Question 1

Which of the statements below is not true?

Accepted Answer

An adjusted tabular summary is prepared after all transactions have been recorded, as it includes the adjustments made at the end of the accounting period.

Question 2

Bluing Corporation issued a one-year 9% $400000 note on April 30 2022.Interest expense for the year ended December 31 2022 was:

Accepted Answer

The answer of Bluing Corporation issued a one-year 9% $400000...

Question 3

De Meaning Corporation issued a one-year 6% $400000 note on April 30 2022.Interest expense for the year ended December 31 2022 was:

Accepted Answer

The formula to calculate interest expense is:

Interest expense = Principal x Interest rate x Time

In this case, the principal is $400,000, the interest rate is 6%, and the time is 8 months (from April 30 to December 31).

To convert 8 months to a fraction of a year, we divide by 12:
8/12 = 2/3

Therefore:

Interest expense = $400,000 x 6% x 2/3
Interest expense = $16,000

So the answer is C, $16,000.

Question 4

Jill Clown earned a salary of $500 for the last week of October.She will be paid on November 1.The adjustment for Jill's employer October 31 is:

Accepted Answer

Since Jill has earned her salary for the last week of October but will not be paid until November 1, her salary expense needs to be recognized in October. This is done by increasing Salaries and Wages Expense by $500. At the same time, since the payment to Jill will not be made until November 1, the $500 is owed to her and should be recognized as a liability. Therefore, Salaries and Wages Payable should also be increased by $500. This will ensure that the financial statements for October reflect the total expense incurred by the company for Jill's services.

Question 5

Ye Olde Christmas shop signs a three-month note payable to help finance increases in inventory for the Christmas shopping season.The note is signed on October 1 in the amount of $30000 with annual interest of 6%.What is the adjustment to be made on December 31 for the interest expense accrued to that date if no adjustments have been made previously for the interest?

Accepted Answer

The interest for three months (October, November, December) is calculated as $30,000 * 6% * (3/12) = $450. Therefore, the adjustment is to increase Interest Expense and Interest Payable by $450.

Question 6

The following accounts show balances on the adjusted tabular summary.Which of these account balances will not appear the same on the balance sheet?

Accepted Answer

Retained earnings is a temporary account that is closed out at the end of the accounting period.

Question 7

Employees at Biquell Corporation are paid $15000 cash every Friday for working Monday through Friday.The calendar year accounting period ends on Wednesday December 31.How much salaries and wages expense should be recorded two days later on January 2?

Accepted Answer

The answer of Employees at Biquell Corporation are paid $15000...

Question 8

Based on the adjusted account balances below what is the total of the asset side of the adjusted tabular summary? $\begin{array} { l r l r } 
\text { Service revenue } & \$ 5,300 & \text { Equipment } & \$ 7,400 \
\text { Cash } & 2,525 & \text { Prepaid insurance } & 1,225 \
\text { Unearned service rev. } & 5,320 & \text { Depreciation expense } & 640 \
\text { Salaries and wages expense } & 1,050 & \text { Accum. depreciation } & 1,280 \
\text { Common stock } & 390 & \text { Retained earnings } & 550
\end{array}$

Accepted Answer

The total of the asset side includes Cash ($2,525), Equipment ($7,400), and Prepaid Insurance ($1,225), which sums up to $11,150. However, the correct total should be $9,870, considering the depreciation adjustment.

Question 9

Mary Richardo CPA has billed her clients for services performed.She subsequently receives payments from her clients.What transaction will she record upon receipt of the payments?

Accepted Answer

Mary Richardo CPA has already billed her clients for services performed, which means she has already recorded an increase in Service Revenue and an increase in Accounts Receivable. Upon receipt of the payments, she will decrease Accounts Receivable (by recording the payment) and increase Cash (as she receives the payment). Therefore, the correct transaction to record is to increase Cash (asset) and decrease Accounts Receivable (asset). Option B is the best choice that matches this transaction. Option A is incorrect because unearned revenue is revenue that has been received in advance but has not yet been earned, which is not applicable in this scenario. Option C is incorrect because Accounts Receivable has already been recorded when Mary Richardo CPA billed her clients, and it is the amount due to the business from credit sales. Option D is incorrect because it does not reflect the decrease in Accounts Receivable due to the client's payment.

Question 10

Snelling Tables paid employee wages on and through Friday January 26 and the next payroll will be paid in February.There are three more working days in January (29-31).Employees work 5 days a week and the company pays $1200 a day in wages.What will be the adjustments to accrue wages expense at the end of January?

Accepted Answer

Since Snelling Tables has paid employee wages up until Friday January 26, there are three more working days (January 29-31) that need to be accrued for. This means that employees will work 3 more days in January, which equals 3/5 of a typical workweek.

To calculate the adjustment needed, we can multiply the daily wage of $1200 by 3/5 and then multiply that result by the number of employees. Since the problem does not specify how many employees there are, we cannot calculate an exact amount. However, we can still determine the correct choice based on the options given.

Choice A is incorrect because it only accrues one day of wages, not the three days that are left in January.

Choice B is incorrect because it would accrue wages for the entire month of January, not just the three days that are left.

Choice C is correct because it accurately reflects the wages that need to be accrued for the remaining three days in January.

Choice D is incorrect because an adjustment is needed to accurately reflect the wages that need to be accrued.

Question 11

A company shows a balance in Salaries and Wages Payable of $50000 at the end of the month.The next payroll amounting to $75000 is to be paid in the following month.To record the payment of salaries the company would

Accepted Answer

The company needs to pay the $50,000 already recorded as payable and record the additional $25,000 as an expense, totaling $75,000 cash payment.

Question 12

A gift shop 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 $50000 with annual interest of 6%.What is the adjustment to be made on December 31 for the interest expense accrued to that date if no adjustments have been made previously for the interest?

Accepted Answer

The interest expense for the two months (November and December) is $50000 * 6% * 2/12 = $500. The interest payable is also $500.

Question 13

Which statement is incorrect concerning the adjusted tabular summary?

Accepted Answer

The adjusted tabular summary lists the account balances in the order of their importance or relevance, not their magnitude. The statement in choice C is incorrect.

Question 14

Can financial statements be prepared directly from the adjusted tabular summary?

Accepted Answer

Yes, financial statements can be prepared directly from the adjusted tabular summary because all necessary adjustments have been recorded in the summary.

Question 15

The primary source used in the preparation of the financial statements is the:

Accepted Answer

The adjusted tabular summary is used to ensure that all transactions are accurately recorded and adjusted before preparing the financial statements.

Question 16

DeNova Real Estate signed a four-month note payable in the amount of $40000 on September 1.The note requires interest at an annual rate of 6%.The amount of interest to be accrued at the end of September is:

Accepted Answer

The interest for one month is calculated by multiplying the principal by the interest rate and dividing by 12 months.

So, the interest for one month is: 
(40000 x 6%) / 12 = $200

Therefore, the amount of interest accrued at the end of September is $200.

Question 17

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

Accepted Answer

If the adjustment for accrued salaries owed to employees was omitted, it means that the company did not record the amount of salaries that were earned by employees but not yet paid out by the end of the fiscal year. This means that the amount of liabilities at the end of the year is understated because the company has a legal obligation to pay these salaries to its employees. This, in turn, affects the statement of financial position (balance sheet) as total assets and total liabilities must balance. Therefore, option B is the correct choice.

Question 18

Which of the following accounts will reflect the account's beginning balance on the adjusted tabular summary?

Accepted Answer

Retained earnings is a permanent account that carries its beginning balance into the adjusted tabular summary, unlike temporary accounts like prepaid expenses or unearned revenue, which are adjusted during the period.

Question 19

Amos Real Estate signed a four-month note payable in the amount of $20000 on September 1.The note requires interest at an annual rate of 9%.The amount of interest to be accrued at the end of September is:

Accepted Answer

The interest for one month can be calculated as: (20000*9%/12)=$150.

Question 20

An adjusted tabular summary:

Accepted Answer

An adjusted tabular summary, also known as an adjusted trial balance, proves the equality of the basic accounting equation after all adjustments have been made. It is not a required financial statement under generally accepted accounting principles, and it can be used to prepare financial statements. However, it is typically prepared before the financial statements are completed.

Quiz 4: Accrual Accounting Concepts