December 31, 2016, indicate the effect on assets, liabilities, equity, and net income.

Accepted Answer

The answer of On October 1, 2016, Smith Service Company...

Question 19

On December 31, 2016, $2,500 of salaries have been earned but not yet paid to employees. If the business failed to make an adjusting entry on December 31, 2016, indicate the effect on assets, liabilities, equity, and net income.

Accepted Answer

The answer of On December 31, 2016, $2,500 of salaries...

Question 20

On the first day of January, Harris Company borrowed $3,000 on a one-year note payable bearing interest at 5% per year. The note specifies that principal and interest must be paid in full at the end of the one-year period. On June 30, the adjusted trial balance will show Interest Payable of ________.
A) $75 credit
B) $75 debit
C) $150 credit
D) $150 debit

Accepted Answer

A)Interest Payable = $3,000 × 5% × 6/12 = $75

Quiz 3: The Adjusting Process

The accountant for Belden Jewelry Repair Services forgot to make an adjusting entry for Depreciation Expense for the current year. Which of the following is an effect of this error?

The worksheet is NOT a journal, a ledger, or a financial statement.

The accountant of Barnes Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense. Which of the following statements is true?

During December 2016, Carroll Service Company performed $1,500 of services, but as of December 31, 2016, Carroll has not yet billed the clients. If Carroll fails to make an adjusting entry on December 31, 2016, indicate the effect on assets, liabilities, equity, and net income.

The accountant of Zeus Legal Services failed to make an adjusting entry for supplies that had been used for the year. Assume the supplies were initially recorded as an asset. Which of the following statements is true?

The accountant for Sparks Electric failed to make an adjusting entry to record $3,000 of telephone expenses for the last two months of the year. Which of the following statements is true?

The accountant of Delta Company failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned. Assume the deferred revenue was initially recorded as a liability. Which of the following statements is true?

The accountant for Hobson Electrical Repair failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year. Which of the following statements is true?

The accountant for Noble Jewelry Repair Services forgot to make an adjusting entry for Depreciation Expense for the current year. Which of the following is an effect of this error?

The accountant of Skyscrapers Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense. Which of the following statements is true?

On December 31, 2016, interest of $1,500 has accrued on a bank note. This interest payment is due on January 20, 2017. If no adjusting entry is made on December 31, 2016, indicate the effect on assets, liabilities, equity, and net income.

At the end of the current year, the accountant for Colorful Graphics forgot to make an adjusting entry to accrue Wages Payable to the company's employees for the last week in December. The wages will be paid to the employees in January. Which of the following is an effect of this error?

A worksheet is an external document that forms a part of the financial statements.

What is the effect of the adjusting entry for Depreciation Expense?

On December 31, 2016, $2,500 of salaries have been earned but not yet paid to employees. If the business failed to make an adjusting entry on December 31, 2016, indicate the effect on assets, liabilities, equity, and net income.