Question 1

The adjusting entry to adjust supplies was omitted at the end of the year. This would effect the income statement by having
A) expenses understated and therefore net income overstated
B) revenues understated and therefore net income understated
C) expenses understated and therefore net income understated
D) expenses overstated and therefore net income understated

Accepted Answer

The answer of The adjusting entry to adjust supplies was...

Question 2

Depreciation on Office Equipment is $3,300. The adjusting entry on December 31, 2011 would be

Accepted Answer

The answer of Depreciation on Office Equipment is $3,300. The...

Question 3

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The last pay day of December is Friday, December 27. Assuming the next pay period begins on Monday, December 30 and the proper adjusting entry is journalized at the end of the fiscal period (December 31). The entry for the payment of the payroll on Friday, January 10 includes a:
A) debit to Salary Expense of $16,000
B) debit to Salary Expense of $4,000
C) credit to Salary Payable of $16,000
D) credit to Salary Payable of $4,000

Accepted Answer

The answer of A business pays bi-weekly salaries of $20,000...

Question 4

Which of the accounting steps in the accounting process below would be completed last?
A) preparing the adjusted trial balance
B) posting
C) preparing the financial statements
D) journalizing

Accepted Answer

Preparing the financial statements is typically the last step in the accounting process, after adjusting entries have been made and an adjusted trial balance has been prepared.

Question 5

What is the purpose of the adjusted trial balance?
A) to verify that all of the adjusting entries have been posted
B) to verify that the net income (loss) is correctly reported
C) to verify that no adjusting journal entry has been omitted
D) to verify the equality of the debit and credit balances

Accepted Answer

The purpose of the adjusted trial balance is to verify the equality of the debit and credit balances after adjusting entries have been made. This ensures that the books are accurate and ready for the preparation of financial statements. While verifying that all adjusting entries have been posted and that no adjusting entry has been omitted are also important aspects of the process, the primary purpose is to check the overall balance of accounts. The net income (loss) is calculated on the income statement and not on the adjusted trial balance.

Question 6

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a:
A) debit to Salary Expense of $8,000.
B) debit to Salary Payable of $8,000
C) credit to Salary Expense of $16,000
D) credit to Salary Payable of $16,000

Accepted Answer

The answer of A business pays bi-weekly salaries of $20,000...

Question 7

Two income statements for PS Enterprises are shown below: 
 Prepare a vertical analysis of PS Enterprises' income statements. Has operating income increased or decreased as a percentage of revenue?
A) Yes, increased by 5%
B) Yes, increased by 111%
C) No, decreased by 5%.
D) None are correct.

Accepted Answer

A vertical analysis involves expressing each item on the income statement as a percentage of total revenue, so that we can see what proportion of revenue each item represents. Looking at the two income statements provided, we can see that operating income has decreased as a percentage of revenue from 25% to 20%, a decrease of 5%. Therefore, the correct answer is C, "No, decreased by 5%." Options A, B, and D are incorrect.

Question 8

When is the adjusted trial balance prepared?
A) before adjusting journal entries are posted
B) after adjusting journal entries are posted
C) after the adjusting journal entries are journalized
D) before the adjusting journal entries are journalized

Accepted Answer

The adjusted trial balance is prepared after adjusting journal entries are posted to the unadjusted trial balance. This allows for an updated and accurate representation of the account balances, including any necessary adjustments made for accruals, deferrals, and other adjustments.

Question 9

At the end of the fiscal year, the usual adjusting entry to Prepaid Insurance to record expired insurance was omitted. Which of the following statements is true?
A) Total assets at the end of the year will be understated.
B) Stockholders' equity at the end of the year will be understated.
C) Net income for the year will be overstated.
D) Insurance Expense will be overstated.

Accepted Answer

The omission of the adjusting entry means that the insurance expense is not recorded, leading to an overstatement of net income.

Question 10

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is
A) $56,700
B) $58,000
C) $55,800
D) $54,500

Accepted Answer

The answer of The net income reported on the income...

Question 11

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?
A) Total assets will be understated at the end of the current year.
B) The balance sheet and income statement will be misstated, but the retained earnings statement will be correct for the current year.
C) Net income will be overstated for the current year.
D) Total liabilities and total assets will be understated.

Accepted Answer

Since depreciation expense was not recorded, net income will be overstated for the current year. This is because the expense was not recognized, leading to an overstatement of the current year's earnings. The other options are not correct because they do not accurately reflect the impact of the omitted adjusting entry.

Question 12

A one-year insurance policy was purchased on June 1, 2011 for $1,500. The adjusting entry on December 31, 2011 would be

Accepted Answer

The answer of A one-year insurance policy was purchased on...

Question 13

For the year ending December 31, Orion, Inc. mistakenly omitted adjusting entries for $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired. For the year ending December 31, what is the effect of these errors on revenues, expenses, and net income?
A) Revenues are overstated by $4,200.
B) Net income is overstated by $2,300.
C) Expenses are overstated by $6,500.
D) Expenses are understated by $3,500.

Accepted Answer

The answer of For the year ending December 31, Orion,...

Question 14

Explain the difference between accrual-basis accounting and cash-basis accounting.

Accepted Answer

The answer of Explain the difference between accrual-basis accounting and...

Question 15

At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true?
A) Salary expense for the year was understated.
B) The total of the liabilities at the end of the year was overstated.
C) Net income for the year was understated.
D) Stockholders' equity at the end of the year was understated.

Accepted Answer

When the adjusting entry for accrued salaries is omitted, salary expense is understated because the expense that should have been recorded is not reflected in the financial statements.

Question 16

All of the following statements regarding vertical analysis are true except
A) Vertical analysis may be prepared for several periods to analyze changes in relationships over time.
B) In a vertical analysis of a balance sheet, each asset item is stated as a percent of total assets.
C) In a vertical analysis of an income statement, each item is stated as a percent of total expenses.
D) Major differences between a company's vertical analysis and industry averages should be investigated.

Accepted Answer

In a vertical analysis of an income statement, each item is stated as a percent of total revenues or net sales, not total expenses.

Question 17

Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the unadjusted trial balance?
A) Fees Earned
B) Accounts Receivable
C) Unearned Fees
D) Depreciation Expense

Accepted Answer

Depreciation Expense is a non-cash expense that is usually recorded at the end of an accounting period, and therefore would not be included in the unadjusted trial balance. However, it would appear on the adjusted trial balance to properly reflect the company's expenses and assets. A, B, and C are all accounts that would appear on both the unadjusted and adjusted trial balances.

Question 18

Protonix Corp has a payroll of $8,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. The adjusting entry on December 31, 2015 assuming the year ends on Thursday would be:

Accepted Answer

The answer of Protonix Corp has a payroll of $8,000...

Question 19

At the end of the current year, $3,700 fees have been earned but have not been billed to clients. Journalize the adjusting entry to record the accrued fees.

Accepted Answer

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

Question 20

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.

Accepted Answer

The answer of Ski Master Company pays weekly salaries of...

Quiz 3: The Adjusting Process

The adjusting entry to adjust supplies was omitted at the end of the year. This would effect the income statement by having

Depreciation on Office Equipment is $3,300. The adjusting entry on December 31, 2011 would be

Which of the accounting steps in the accounting process below would be completed last?

What is the purpose of the adjusted trial balance?

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a:

Two income statements for PS Enterprises are shown below: Prepare a vertical analysis of PS Enterprises' income statements. Has operating income increased or decreased as a percentage of revenue?

When is the adjusted trial balance prepared?

At the end of the fiscal year, the usual adjusting entry to Prepaid Insurance to record expired insurance was omitted. Which of the following statements is true?

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?

A one-year insurance policy was purchased on June 1, 2011 for $1,500. The adjusting entry on December 31, 2011 would be

Explain the difference between accrual-basis accounting and cash-basis accounting.

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

All of the following statements regarding vertical analysis are true except

Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the unadjusted trial balance?

Protonix Corp has a payroll of $8,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. The adjusting entry on December 31, 2015 assuming the year ends on Thursday would be:

At the end of the current year, $3,700 fees have been earned but have not been billed to clients. Journalize the adjusting entry to record the accrued fees.

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.