Question 1

Doorglam paid $35,000 for office furniture.The furniture is depreciated using the straight-line method and has an estimated service life of 7 years and no residual value.After three years of use,the accumulated depreciation of the furniture will be:

Accepted Answer

$35,000 ÷ 7 = $5,000 per year × 3 years = $15,000

Question 2

At December 31,the NBC Company owes an employee for four days of work that will not be paid until January 5th.The weekly rate of pay for a five-day workweek is $500.The adjusting entry to record the accrued wages on December 31 will include a:

Accepted Answer

$500 ÷ 5 = $100 wage expense per day × 4 days = $400

Question 3

On October 1,McReady Company paid six months' insurance in advance totaling $3,600.The policy begins on October 1.An adjusted trial balance prepared on December 31 would include a balance in the Prepaid Insurance account of:

Accepted Answer

$3,600 ÷ 6 = $600 insurance expense per month
$600 × 3 months = $1,800 insurance expense
$3,600 - $1,800 = $1,800 left in Prepaid Insurance

Question 4

A company purchased supplies during the year totaling $21,000.At the end of the year,they made an adjusting entry to record $16,000 of supplies that had been used during the year.The ending balance in the Supplies account after the adjustment was $12,000.The beginning balance in the Supplies account was:

Accepted Answer

x + 21,000 - 16,000 = 12,000;x = 7,000

Question 5

On December 1,2019,Carrie's Day Care receives $4,200 in advance for an agreement to care for Susan's children for the months of December,January,and February.Carrie's Day Care will make an adjusting entry on December 31,2019 to:

Accepted Answer

$4,200 ÷ 3 = $1,400 revenue per month × 1 month = $1,400 revenue earned (and the entry would be debit Unearned Revenue for $1,400 and a credit to Service Revenue for $1,400).

Question 6

If adjusting entries are NOT prepared,which financial statements are misstated?

Accepted Answer

Adjusting entries are necessary to accurately record revenue and expenses in the appropriate accounting period, and to properly allocate expenses to the periods in which they were incurred. If adjusting entries are not prepared, then all financial statements will be misstated because they will not represent the correct financial position or results of operations of the company. This includes the income statement, balance sheet, and statement of retained earnings.

Question 7

In lieu of using the Trial Balance Worksheet to prepare the financial statements,an accountant can use the:

Accepted Answer

The ledger contains all the accounts and their balances, providing the necessary information to directly prepare the financial statements without the need for a Trial Balance Worksheet. The journal records transactions chronologically and does not provide the account balances necessary for financial statement preparation. Prior period financial statements and audit reports may be used for reference and comparison but do not provide the current balances required for financial statement preparation.

Question 8

A company purchased medical equipment for $130,000 on January 1,2018.The company determined that the yearly depreciation expense is $13,000.What will be the ending balance in the Accumulated Depreciation-Medical Equipment at December 31,2020?

Accepted Answer

$13,000 depreciation per year × 3 years = $39,000 accumulated depreciation

Question 9

The dollar amount for Accounts Receivable in the Adjusted Trial Balance Debit column of a Trial Balance Worksheet is obtained by taking the:

Accepted Answer

The dollar amount for Accounts Receivable in the Adjusted Trial Balance Debit column of a Trial Balance Worksheet takes into account any adjustments made to the account during the accounting period. Therefore, we need to add the Debit Adjustments column (which includes any increases to the account) to the Unadjusted Trial Balance Debit column and subtract any Credit Adjustments column (which includes any decreases to the account) from this sum. This gives us the dollar amount for Accounts Receivable in the Adjusted Trial Balance Debit column.

Question 10

The Trial Balance Worksheet does NOT have columns for:

Accepted Answer

The Trial Balance Worksheet includes columns for the unadjusted trial balance and the adjusted trial balance. It is used to ensure that the total debits equal the total credits after adjustments have been made. However, it does not include columns for closing journal entries since those are made after the adjusted trial balance has been prepared.

Question 11

A company started the year with $300 of supplies.During the year the company purchased additional supplies costing $1,300.There were $1,100 of supplies on hand at the end of the year.An adjusted trial balance,prepared at the end of the accounting period,will show the following balance in Supplies Expense:

Accepted Answer

$300 + $1,300 - $1,100 = $500

Question 12

A company has $800 in Prepaid Advertising before any adjustments.At the end of the year,an adjusting entry is made to debit Advertising Expense for $60.The ending balance in the Prepaid Advertising account will be:

Accepted Answer

$800 - $60 = $740

Question 13

Why are adjusting entries prepared?

Accepted Answer

Adjusting entries are prepared because some accounts are not up to date and the unadjusted trial balance is not quite ready for preparing the financial statements. Adjusting entries are made at the end of the accounting period to update accounts and match revenues and expenses with the period in which they were incurred.

Question 14

A Trial Balance Worksheet lists:

Accepted Answer

A Trial Balance Worksheet lists all ledger accounts, including balance sheet accounts and income statement accounts, as well as Retained Earnings at the beginning of the accounting period and dividends declared.

Question 15

Deere Company holds a $14,400 note receivable dated July 1,2019,with 10% interest.What adjusting entry is needed on December 31,2019?

Accepted Answer

$14,400 × 10% × 1/2 = $720

Question 16

A Trial Balance Worksheet can be used to prepare:

Accepted Answer

A Trial Balance Worksheet can be used to prepare all of the above (balance sheet, income statement, and statement of retained earnings). The Trial Balance Worksheet provides a summary of all accounts with their debit or credit balances, which is essential for preparing financial statements.

Question 17

If a Trial Balance Worksheet is prepared,which columns are used to prepare the financial statements?

Accepted Answer

The adjusted trial balance columns are used to prepare the financial statements because they include all necessary adjustments made after the unadjusted trial balance and before the financial statements are created. The unadjusted trial balance columns only list the account balances without adjustments, and the adjustments columns are used to record those adjustments but are not included in the final financial statements.

Question 18

The adjustments columns of the Trial Balance Worksheet summarize the:

Accepted Answer

The adjustments column of the Trial Balance Worksheet summarizes the adjusting journal entries made at the end of an accounting period to update accounts and prepare financial statements.

Question 19

A company started the year with $200 of supplies.During the year,the company purchased an additional $1,400 of supplies.There were $600 of supplies on hand at the end of the year.An adjusting entry prepared at the end of the accounting period includes a:

Accepted Answer

$200 + $1,400 - $600 = $1,000

Question 20

On August 1,2018,Brian Quinn received $8,400 for legal services to be performed evenly throughout the next twelve months,beginning August 1,2018.An adjusted trial balance prepared on December 31,2018 will show a credit balance in Unearned Revenue in the amount of:

Accepted Answer

$8,400 ÷ 12 = $700 revenue per month.$700 × 5 months earned = $3,500 earned
$8,400 - $3,500 = $4,900 unearned

Quiz 3: Accrual Accounting Income