Question 1

If Salaries payable were recorded on December 31,and these salaries were paid on the following January 5,the entry on January 5 would be:

Accepted Answer

The entry on January 5 would be a debit to Salaries Payable to decrease the liability and a credit to Cash to reflect the payment.

Question 2

A company started the year with $1,500 of supplies on hand.During the year the company purchased additional supplies of $800 and recorded them as increase to the supplies asset.At the end of the year the company determined that only $300 of supplies are still on hand.What is the adjusting journal entry to be made at the end of the period?

Accepted Answer

The answer of A company started the year with $1,500...

Question 3

Which of the following would have an unfavorable effect on net income?

Accepted Answer

Omitting an adjusting entry to accrue revenue means that revenue that should have been recorded in the current period will not be recognized, leading to a decrease in net income. The other options would all have a favorable effect on net income, as they would result in lower expenses being recognized and a higher net income.

Question 4

Which of the following will happen if the accrual adjusting entry is not made for revenue earned but not yet recorded?

Accepted Answer

The answer of Which of the following will happen if...

Question 5

What is the amount to be reported on the balance sheet as Prepaid Insurance at December 31,2014?

Accepted Answer

The answer of What is the amount to be reported...

Question 6

Which of the following is not a true statement?

Accepted Answer

Retained earnings are closed with a credit, not a debit. When the income statement accounts are closed at the end of an accounting period, their balances are transferred to retained earnings, which is a part of the equity section on the balance sheet. Since retained earnings have a normal credit balance, they are closed with a credit entry.

Question 7

A company originally recorded Prepaid Rent.As of the end of the accounting year,part of this is no longer prepaid.If no adjustment is made to record this expiration,which of the following will occur?

Accepted Answer

If no adjustment is made, the prepaid rent that has expired will still be recorded as an asset, overstating assets. Additionally, the expense for the rent that has been used will not be recorded, understating expenses.

Question 8

A company had calculated net income to be $77,550 based on the unadjusted trial balance.The following adjusting entries were then made: Salaries payable of $790 was recorded;Interest earned but not received from investments $750;Prepaid insurance decreased by $550 for insurance used up during the period;$750 of Unearned revenue has now been earned.After recording these adjustments,net income would be:

Accepted Answer

Net income increases by the amount of accrued salaries payable and interest earned but not received, and decreases by the amount of insurance used up and unearned revenue earned.$77,550 + $790 + $750 - $550 - $750 = $77,710

Question 9

A company pays its workforce on Fridays for a five day workweek.The payroll for a week is $100,000.If the accounting year-end falls on a Tuesday,the adjusting journal entry to record this will include a

Accepted Answer

The company needs to record the salaries expense for the two days (Monday and Tuesday) that have been incurred but not yet paid by the year-end. This amounts to 2/5 of the weekly payroll, which is $40,000.

Question 10

Which of the following will happen if the accrual adjustment entry is not made to record expenses incurred but not yet recorded?

Accepted Answer

If the accrual adjustment entry is not made, expenses incurred but not recorded will not be reflected in the financial statements, leading to understated expenses and liabilities.

Question 11

What is the total of the credit column of the adjusted trial balance?

Accepted Answer

The answer of What is the total of the credit...

Question 12

A company reported the following amounts of wages payable at the beginning and the end of the year 2013:  The income statement for 2013 reported Wages Expense of $56,200. How much cash was paid for wages during 2013?

Accepted Answer

The answer of A company reported the following amounts of...

Question 13

The December 31,2013,adjusted trial balance of a company,where all accounts have normal balances is:  Given this information,after all closing entries are made,the balance in the retained earnings account is:

Accepted Answer

The answer of The December 31,2013,adjusted trial balance of a...

Question 14

The asset account Office Supplies has a balance of $800 at the beginning of the year.The amount on hand at the end of the year is $500.The company has calculated the Office Supplies Expense for the year to be $3,500.Based on this information,what amount of office supplies was purchased during the year?

Accepted Answer

The amount of office supplies purchased during the year can be calculated using the formula:
Beginning Balance + Purchases - Ending Balance = Expense
$800 + Purchases - $500 = $3,500
Solving for Purchases, we get:
Purchases = $3,500 + $500 - $800 = $3,200
Therefore, the answer is C.

Question 15

What is the amount of insurance expense that would be reported on the income statement for the year ended December 31,2014?

Accepted Answer

The answer of What is the amount of insurance expense...

Question 16

On December 31,2013,the balance in retained earnings is $20,000.On December 31,2014,the balance in retained earnings is $19,100.During 2014,dividends of $4,000 were declared and paid.What is the amount of net income for 2014?

Accepted Answer

Net income can be calculated using the formula: Net Income = Beginning Retained Earnings + Net Income - Dividends. Plugging in the given values, we get: $20,000 + Net Income - $4,000 = $19,100. Solving for Net Income, we get: Net Income = $3,100. Therefore, the best choice is B.

Question 17

On June,30,2013,a company purchased a two-year insurance policy for $18,000,paying cash and debiting Prepaid Insurance for the entire two-year premium amount.The adjusting entry on December 31,2013 includes a

Accepted Answer

The insurance policy covers two years, so the monthly expense is $750 ($18,000/24 months). By December 31, 2013, six months have passed, so the expense is $4,500 (6 months x $750). The adjusting entry should credit Prepaid Insurance by $4,500 to reflect the expense incurred.

Question 18

What is the amount of net income (net loss)for the year?

Accepted Answer

The answer of What is the amount of net income...

Question 19

On December 31,2013,interest of $500 is owed on a bank loan that will not be paid until June 30,2014.What is the necessary adjusting journal entry on December 31,2013?

Accepted Answer

The answer of On December 31,2013,interest of $500 is owed...

Question 20

Which of the following statements is true?

Accepted Answer

Retained earnings is a permanent account because it represents the accumulated profits and losses of a company over time. Income statement accounts, on the other hand, are temporary accounts because they track the revenues, expenses, gains, and losses of a company for a specific time period, usually a year. As such, their balances are closed out at the end of each accounting period and transferred to retained earnings, which is a permanent account.

Quiz 4: Adjustments, Financial Statements, and Financial Results