Question 1

The accountant of Omega Consulting failed to make an adjusting entry to record $6,000 for unearned service revenues that were earned before the end of the fiscal year.Assume the company initially recorded a liability.Which of the following statements is true?

Accepted Answer

The failure to adjust the unearned service revenue means that the liability remains on the books, even though the revenue has been earned. This results in an overstatement of liabilities.

Question 2

Ursula Tax Planning Service has the following plant assets: Communications equipment: Cost,$6,960 with useful life of eight years;Furniture: Cost,$19,200 with useful life of 12 years;and Computer: Cost,$14,000 with useful life of four years.(Assume residual value of all the assets is zero. )Ursula's monthly depreciation expense calculated using the straight-line method is ________.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Accepted Answer

D)Straight-line depreciation = (Cost - Residual value)/ Useful life
Straight-line depreciation for:
Communications 11ea8a42_4f1f_f3f9_8b44_afc91ddbf8e5_TB5024_00 11ea8a42_4f1f_f3fa_8b44_29a7f6414463_TB5024_00 11ea8a42_4f20_1b0b_8b44_1399f0bae045_TB5024_00 11ea8a42_4f20_1b0c_8b44_03e2d3e103e7_TB5024_00

Question 3

If a company fails to make an adjusting entry for deferred expense,the assets will be overstated.Assume the deferred expense is initially recorded as an asset.

Accepted Answer

If a company fails to make an adjusting entry for a deferred expense that was initially recorded as an asset, the asset will be overstated because the expense was not recognized as an expense in the appropriate period. This can lead to inaccurate financial statements and misrepresentation of the company's financial position.

Question 4

Ariel Tax Planning Service has the following plant assets: Communications equipment: Cost,$9,600 with useful life of 8 years;Furniture: Cost,$17,712 with useful life of 12 years;and Computer: Cost,$14,400 with useful life of 4 years.Assume the residual value of all the assets is zero and the straight-line method is used.
Ariel's monthly depreciation journal entry will include a ________.

Accepted Answer

D)Straight-line depreciation = (Cost - Residual value)/ Useful life
Straight-line depreciation for: 11ea8a42_4f20_1b0d_8b44_676ec92f8f6b_TB5024_00 11ea8a42_4f20_1b0e_8b44_3fbbf2368ebe_TB5024_00 11ea8a42_4f20_421f_8b44_c77e0837438f_TB5024_00 11ea8a42_4f20_4220_8b44_a73ef0721ab2_TB5024_00

Question 5

Bryan Consultants had the following balances before preparing adjusting entries in the books on December 31,2017.

Prepare the adjusted trial balance after considering these adjustments:
a.Office Supplies used,$800.Assume the office supplies were initially recorded as an asset.
b.Accrued salaries on December 31,$600.
c.Revenue earned but not recorded,$200.

Accepted Answer

The answer of Bryan Consultants had the following balances before...

Question 6

On July 1,Omega Company paid rent of $15,000 for a small equipment storage area from July 1 until December 31.Provide the adjusting journal entry on July 31.(Ignore explanation. )Assume the deferred expense is initially recorded as an asset.

Accepted Answer

The answer of On July 1,Omega Company paid rent of...

Question 7

All of the accounts and the account balances of a company appear on the ________.

Accepted Answer

The adjusted trial balance includes all accounts and their balances after adjustments have been made, serving as a basis for preparing financial statements.

Question 8

Deborah Consultants had the following accounts and account balances after adjusting entries.Assume all accounts have normal balances.Calculate the amount of service revenue and prepare the adjusted trial balance for Deborah Consultants as of December 31,2017.

Accepted Answer

The answer of Deborah Consultants had the following accounts and...

Question 9

If a company fails to make an adjusting entry for accrued revenues,the net income will be overstated.

Accepted Answer

If a company fails to make an adjusting entry for accrued revenues, the net income will be understated.

Question 10

An adjusted trial balance does not list the revenues and expenses of a business.

Accepted Answer

An adjusted trial balance does list the revenues and expenses of a business, but it reflects adjustments made to these accounts at the end of an accounting period.

Question 11

Downs Tax Planning Service bought communications equipment for $9,600 on January 1,2017.It has an estimated useful life of five years and zero residual value.Downs uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month.As of June 30,2017,the balance in the Accumulated Depreciation account for this equipment is ________.

Accepted Answer

D)Straight-line depreciation = (Cost - Residual value)/ Useful life
Straight-line depreciation = ($9,600 - 0)/ 5 years = $1,920 per year 11ea8a42_4f1f_cce5_8b44_a907d5d85e80_TB5024_00 11ea8a42_4f1f_cce6_8b44_05b41d7879f9_TB5024_00

Question 12

On July 1,Alpha Company prepaid rent for a small equipment storage area.Alpha paid $20,000 to rent the area from July 1 through the end of the year.Provide the journal entry needed on July 1 when the payment is made.(Ignore explanation. )Assume the deferred expense is initially recorded as an asset.

Accepted Answer

The answer of On July 1,Alpha Company prepaid rent for...

Question 13

Viva Company bought machine X for $18,000 two years ago.The machine had no residual value and had an estimated useful life of 10 years.If the company uses the straight-line depreciation method,calculate the current book value of the machine.

Accepted Answer

A)
Book value of machine X
 11ea8a42_4f20_4221_8b44_17132202bef9_TB5024_00

Question 14

DeLito Tax Planning Service bought production equipment for $11,400 on January 1,2017.It has an estimated useful life of five years and zero residual value.DeLito uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month.As of June 30,2017,the book value of this equipment shown on its balance sheet will be ________.

Accepted Answer

A)Straight-line depreciation = (Cost - Residual value)/ Useful life
Straight-line depreciation = ($11,400 - 0)/ 5 years = $2,280 per year 11ea8a42_4f1f_f3f7_8b44_3fd149d4ede2_TB5024_00 11ea8a42_4f1f_f3f8_8b44_49ce03685f38_TB5024_00 Book value of equipment = $11,400 - $1,140 = $10,260

Question 15

Financial statements are prepared from the balances in a(n)________.

Accepted Answer

Financial statements are prepared from the adjusted trial balance since it shows the correct account balances after adjusting entries have been made at the end of an accounting period. This allows for accurate financial statements to be prepared.

Question 16

Hank's Tax Planning Service started business in January 2016.The company rented an office for $1,800 per month starting from January 1,2016.On that day,Hank prepaid the rent through June 30.The company makes adjusting entries at the end of each month.What is the balance in the Prepaid Rent account as of April 30,2016?

Accepted Answer

A) 11ea8a42_4f1f_a5d2_8b44_716b8434ad7b_TB5024_00

Question 17

The accountant for Jones Auto Repair failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year.Which of the following is an effect of this omission?

Accepted Answer

The omission of recording unpaid salaries means expenses are understated, leading to an overstatement of net income.

Question 18

The adjusted trial balance shows ________.

Accepted Answer

The adjusted trial balance shows account balances after adjustments have been made at the end of an accounting period. This includes all types of accounts, including balance sheet accounts and revenue and expense accounts.

Question 19

Russin Tax Planning Service bought computer equipment for $24,000 on January 1,2016.It has an estimated useful life of four years and zero residual value.Russin uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month.Calculate the amount of Depreciation Expense for the period,January 1,2016 through September 30,2016,for this equipment.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Accepted Answer

B)Straight-line depreciation = (Cost - Residual value)/ Useful life
Straight-line depreciation = ($24,000 - 0)/ 4 years = $6,000 per year 11ea8a42_4f1f_a5d3_8b44_7f865bb38ba9_TB5024_00 Depreciation Expense from January to 11ea8a42_4f1f_a5d4_8b44_a3fd508d7e81_TB5024_00

Question 20

On April 1,Balsa Company purchased office supplies for $1,500.At the end of April,they took a count of the remaining supplies and found that there was $500 of supplies left.Provide the adjusting entry needed at the end of April.(Ignore explanation. )Assume the office supplies were initially recorded as an asset.Assume there were no office supplies on hand prior to the purchase on April 1.

Accepted Answer

The answer of On April 1,Balsa Company purchased office supplies...

Quiz 3: The Adjusting Process