Question 1

If a prepaid expense is initially recorded as an asset,the end-of-period adjusting entry records the expired portion.

Accepted Answer

This is true. Prepaid expenses are initially recorded as assets because they represent future economic benefits that the company has paid for in advance. However, as time passes, the benefits of the prepaid expense are consumed or used up, and it becomes an expense. The end-of-period adjusting entry records the expired portion or the portion that has been used up, which reduces the asset and increases the expense.

Question 2

If a prepaid expense is recorded as an expense and,and the adjusting entry is not made at the end of the period,assets on the balance sheet will be overstated.

Accepted Answer

If a prepaid expense is recorded as an expense and not adjusted, expenses are overstated and assets are understated on the balance sheet.

Question 3

If an unearned revenue is initially recorded as a liability,the end-of-period adjusting entry records the unexpired portion.

Accepted Answer

The end-of-period adjusting entry records the expired portion of the unearned revenue, converting it from a liability to revenue as the service or product is delivered.

Question 4

If an unearned revenue is initially recorded as a liability,the end-of-period adjusting entry records the expired portion.

Accepted Answer

This statement is true. The adjusting entry for unearned revenue at the end of a period records the amount of revenue that has been earned or delivered to the customer, reducing the liability and increasing revenue on the income statement.

Question 5

Which of the following accounts would not be shown on the post-closing trial balance?

Accepted Answer

Depletion is an expense account and all expense accounts are closed at the end of the accounting period, so it would not appear on the post-closing trial balance.

Question 6

If an unearned revenue is initially recorded as a revenue,the end-of-period adjusting entry records the unexpired portion.

Accepted Answer

This is correct. The end-of-period adjusting entry for unearned revenue is to record the unexpired portion as a liability, as it represents money received for goods or services that have not yet been provided. Initially recording it as revenue would be an error.

Question 7

Prepaid expenses may be initially recorded as liabilities or revenues.

Accepted Answer

The answer of Prepaid expenses may be initially recorded as...

Question 8

The post-closing trial balance contains both permanent and temporary accounts.

Accepted Answer

The answer of The post-closing trial balance contains both permanent...

Question 9

If an unearned revenue is initially recorded as a revenue the end-of-period adjusting entry records the expired portion.

Accepted Answer

If an unearned revenue is initially recorded as a revenue, the end-of-period adjusting entry would actually record the unearned portion as a liability and reduce the revenue recognized in the period. This is because unearned revenue represents money received in advance for goods or services that have not yet been provided, and therefore cannot be recognized as revenue until they are actually delivered or fulfilled.

Question 10

Prepaid expenses may be initially recorded as assets or expenses.

Accepted Answer

Prepaid expenses are initially recorded as assets because they represent payments made for goods or services that have not yet been used or consumed. As the goods or services are used or consumed over time, the prepaid expense is gradually recognized as an expense on the income statement.

Question 11

Which of the following accounts would be shown on the post-closing trial balance?

Accepted Answer

The answer of Which of the following accounts would be...

Question 12

If a prepaid expense is recorded as an expense,and the adjusting entry is not made at the end of the period,expenses on the income statement will be overstated.

Accepted Answer

If a prepaid expense is recorded as an expense and not adjusted by the end of the period, it means that expenses have been overstated and assets (prepaid expenses) have been understated, which results in a distortion of the income statement.

Question 13

On January 1,Mountbatten Corporation paid $18,000 for a year's advance rent on a building and recorded it as Rent Expense.When financial statements are prepared on March 31,the adjusting entry should include ________.

Accepted Answer

The initial entry incorrectly recorded the entire $18,000 as Rent Expense. By March 31, only three months' worth of rent ($4,500) should be expensed. Therefore, $13,500 should be credited to Rent Expense to adjust for the prepaid portion.

Question 14

If a prepaid expense is initially recorded as an asset,the end-of-period adjusting entry records the unexpired portion.

Accepted Answer

The answer of If a prepaid expense is initially recorded...

Question 15

Unearned revenues may be initially recorded as liabilities or revenues.

Accepted Answer

Unearned revenues represent advances received from customers for goods or services that have not yet been delivered. These can be initially recorded as liabilities because the company has an obligation to provide the goods or services in the future. Once the goods or services are delivered, the liability is reduced and the revenue is recognized.

Question 16

On March 31,Paris Enterprises received $36,000 in payment for annual advertising contracts and recorded it as advertising revenue.If the revenue is earned equally each month,the adjusting entry on June 30 will include a(n)________.

Accepted Answer

The answer of On March 31,Paris Enterprises received $36,000 in...

Question 17

Unearned revenues may be initially recorded as assets or expenses.

Accepted Answer

The answer of Unearned revenues may be initially recorded as...

Question 18

Snowden Company purchased a 2 year insurance policy on March 31 for $6,000 and charged the entire amount to Insurance Expense.The adjusting entry on December 31 will include ________.

Accepted Answer

The insurance policy covers 2 years, so the monthly expense is $250 ($6,000/24 months). By December 31, 9 months have passed, so $2,250 (9 x $250) should be expensed. The remaining $3,750 should be credited back to Insurance Expense to adjust for the prepaid portion.

Question 19

If a prepaid expense is initially recorded as an expense,the end-of-period adjusting entry records the unexpired portion.

Accepted Answer

This is true. Prepaid expenses are initially recorded as expenses when they are paid in advance, but the end-of-period adjusting entry is used to record the portion of the expense that has not yet been used or expired. This ensures that the matching principle is followed, and expenses are recognized in the period in which they are incurred.

Question 20

If a prepaid expense is initially recorded as an expense,the end-of-period adjusting entry records the expired portion.

Accepted Answer