Question 1

Carnegie Jewelers accepted a 9-month,9% note for $100,000 from a customer on July 1,2013.The note is due on March 31,2014.Assuming the company's accounting period ends on December 31,2013,how much interest revenue should be recognized during 2013 and 2014? 2013 2014

Accepted Answer

To calculate the interest revenue for 2013, we need to determine the period from July 1, 2013, to December 31, 2013, which is 6 months. Therefore, the interest revenue earned in 2013 is:
$100,000 x 9% x 6/12 = $4,500

To calculate the interest revenue for 2014, we need to determine the period from January 1, 2014, to March 31, 2014, which is 3 months. Therefore, the interest revenue earned in 2014 is:
$100,000 x 9% x 3/12 = $2,250

Therefore, the total interest revenue recognized in 2013 and 2014 is $4,500 + $2,250 = $6,750, which is represented by choice B.

Question 2

A sporting goods chain purchased supplies at a cost of $11,000 during the year.At January 1,the beginning balance in the supplies account was $3,000.At December 31,supplies on hand are $800.Determine supplies expense for the year.

Accepted Answer

The supplies expense for the year is calculated by adding the beginning balance of supplies to the purchases made during the year and then subtracting the ending balance of supplies. This gives: $3,000 (beginning balance) + $11,000 (purchases) - $800 (ending balance) = $13,200.

Question 3

Cozy Corporation purchased supplies at a cost of $15,000 during 2013.At January 1,2013,supplies on hand were $5,000.At December 31,2013,supplies on hand are $2,000.Calculate supplies expense for 2013.

Accepted Answer

The answer of Cozy Corporation purchased supplies at a cost...

Question 4

Carolina Truck Lines purchased a truck at a cost of $22,000 in 2008.As of January 1,2013,depreciation of $18,000 had been recorded on this asset.Depreciation expense for 2013 is $2,000.Before the adjustments are recorded and posted at December 31,2013,what is the truck's book value?

Accepted Answer

The book value of an asset is its cost minus accumulated depreciation.

Cost of truck = $22,000

Accumulated depreciation as of January 1, 2013 = $18,000

Depreciation expense for 2013 = $2,000

Accumulated depreciation as of December 31, 2013 = $18,000 + $2,000 = $20,000

Book value as of December 31, 2013 = Cost - Accumulated depreciation = $22,000 - $20,000 = $2,000

Therefore, the correct answer is C) $4,000.

Question 5

Which one of the following is an example of an accrued liability?

Accepted Answer

An accrued liability is a liability that has been incurred but not yet paid. Rent that has been incurred but has not been paid by the end of the accounting period is an example of an accrued liability. The other options are not examples of accrued liabilities - B is an example of a long-term asset, C is an example of a prepaid expense, and D is an example of an expense incurred over multiple periods.

Question 6

Adjusting journal entries are made at the end of the period when

Accepted Answer

Adjusting journal entries are made at the end of the accounting period to ensure that revenues and expenses are recorded in the correct period according to the accrual basis of accounting. They are necessary when cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized. The other choices do not accurately describe when adjusting journal entries are made.

Question 7

What happens to the accounting equation when the adjustment is recorded to recognize earned revenue previously recorded as unearned revenue?

Accepted Answer

When earned revenue is recognized, the liability for unearned revenue decreases and the revenue account in stockholders' equity increases, resulting in a decrease in liabilities and an increase in stockholders' equity. There is no effect on assets.

Question 8

Carithers Cleaning Service received advance payments from customers during 2013 of $24,000.At December 31,2013,$5,000 of the advance payments still had not been earned.After the adjustments are recorded and posted at December 31,2013,the balances in the Unearned Service Revenue and Service Revenue accounts will be:

Accepted Answer

The $24,000 advance payment is initially recorded as Unearned Service Revenue, but at the end of the year, $5,000 of that payment has not yet been earned. This means that $19,000 has been earned and should be recorded as Service Revenue. Therefore, the balances in the Unearned Service Revenue and Service Revenue accounts will be $5,000 and $19,000, respectively.

Question 9

A law firm purchased supplies at a cost of $20,000 during 2013.At January 1,2013,the beginning balance in the supplies account was $1,300.For 2013,supplies expense was $11,200.How much "Supplies" are on hand as of December 31,2013?

Accepted Answer

The answer of A law firm purchased supplies at a...

Question 10

Carver Memorial Gardens purchased supplies for $14,500 during the year.At January 1,supplies on hand were $1,000.At December 31,supplies on hand are $3,500.Determine the amount of supplies expense for the year.

Accepted Answer

The supplies expense for the year is calculated by adding the purchases to the beginning inventory, then subtracting the ending inventory: $14,500 + $1,000 - $3,500 = $12,000.

Question 11

A company forgot to record four adjustments during 2013.Which one of the following omissions of adjustments will understate assets?

Accepted Answer

The answer of A company forgot to record four adjustments...

Question 12

A particular company had $2,400 of supplies on hand at January 1.During the year,supplies with a cost of $4,000 were purchased.At December 31,the actual supplies on hand amounted to $2,000.After the adjustments are recorded and posted at December 31,what are the ending balances in the Supplies and Supplies Expense accounts?

Accepted Answer

The cost of supplies purchased during the year ($4,000) needs to be added to the beginning balance of supplies on hand ($2,400) to get the total cost of supplies available for use during the year ($6,400). Then, the actual supplies on hand at the end of the year ($2,000) need to be subtracted from this total to get the amount of supplies used during the year ($4,400). This amount is recorded as Supplies Expense. 
Supplies: Beginning balance $2,400 + Purchases $4,000 - Ending balance $2,000 = $4,400 
Supplies Expense: $4,400.

Question 13

Match Incorporated recorded salary expense of $120,000 in 2013.However,additional salaries of $9,000 had been earned,but not paid or recorded at December 31,2013.After the adjustments are recorded and posted at December 31,2013,the balances in the Salaries Expense and Salaries Payable accounts will be

Accepted Answer

The answer of Match Incorporated recorded salary expense of $120,000...

Question 14

A company forgot to record four adjustments during 2013.Which one of the following omissions of adjustments will understate net income?

Accepted Answer

The answer of A company forgot to record four adjustments...

Question 15

On October 1,2013,a company paid $9,000 rent in advance.The rent per month is $1,000.Assuming the company's accounting period ends on December 31,2013,what will be reported on the financial statements?

Accepted Answer

Since the company paid $9,000 rent in advance for 9 months (October 2013 to June 2014), they have prepaid $1,000 for each of those months. As of December 31, 2013, three months have passed, so they have only used up $3,000 worth of rent. The remaining $6,000 of prepaid rent will be reported as an asset (Prepaid Rent) on the company's balance sheet at December 31, 2013. Therefore, the correct choice is A.

Question 16

Cash Express had no supplies on January 1 but purchased $2,581 in supplies during the year.At December 31,supplies on hand are $1,492.What amount for supplies will be reported on the firm's balance sheet?

Accepted Answer

The amount for supplies reported on the firm's balance sheet will be the supplies on hand at the end of the year, which is $1,492.

Question 17

Carlock Systems received a 6-month,12% note for $50,000 from a customer on November 1,2013.The note is due on April 30,2014.Assuming the company's accounting period ends on December 31,how much interest revenue should be recognized during 2013 and 2014?

Accepted Answer

The answer of Carlock Systems received a 6-month,12% note for...

Question 18

What happens to the accounting equation when the adjustment for depreciation expense for the accounting period is recorded?

Accepted Answer

The adjustment for depreciation expense reduces the value of the asset (by debiting depreciation expense and crediting accumulated depreciation), resulting in a decrease in the total assets. This decrease in assets leads to a decrease in stockholders' equity (which is a residual claim to the assets). Therefore, the accounting equation is affected in a way that assets decrease and stockholders' equity decreases.

Question 19

Which one of the following adjustments will increase assets?

Accepted Answer

Recording rent revenue for amounts owed by a tenant but not yet paid will increase assets. This is because it increases the amount of money owed to the company, which is an asset. The other options, such as accruing interest, recording the use of supplies, and recording depreciation, do not directly increase assets but either increase liabilities, decrease assets, or decrease equity.

Question 20

An insurance company received advance payments from clients during 2013 of $12,000.At December 31,2013,$10,000 of the advance payments still had not been earned.After the adjustments are recorded and posted at December 31,2013,what will the balances be in the Unearned Insurance Revenue and Insurance Revenue accounts?

Accepted Answer

The answer of An insurance company received advance payments from...

Quiz 3: Accrual Accounting