Problem #1 of 21 If the adjustment for accrued expenses is not recorded 2 O a. net income will be overstated. O b. revenues will be understated. O c. net income will be understated. O d. expenses will be overstated. 3 Problem #2 of 21 Clever Computers has a five-day workweek and pays the office staff $3,050 each week. If the month ends on a Thursday, the adjusting entry will credit Wages Payable for O a. $3,050. O b. $610. O c. $2,440. O d. $1,220. Problem #3 of 21 If the adjustment for depreciation is not recorded 1 O a. revenues are overstated. O b. net income is overstated. O c. net income is correctly stated. O d. assets are understated. Problem #4 of 21 Vertical analysis can be used to analyze changes except O a. on a balance sheet. O b. on an income statement. O c. on a statement of cash flows. O d. over time. Problem #5 of 21 The adjusting entry for accrued revenues includes a O a. debit to an asset account. O b. credit to an asset account. O c. credit to an expense account. O d. debit to a revenue account. Problem #6 of 21 The following are line items from the vertical analysis of an income statement: Percent 300% Total revenues Total expenses Net income Amount $600 400 $200 200% 100% What needs to be changed on the statement? O a. Total revenues should be the base expressed as 100%. O b. The percentage for total expenses should be 33% O c. The percentage for total expenses should be 50% O d. The percentage for net income should be 25%. Problem #7 of 21 In the vertical analysis of an income statement O a. each item is stated as a percent of total expenses. O b. total revenues are stated as a percent of stockholders' equity. O c. each item is stated as a percent of change from the previous period's statement. O d. each item is stated as a percent of revenues or fees earned. Problem #8 of 21 All adjusting entries affect O a. the cash account. O b. at least one income statement account and one balance sheet account. O c. only income statement accounts. O d. only balance sheet accounts. Problem #9 of 21 The adjusted trial balance is prepared O a. prior to completing the adjusting entries. O b. after adjusting entries are posted but before financial statements are prepared. O c. only if errors are suspected when problems arise while preparing the financial statements. O d. after financial statements are prepared. Problem #10 of 21 Green Source Company began the period with $330 in supplies. During the month, an additional $1,500 of supplies were purchased. A physical inventory at the end of the period revealed that there were $585 of supplies on hand. The adjusting entry should include a O a. debit to Supplies for $585. Ob. credit to Supplies Expense for $585. O c. credit to Supplies for $1,245. O d.credit to Supplies Expense for $1,245. Problem #11 of 21 If an adjustment for salaries earned but not recorded or paid in the amount of $85,000 were to be omitted, how would this affect the financial statements? 10 O a. Expenses would be overstated on the income statement by $85,000. O b. Net income would be understated on the income statement by $85,000. O c. Assets would be understated on the balance sheet for $85,000. O d. Liabilities would be understated on the balance sheet for $85,000. Problem #12 of 21 Boxer Company purchased store equipment for $12,000 on December 3. The store equipment depreciated $500 in December. The book value of the store equipment on December 31 is 10 O a. $12,000. O b. $12,500. O c. $11,500. O d. $500. 13 Problem #13 of 21 All of the following are types of adjustments except 10 O a. prepaid expenses. O b. accrued expenses. O c. accrued revenues. O d. cash expenses. 12 Problem #14 of 21 The $9,600 balance in Fellows Company's prepaid insurance account represents six months of insurance. The insurance was purchased on December 1. Which of the following should be included in the adjusting journal entry on December 31? O a. Debit to Cash for $9,600 O b. Debit to Prepaid Insurance for $1,600 O c. Debit to Insurance Expense for $1,600 Od. Debit to Insurance Expense for $9,600 13 Problem #15 of 21 Which statement is true regarding the cash basis of accounting? O a. Revenues are reported in the period in which a service has been performed or a product has been delivered. O b. Expenses are reported in the same period as the revenues to which they relate. O c. Revenues are reported in the period in which cash is received, and expenses are reported when cash is paid out. O d. The cash basis of accounting is used by most large businesses to provide accurate financial statements for users. 13 Problem #16 of 21 Unearned revenues O a. are recorded as assets when cash is received. O b. are referred to as future revenues. O c. are referred to as prepaid revenue. O d. are recorded when services have been performed for the customer. Problem #18 of 21 Which of the following would not cause the adjusted trial balance totals to be unequal? 11 O a. The adjustment for accrued fees of $16,340 was journalized as a debit to Accounts Payable for $16,430 and a credit to Fees Earned of $16,340. O b. The adjustment for prepaid insurance was omitted. Oc. The adjustment for accrued salary expenses of $12,428 was journalized as a debit to Salary Expense for $12,428 and a debit to Accrued Salary Expense for $12,428. O d. The adjustment for depreciation of $3,545 was journalized as a debit to Depreciation Expense for $3,454 and a credit to Accumulated Depreciation of $3,545. 12 13 Problem #19 of 21 1 If the adjustment for unearned revenues is not recorded O a. net income will be correctly stated. O b. net income will be understated. O c. liabilities will be understated. O d. assets will be overstated. 12 13 Problem #20 of 21 The accumulated depreciation account is called O a. a prepaid asset account. O b. a contra asset account. O c. a liability account. O d. an expense account. - 12 13 Problem #21 of 21 The purpose of the adjusted trial balance is to verify 10 O a. the equality of the total debit balances and the total credit balances after adjustments have been recorded. O b. the equality of the total debit balances and the total credit balances before adjustments have been recorded. O c. that all of the accounts are correct. O d. that the net income reported is accurate. - 12 - 13