Question 1

The unadjusted trial balance does not reflect adjusting entries.

Accepted Answer

The unadjusted trial balance only shows the balances of accounts before adjusting entries have been made, so it does not reflect the adjusting entries.

Question 2

A trial balance is a list of all accounts with their debit or credit balances indicated in the appropriate column to provide a check on the equality of the debits and credits.

Accepted Answer

A trial balance is a list of all accounts with their debit or credit balances indicated in the appropriate column to provide a check on the equality of the debits and credits.

Question 3

At the end of the accounting period,wages earned by employees but not yet recorded nor paid amounted to $400; therefore,the adjusting entry should be: Debit--Wages payable; Credit-- Wages expense.

Accepted Answer

The correct adjusting entry should be: Debit--Wages Expense; Credit--Wages Payable. This records the expense incurred during the period and acknowledges the liability (wages payable) that the company owes to its employees.

Question 4

To compute amortization expense using the straight-line formula,the cost of a depreciable asset (i.e.,equipment)must be reduced by any estimated residual or salvage value.

Accepted Answer

This statement is true. To compute amortization expense using the straight-line formula, the cost of a depreciable asset must be reduced by any estimated residual or salvage value. The residual or salvage value is the estimated value of the asset at the end of its useful life, and it represents the amount that the company expects to receive from selling or disposing of the asset. By subtracting this value from the cost of the asset, the company can determine the amount of depreciation or amortization expense that will be recorded each year over the asset's useful life.

Question 5

Deferred expenses are previously recorded liabilities that must be adjusted for the amount of expense incurred during the period.

Accepted Answer

Deferred expenses are previously recorded assets that represent prepayments for future expenses, not liabilities. They are adjusted as the expense is incurred over time.

Question 6

Amortization expense is an example of the need for accountants to make estimates in order to record adjustments.

Accepted Answer

Amortization expense is a non-cash expense that represents the gradual decrease in the value of an asset over time. In order to record this expense, accountants must estimate the useful lifespan and residual value of the asset, as well as choose an appropriate method of allocating the expense over time. These estimates may need to be adjusted periodically based on actual experience, market conditions, or changes in the company's operations.

Question 7

Adjusting entries are recorded in the journal (i.e.,journalized)but they are not posted to the ledger.

Accepted Answer

Adjusting entries are both journalized and posted to the ledger. This process ensures that the financial statements reflect the correct amounts.

Question 8

Service revenue earned but not yet collected by the end of the period was $200; therefore,the adjusting entry should be: Debit--Service revenue receivable,$200; Credit--Unearned service revenue,$200.

Accepted Answer

The adjusting entry should be Debit - Service revenue receivable, $200; Credit - Service revenue, $200. The entry in the question is incorrect as unearned service revenue does not apply in this scenario.

Question 9

Both the adjusting entries and the closing entries usually are dated as of the last day of the accounting period.

Accepted Answer

The adjusting entries and closing entries are both made as of the last day of the accounting period to ensure that the financial statements are accurate and up-to-date.

Question 10

Usually,adjusting entries are entered in the accounts at the end of the accounting period.

Accepted Answer

Adjusting entries are made at the end of the accounting period to record any transactions that occurred but were not yet recorded, as well as to update account balances for accruals and other adjustments.

Question 11

Adjusting entries are used to update income statement accounts and statement of financial position accounts.

Accepted Answer

Adjusting entries are used to ensure that the income statement accounts reflect the current period's income and expenses, and that the statement of financial position accounts reflect the current balances in assets, liabilities, and equity. Therefore, the statement is true.

Question 12

Expenses paid in advance of the use of services or goods give rise to an asset until the goods and services are used,consumed,or expired.

Accepted Answer

This statement is true. Expenses that are paid in advance create a prepaid expense asset until the services or goods paid for are used or consumed. Once the services or goods are used, the prepaid expense is then recognized as an expense on the income statement.

Question 13

Each adjusting entry affects at least one income statement account and at least one statement of financial position account.

Accepted Answer

This statement is true. Adjusting entries are made at the end of an accounting period to ensure that the accounts on the income statement and statement of financial position accurately reflect the financial position of the company. Therefore, each adjusting entry will impact at least one income statement account and at least one statement of financial position account.

Question 14

An adjusted trial balance is usually developed to show the balances in all of the accounts after the effects of the adjusting and closing entries.

Accepted Answer

The answer of An adjusted trial balance is usually developed...

Question 15

The primary purpose of a trial balance is to determine the equality of debits and credits in the ledger accounts (or T-accounts).

Accepted Answer

The primary purpose of a trial balance is to ensure that the total of debits equals the total of credits in the ledger accounts, which helps to identify any errors in the accounting records.

Question 16

On July 1,20A,Liz Company borrowed $5,000 cash and signed a one year note payable,interest 10 percent,payable on the maturity date,June 30,20B.The accounting period ends on December 31; therefore,the required adjusting entry on December 31,20A would be: Debit--Interest payable,$250; Credit--Interest expense,$250.

Accepted Answer

The answer of On July 1,20A,Liz Company borrowed $5,000 cash...

Question 17

During the accounting period,an expense paid in advance and debited to prepaid expense was $180; therefore,the adjusting entry for the expiration of this item should be to debit an expense account for $180 and credit a prepaid expense account for $180.

Accepted Answer

This is the correct adjusting entry for the expiration of a prepaid expense. The expense is debited and the prepaid expense account is credited for the same amount.

Question 18

An expense incurred,but not yet recorded nor paid,creates a liability until the payment is made.

Accepted Answer

An expense incurred but not yet recorded nor paid is known as an accrued expense or accrued liability. It creates a liability on the company's books until the payment is made to the creditor.

Question 19

Adjusting entries are necessary at the end of the accounting period to measure income properly and to provide appropriate amounts for financial statement accounts.

Accepted Answer

Adjusting entries are necessary to ensure that income and financial statement accounts are accurately recorded at the end of the accounting period. This helps ensure that financial statements provide an accurate reflection of a company's financial position and performance.

Question 20

Rent of $150 collected in advance was credited to rent revenue.At the end of the accounting period,it was still unearned.The related adjusting entry should be: Debit-- Rent revenue,$150; Credit--Unearned rent revenue,$150.

Accepted Answer

The adjusting entry correctly moves the $150 from earned revenue (where it was incorrectly recognized upon initial receipt) to a liability account (unearned rent revenue), reflecting that the service has not yet been provided.

Quiz 4: Adjustments,financial Statements,and the Quality of Earnings

The unadjusted trial balance does not reflect adjusting entries.

A trial balance is a list of all accounts with their debit or credit balances indicated in the appropriate column to provide a check on the equality of the debits and credits.

At the end of the accounting period,wages earned by employees but not yet recorded nor paid amounted to $400; therefore,the adjusting entry should be: Debit--Wages payable; Credit-- Wages expense.

To compute amortization expense using the straight-line formula,the cost of a depreciable asset (i.e.,equipment)must be reduced by any estimated residual or salvage value.

Deferred expenses are previously recorded liabilities that must be adjusted for the amount of expense incurred during the period.

Amortization expense is an example of the need for accountants to make estimates in order to record adjustments.

Adjusting entries are recorded in the journal (i.e.,journalized)but they are not posted to the ledger.

Service revenue earned but not yet collected by the end of the period was $200; therefore,the adjusting entry should be: Debit--Service revenue receivable,$200; Credit--Unearned service revenue,$200.

Both the adjusting entries and the closing entries usually are dated as of the last day of the accounting period.

Usually,adjusting entries are entered in the accounts at the end of the accounting period.

Adjusting entries are used to update income statement accounts and statement of financial position accounts.

Expenses paid in advance of the use of services or goods give rise to an asset until the goods and services are used,consumed,or expired.

Each adjusting entry affects at least one income statement account and at least one statement of financial position account.

An adjusted trial balance is usually developed to show the balances in all of the accounts after the effects of the adjusting and closing entries.

The primary purpose of a trial balance is to determine the equality of debits and credits in the ledger accounts (or T-accounts).

During the accounting period,an expense paid in advance and debited to prepaid expense was $180; therefore,the adjusting entry for the expiration of this item should be to debit an expense account for $180 and credit a prepaid expense account for $180.

An expense incurred,but not yet recorded nor paid,creates a liability until the payment is made.

Adjusting entries are necessary at the end of the accounting period to measure income properly and to provide appropriate amounts for financial statement accounts.

Rent of $150 collected in advance was credited to rent revenue.At the end of the accounting period,it was still unearned.The related adjusting entry should be: Debit-- Rent revenue,$150; Credit--Unearned rent revenue,$150.