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A company lends $30,000 with 10% interest on May 1, 2012. This amount plus interest is due on April 30, 2013. Record the adjusting entry on December 31, 2012.

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Interest Revenueblured image2,00...

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Consider the following items: Land Accounts Receivable Notes Payable (due in three years) Accounts Payable Retained Earnings Prepaid Rent Unearned Revenue Buildings Notes Payable (due in six months) Equipment How many of the items listed above are generally long-term assets?


A) Two.
B) Three.
C) Four.
D) Five.

E) B) and C)
F) C) and D)

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A list of all accounts and their balances after posting closing entries is referred to as:


A) A trial balance.
B) An adjusted trial balance.
C) A post-closing trial balance.
D) An accounting trial balance.

E) All of the above
F) B) and C)

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The matching principle is the principle that states:


A) All costs that are used to generate revenue are recorded in the period the revenue is recognized.
B) All transactions are recorded at the exchange price.
C) The business is separate from its owners.
D) The business will continue to operate indefinitely unless there is evidence to the contrary.

E) C) and D)
F) None of the above

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A post-closing trial balance:


A) Is a list of all accounts and their balances after adjusting entries.
B) Is a list of all accounts and their balances before adjusting entries.
C) Is a list of all accounts and their balances after closing entries.
D) Is a trial balance adjusted for cash-basis accounting.

E) B) and D)
F) B) and C)

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Pawn Shops Unlimited recorded the following four transactions during April. Which of these transactions would have the same income statement impact in April regardless of whether the company used accrual-basis or cash-basis accounting?


A) Purchased $500 of office supplies on account (supplies were used in May and paid for in May) .
B) Paid $1,800 for a six-month insurance policy covering the period July 1-December 31.
C) Paid $700 for an advertisement that appeared in the May 17 edition of the Las Vegas Sun newspaper.
D) Received $300 from customers for services performed in March.

E) None of the above
F) A) and B)

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A classified balance sheet separates assets into current and long-term, and separates liabilities into current and long-term.

A) True
B) False

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On July 1, 2012, Charlie Co. paid $18,000 to Rent-An-Office for rent covering 18 months from July 2012 through December 2013. What adjusting entry should Charlie Co. record on December 31, 2012?


A)  Rent Expense 18,000 Cash 18,000\begin{array}{cc}\text { Rent Expense } & 18,000 \\\text { Cash } & 18,000\end{array}
B)  Rent Expense 18,000 Prepaid Rent 18,000\begin{array}{l}\begin{array} { l l } \text { Rent Expense } & 18,000\end{array}\\\begin{array} { l l } \text { Prepaid Rent } & 18,000\end{array}\end{array}
C)  Prepaid Rent 6,000 Rent Expense 6,000\begin{array} { c c } \text { Prepaid Rent } & { 6,000 } \\\text { Rent Expense } & 6,000\end{array}
D) Rent Expense \quad 6,000
Prepaid Rent \quad 6,000

E) A) and B)
F) A) and C)

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The adjusting entry required to record accrued expenses includes:


A) A credit to Cash.
B) A debit to an asset.
C) A credit to an asset.
D) A credit to liability.

E) B) and D)
F) All of the above

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Which transaction would not be recorded under cash-basis accounting?


A) Providing services to customers for cash.
B) Purchasing one year of rent in advance.
C) Paying salaries to employees.
D) Purchasing supplies on account.

E) A) and B)
F) C) and D)

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Accrual-basis accounting involves recording revenues when earned and recording expenses with their related revenues.

A) True
B) False

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The adjusting entry for an accrued expense always includes a debit to an expense account and a credit to a liability account.

A) True
B) False

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Which of the following accounts is(are) listed in a post-closing trial balance?


A) Prepaid Rent.
B) Accounts Payable.
C) Salaries Expense.
D) Two of these three accounts would be included in a post-closing trial balance.

E) A) and B)
F) A) and C)

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The following table contains financial information for Trumpeter Inc. before closing entries:  Cash $12,000 Supplies 4,500 Prepaid Rent 2,000 Salaries Expense 4,500 Equipment 65,000 Service Revenue 30,000 Miscellaneous Expenses 20,000 Dividends 3,000 Accounts Payable 5,000 Common Stock 68,000 Retained Earnings 8,000\begin{array} { | l | r | } \hline \text { Cash } & \$ 12,000 \\\hline \text { Supplies } & 4,500 \\\hline \text { Prepaid Rent } & 2,000 \\\hline \text { Salaries Expense } & 4,500 \\\hline \text { Equipment } & 65,000 \\\hline \text { Service Revenue } & 30,000 \\\hline \text { Miscellaneous Expenses } & 20,000 \\\hline \text { Dividends } & 3,000 \\\hline \text { Accounts Payable } & 5,000 \\\hline \text { Common Stock } & 68,000 \\\hline \text { Retained Earnings } & 8,000 \\\hline\end{array} What is the amount of Trumpeter's total assets?


A) $81,500
B) $82,500
C) $68,500
D) $83,500

E) A) and C)
F) B) and D)

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A post-closing trial balance is a list of all accounts and their balances after we have updated account balances for adjusting entries.

A) True
B) False

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Once the adjusted trial balance is complete, financial statements are prepared.

A) True
B) False

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The ending Retained Earnings balance of Juan's Mexican Restaurant chain increased by $3.2 million from the beginning of the year. The company declared a dividend of $1.3 million during the year. What was the net income earned during the year?


A) $1.9 million
B) $3.2 million
C) $4.5 million
D) $1.3 million

E) A) and B)
F) C) and D)

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The primary purpose of closing entries is to:


A) Prove the equality of the debit and credit entries in the general journal.
B) Ensure that all assets and liabilities are recognized in the appropriate period.
C) Update the balance of Retained Earnings and prepare revenue, expense, and dividend accounts for next period's transactions.
D) Assure that adjusting entries balance.

E) C) and D)
F) None of the above

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Which of the following is true about adjusting entries?


A) Entries are necessary due to the conservatism principle.
B) Entries can be done at the beginning or end of the accounting period.
C) They zero the balance of all income statement accounts.
D) They are a necessary part of accrual-basis accounting.

E) A) and C)
F) None of the above

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If the beginning balance of Retained Earnings equals $10,000, net income for the year equals $6,000, and dividends for the year equal $2,000, then the ending balance of Retained Earnings equals $18,000.

A) True
B) False

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Showing 41 - 60 of 183

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