1) In recording the adjusting entry for accrued taxes, both accounts involved are increased.True False

2)Adjusting entries are sometimes referred to as correcting entries.True False

3) Most companies use the cash basis of accounting because it matches revenues and expenses better during the accounting period. True False

4) A net income occurs when there are more revenues than expenses. True Flase

5) As Equipment is depreciated, its net book value decreases and its accumulated depreciation increases. True False

6) If an entire adjusting entry for accrued payroll is omitted, then, the Adjusted Trial Balance will not balance. True False

7) The beginning balance of Office Supplies is $475.00, and$2,000.00 was purchased for the period. If ending inventory balance of Office Supplies is $2,000.00, the amount of Office Supplies used is $475.00. True False

8) The expiration of the usefulness of a Plant Asset during an accounting period is called depreciation. True False

9) Deferred Revenues are revenues already earned but not yet received. True False

10) Accrued Expenses are expenses already incurred but not yet paid.True False

11) Which of the following is not a financial statement?

Balance Sheet

Income Statement

Cash Flow Statement

Trial Balance

Profit & Loss Statement

12) Journal entries are recorded in QuickBooks by selecting:

Tasks, Accountant & Taxes, Make Journal Entry

Reports, Company & Financial, Make Journal Entry

Company, Make Journal Entry

Reports, Lists, Make Journal Entry

File, Company, Make Journal Entry

13) Adjusting entries are made at the end of the accounting period to:

Check the total debits and total credits

Bring the account balances up to date

Prove the equality of the financial statements

Bring the Chart of Accounts up to date

Correct erroneous entries made during the period

14) The Accumulated Depreciation account is not a:

contra account

debit balance account

credit balance account

contra asset account

none of the above

15) The adjusting entry to record accrued interest expense will include a:

debit to Interest Expense

credit to Interest Expense

debit to Interest Payable

debit to Interest Receivable

credit to Interest Receivable

16) If the balance in the Prepaid Insurance account at the beginning of the year is $3,600.00 representing three (3) years of insurance premium, the adjusting entry at the end of the first year will include a:

debit to Prepaid Insurance for $1,200.00

credit to Prepaid Insurance for $1,200.00

debit to Insurance Expense for $2,400.00

credit to Insurance Expense for $2,400.00

debit to Insurance Expense for $3,600.00

17) A company pays its employees salaries every Friday, $5,000.00 with daily equal earnings, and Dec. 31 fell on a Thursday. The adjusting entry will include a:

debit to Salaries Expense for $5,000.00

credit to Salaries Expense for $4,000.00

debit to Salaries Payable for $4,000.00

credit to Salaries Expense for $5,000.00

debit to Salaries Expense for $4,000.00

18) The Balance Sheet shows:

Assets, Liabilities, Expenses

Revenues, Expenses, Net Income or Net Loss

Liabilities, Owner's Equity, Assets

Assets, Liabilities, Owner's Equity, Revenues

Owner's Equity, Expenses, Drawing, Revenues

19) The Profit and Loss Statement shows:

Expenses, Revenues, Net Income or Net Loss

Assets, Liabilities, Owner's Equity

Liabilities, Assets, Revenues, Net Income or Net Loss

Owner's Equity, Expenses, Liabilities

Drawing, Revenues, Expenses, Net Income or Net Loss

20) If an accountant fails to record an entire adjusting entry for expired insurance, the omission will cause:

total assets to be understated

total liabilities to be understated

total expenses to be overstated

total revenue to be understated

total assets to be overstated