Question 1

Data for an adjusting entry described as "accrued wages, $2,020" requires a
A) debit to Wages Expense and a credit to Wages Payable
B) debit to Wages Payable and a credit to Wages Expense
C) debit to Accounts Receivable and a credit to Wages Expense
D) debit to Dividends and a credit to Wages Payable

Accepted Answer

Accrued wages are wages earned by employees, but not yet paid by the company. This means that an expense has been incurred by the company, but the amount is not yet recorded as a liability. Therefore, the adjusting entry would require a debit to Wages Expense (to recognize the expense) and a credit to Wages Payable (to recognize the liability).

Question 2

A business pays biweekly salaries of $20,000 every other Friday for a 10-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 Salaries Payable of $8,000
C) credit to Salary Expense of $16,000
D) credit to Salaries Payable of $16,000

Accepted Answer

The answer of A business pays biweekly salaries of $20,000...

Question 3

Buster Industries pays weekly salaries of $30,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is
A) debit Salaries Payable, $12,000; credit Cash, $12,000
B) debit Salary Expense, $12,000; credit Dividends, $12,000
C) debit Salary Expense, $12,000; credit Salaries Payable, $12,000
D) debit Dividends, $12,000; credit Cash, $12,000

Accepted Answer

Since the weekly salaries are paid on Fridays, the adjusting entry is necessary as the fiscal period ends on Tuesday. This means that two days of salaries are still unpaid, and therefore should be accrued as a liability.

The adjusting entry to properly account for the accrued salaries is to debit the Salary Expense account for the unpaid salaries and credit the Salaries Payable account for the same amount.

Therefore, the correct answer is option C - debit Salary Expense, $12,000; credit Salaries Payable, $12,000.

Question 4

The entry to adjust the accounts for salaries accrued at the end of the accounting period is
A) debit Salaries Payable; credit Cash
B) debit Cash; credit Salaries Payable
C) debit Salaries Payable; credit Salaries Expense
D) debit Salaries Expense; credit Salaries Payable

Accepted Answer

Salaries accrued but not yet paid are recorded as a liability in the Salaries Payable account. To adjust the accounts for salaries accrued at the end of the accounting period, the Salaries Expense account is debited to recognize the expense for the period, and the Salaries Payable account is credited to increase the liability. Therefore, the correct entry is to debit Salaries Expense and credit Salaries Payable.

Question 5

Which of the following is an example of an accrued expense?
A) salary owed but not yet paid
B) fees received but not yet earned
C) supplies on hand
D) a two-year premium paid on a fire insurance policy

Accepted Answer

An accrued expense is an expense that has been incurred but not yet paid. Salary owed but not yet paid is an example of an accrued expense.

Question 6

The supplies account had a balance of $4,400 at the beginning of the year and was debited during the year for $2,400, representing the total of supplies purchased during the year. If $400 of supplies are on hand at the end of the year, the supplies expense to be reported on the income statement for the year is
A) $400
B) $2,000
C) $6,800
D) $6,400

Accepted Answer

The supplies expense is calculated as the beginning balance ($4,400) plus purchases ($2,400) minus the ending balance ($400), which equals $6,400.

Question 7

The account type and normal balance of Unearned Revenue would be
A) revenue, credit
B) expense, debit
C) liability, credit
D) asset, debit

Accepted Answer

Unearned Revenue is a liability because it represents money that has been received in advance for goods or services that have not yet been provided. The normal balance for a liability account is a credit balance.

Question 8

Gracie Company made a prepaid rent payment of $2,800 on January 1. The company's monthly rent is $700. The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is
A) $2,100
B) $700
C) $2,800
D) $1,400

Accepted Answer

Gracie Company paid $2,800 for rent on January 1, covering 4 months ($700 per month). By January 31, one month's rent ($700) has been used, leaving $2,100 ($2,800 - $700) as the prepaid rent on the balance sheet.

Question 9

The balance in the office supplies account on January 1 was $7,000, supplies purchased during January were $3,000, and the supplies on hand on January 31 were $2,000. The amount to be used for the appropriate adjusting entry is
A) $4,300
B) $12,000
C) $5,000
D) $8,000

Accepted Answer

The answer of The balance in the office supplies account...

Question 10

A business pays biweekly salaries of $20,000 every other Friday for a 10-day period ending on that day. The last payday of December is Friday, December 27. Assume 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 Salaries Payable of $16,000
D) credit to Salaries Payable of $4,000

Accepted Answer

The payroll covers a 10-day period, and the fiscal period ends on December 31. Therefore, 8 days of salary expense ($16,000) should be recorded as an expense for the current period, and the remaining 2 days ($4,000) will be recorded in the next period. The entry on January 10 will include a debit to Salary Expense for the 8 days ($16,000) incurred in the current period.

Question 11

Fees payable would appear on the balance sheet as a (n)
A) asset
B) liability
C) fixed asset
D) unearned revenue

Accepted Answer

Fees payable are considered a liability because they represent an obligation to pay for services or goods received.

Question 12

The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is
A) debit Rent Expense, $8,000; credit Prepaid Rent, $8,000
B) debit Prepaid Rent, $24,000; credit Rent Expense, $8,000
C) debit Rent Expense, $24,000; credit Prepaid Rent, $8,000
D) debit Prepaid Rent, $8,000; credit Rent Expense, $8,000

Accepted Answer

Since the $32,000 covers four months and only one month has passed by December 31, $8,000 (1/4 of $32,000) of the prepaid rent has been used. The adjusting entry should recognize this expense by debiting Rent Expense and crediting Prepaid Rent for $8,000.

Question 13

The type of account and normal balance of Prepaid Insurance would be
A) asset, credit
B) asset, debit
C) contra asset, credit
D) contra asset, debit

Accepted Answer

Prepaid Insurance is an asset account, which represents the amount paid for insurance coverage that has not yet been used or expired. The normal balance of an asset account is a debit balance, as it represents something that the business owns or has paid for. Therefore, the correct answer is option B, asset and debit.

Question 14

Accrued expenses affect ________ on the balance sheet.
A) assets
B) liabilities
C) fixed assets
D) prepaid expenses

Accepted Answer

Accrued expenses are expenses that have been incurred but not yet paid. They are considered liabilities because they represent an obligation to pay in the future. Therefore, they affect liabilities on the balance sheet.

Question 15

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is
A) debit Insurance Expense, $1,800; credit Prepaid Insurance, $1,800
B) debit Insurance Expense, $1,500; credit Prepaid Insurance, $1,500
C) debit Insurance Expense, $2,100; credit Prepaid Insurance, $2,100
D) debit Prepaid Insurance, $1,800; credit Cash, $1,800

Accepted Answer

Since Smokey Company purchases a one-year insurance policy on July 1, only half of the policy period would have elapsed by December 31. Therefore, the amount of insurance actually used during the six months ending December 31 is only $1,800 ($3,600/2). The adjusting entry to record this would involve debiting Insurance Expense (to recognize the cost of the insurance for the period) and crediting Prepaid Insurance (to reduce the amount of the asset to its ending balance, which represents the insurance cost that has not yet been used). Therefore, choice A is the best answer.

Question 16

Accrued revenues would affect _______ on the balance sheet.
A) assets
B) liabilities
C) owner's capital
D) prepaid expenses

Accepted Answer

Accrued revenues are revenues that have been earned but not yet received, so they increase the company's assets (specifically accounts receivable) on the balance sheet.

Question 17

The following adjusting journal entry found in the journal is missing an explanation. Select the best explanation for the entry. 
A) Record payment of wages.
B) Record wages paid last month.
C) Record wages paid in advance.
D) Record wages expense incurred and to be paid next month.

Accepted Answer

The entry is recording wages expense that has been incurred but not yet paid, indicating that it is an accrual of expense. The wording "to be paid next month" suggests that this is an adjusting entry to ensure that the correct amount of expenses are included in the correct accounting period.

Question 18

The type of account and normal balance of Unearned Consulting Fees would be
A) revenue, credit
B) expense, debit
C) liability, credit
D) liability, debit

Accepted Answer

Unearned Consulting Fees is a liability account because the company has received money from customers in advance for services that have not yet been provided. As a result, the normal balance for this type of account is credit. Therefore, option C is the correct answer.

Question 19

Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $14,000 and unexpired insurance of $3,000, for the fiscal year ending on April 30?
A) debit Insurance Expense, $3,000; credit Prepaid Insurance, $3,000
B) debit Insurance Expense, $14,000; credit Prepaid Insurance, $14,000
C) debit Prepaid Insurance, $11,000; credit Insurance Expense, $11,000
D) debit Insurance Expense, $11,000; credit Prepaid Insurance, $11,000

Accepted Answer

The adjusting entry for prepaid insurance is to debit Insurance Expense and credit Prepaid Insurance for the amount of insurance that has been used up or expired during the period. In this case, the unexpired insurance is $3,000, so the amount of insurance that has been used up or expired is $14,000 - $3,000 = $11,000. Therefore, the proper adjusting entry is to debit Insurance Expense for $11,000 and credit Prepaid Insurance for $11,000. Choice D is the correct answer.

Question 20

The entry to adjust for the cost of supplies used during the accounting period is
A) debit Supplies Expense; credit Supplies
B) debit Owner's Equity; credit Supplies
C) debit Accounts Payable; credit Supplies
D) debit Supplies; credit Owner's Equity

Accepted Answer

The cost of supplies used during the accounting period should be recognized as an expense on the income statement. Therefore, Supplies Expense should be debited. The supplies themselves should be credited to reduce the asset on the balance sheet. The correct journal entry is: debit Supplies Expense; credit Supplies.

Quiz 3: The Adjusting Process

Data for an adjusting entry described as "accrued wages, $2,020" requires a

A business pays biweekly salaries of $20,000 every other Friday for a 10-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

Buster Industries pays weekly salaries of $30,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

The entry to adjust the accounts for salaries accrued at the end of the accounting period is

Which of the following is an example of an accrued expense?

The account type and normal balance of Unearned Revenue would be

Gracie Company made a prepaid rent payment of $2,800 on January 1. The company's monthly rent is $700. The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is

The balance in the office supplies account on January 1 was $7,000, supplies purchased during January were $3,000, and the supplies on hand on January 31 were $2,000. The amount to be used for the appropriate adjusting entry is

Fees payable would appear on the balance sheet as a (n)

The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is

The type of account and normal balance of Prepaid Insurance would be

Accrued expenses affect ________ on the balance sheet.

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

Accrued revenues would affect _______ on the balance sheet.

The following adjusting journal entry found in the journal is missing an explanation. Select the best explanation for the entry.

The type of account and normal balance of Unearned Consulting Fees would be

Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $14,000 and unexpired insurance of $3,000, for the fiscal year ending on April 30?

The entry to adjust for the cost of supplies used during the accounting period is