Unit III Assessment Question 1

1. Jupiter Company signed a one-year $36,000 note payable at 8% interest on March 1, 2019. How much interest expense must be accrued on May 31, 2019? (Round any intermediate calculations to two decimal places, and your final answer to the nearest whole number.)
3. $2,880
5. $1,080
7. $720
9. $360

5 points

Question 2

1. Which of the following statements is TRUE of accrual basis accounting?
3. Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP).
5. Accrual basis accounting records expenses only when cash has been paid for them.
7. Accrual basis accounting records revenue only when cash is received.
9. Accrual basis accounting always results in greater net income than cash basis accounting.

5 points

Question 3

1. On September 1, 2018, Real Estate Professionals Company paid $5,000 in advance for an eight-month rental space covering the period of September 1, 2018 through April 30, 2019. The deferred expense was initially recorded as an asset. The company makes adjusting entries once a year at year-end. The adjusting entry on December 31, 2018 would include a __________.
3. debit of $5,000 to Cash
5. credit of $5,000 to Prepaid Rent
7. debit of $2,500 to Rent Expense
9. credit of $2,500 to Rent Expense

5 points

Question 4

1. On January 1, 2017, the Accounts Receivable of Martha Company had a debit balance of $190,000. During January, the company provided services for $400,000 on account. The company collected $240,000 from its customers on account in January. What was the ending balance in the Accounts Receivable account at the end of January?
3. $160,000
5. $590,000
7. $350,000
9. $400,000

5 points

Question 5

1. Metro Event Planning Services collects fees from its customers in advance. On January 1, 2019, the balance of its unearned revenue account was $5,000 (credit. During January and February, the company collected $2,000 and $700 as advance fees, respectively. During the two-month period, it performed services of $4,500 related to the deferred revenue. What is the balance in unearned revenue at the end of February?
3. Debit balance of $5,000
5. Credit balance of $5,000
7. Debit balance of $3,200
9. Credit balance of $3,200

5 points

Question 6

1. A company receives payment from one of its customers on August 5 for services performed on July 21. Which of the following entries would be recorded if the company uses accrual basis accounting?
3. Cash 1,000 Accounts Receivable 1,000
5. Accounts Payable 1,000 Cash 1,000
7. Cash 1,000 Service Revenue 1,000
9. Service Revenue 1,000 Cash 1,000

5 points

Question 7

1. Mercury Company sells tickets in advance for its weekly productions and records the proceeds as Unearned Revenue. At the end of each month, the company makes an adjusting entry to account for the tickets used during the month (ticket revenue.) On March 1, the Unearned Revenue account had a credit balance of $5,000. During March, Mercury sold 500 tickets at $40 each, and 450 tickets were used during the month. What is the balance in Unearned Revenue at the end of March?
3. Credit balance of $7,000
5. Debit balance of $5,000
7. Credit balance of $5,000
9. Debit balance of $7,000

5 points

Question 8

1. A business purchased equipment for $145,000 on January 1, 2019. The equipment will be depreciated over the five years of its estimated useful life using the straight-line depreciation method. The business records depreciation once a year on December 31. Which of the following is the adjusting entry required to record depreciation on the equipment for the year 2019? (Assume the residual value of the acquired equipment to be zero.)
3. Debit $145,000 to Equipment, and credit $145,000 to Cash.
5. Debit $145,000 to Depreciation Expense-Equipment, and credit $145,000 to Accumulated Depreciation-Equipment.
7. Debit $29,000 to Depreciation Expense-Equipment, and credit $29,000 to Accumulated Depreciation-Equipment.
9. Debit $29,000 to Depreciation Expense, and credit $29,000 to Equipment.

5 points

Question 9

1. If a company is using accrual basis accounting, when should it record revenue?
3. When cash is received, even though services may be performed at a later date
5. When services are performed, even though cash may be received at a later date
7. Before services are performed
9. When cash is received, 30 days after the completion of the services

5 points

Question 10

1. Anthony Delivery Service has a weekly payroll of $34,000. December 31 falls on Tuesday and Anthony will pay its employees the following Monday (January 6) for the previous full week. Assume that Anthony has a five-day workweek and has an unadjusted balance in Salaries Expense of $925,000 at December 31. What is the December 31 balance of Salaries Expense after adjusting entries are recorded and posted?
3. $925,000
5. $959,000
7. $945,400
9. $938,600

5 points

Question 11

1. ABC Tax Planning Service started business in January 2018. The company rented an office for $1,800 per month starting from January 1, 2018. On that day, ABC prepaid the rent through June 30. The company makes adjusting entries at the end of each month. What is the balance in the Prepaid Rent account as of April 30, 2018?
3. $3,600
5. $300
7. $1,800
9. $900

5 points

Question 12

1. Hudson Landscaping Service bought equipment for $10,800 on January 1, 2019. It has an estimated useful life of five years and zero residual value. Hudson uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month. As of June 30, 2019, the book value of this equipment shown on its balance sheet will be __________.
3. $9,720
5. $10,800
7. $11,880
9. $10,980

5 points

Question 13

1. The sum of all the depreciation expense recorded to date for a depreciable asset is called __________.
3. book value
5. residual value
7. depreciation expense
9. accumulated depreciation

5 points

Question 14

1. An adjusting entry is completed __________.
3. at the beginning of the accounting period
5. at the end of the accounting period
7. after all performance obligations are satisfied
9. when accounts need to be balanced in the ledger

5 points

Question 15

1. Advance cash payments of future expenses are called __________.
3. accrued revenues
5. deferred expenses
7. deferred revenues
9. accrued expenses

5 points

Question 16

1. Accumulated depreciation is a(n) __________ account and carries a normal __________ balance.
3. revenue; debit
5. expense; debit
7. contra asset; credit
9. liability; credit

5 points

Question 17

1. Which of the following accounting terms assumes that a business's activities can be divided into small segments and that financial statements can be prepared for specific periods of time?
3. Adjusting entry concept
5. Economic entity concept
7. Matching principle
9. Time period concept

5 points

Question 18

1. Princeton Financial Services Company purchased computers that are to be used in its consulting services. Based on the matching principle, what account, other than Computers, should appear on the balance sheet as of December 31 of that same year?
3. Depreciation Expense - Equipment
5. Service Revenue
7. Accumulated Depreciation - Equipment
9. Equipment Expense

5 points

Question 19

1. Which of the following is considered a fiscal year?
3. Six months
5. Three months
7. Twelve months
9. Four months

5 points

Question 20

1. The asset account, Office Supplies had a beginning balance of $5,700. During the accounting period, office supplies were purchased, on account, for $5,100. A physical count, on the last day of the accounting period, shows $2,000 of office supplies on hand. What is the amount of Supplies Expense for the accounting period?
3. $5,100
5. $2,600
7. $8,800
9. $3,700

5 points

Unit III Assessment Content Question 1 1. Jupiter Company signed a one-year $36,000 note payable at 8% interest on March 1, 2019. How much interest expense must be accrued on May 31, 2019? (Round any intermediate calculations to two decimal places, and your final answer to the nearest whole number.) $2,880 $1,080 $720 $360 5 points Question 2 1. Which of the following statements is TRUE of accrual basis accounting? Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP). Accrual basis accounting records expenses only when cash has been paid for them. Accrual basis accounting records revenue only when cash is received. Accrual basis accounting always results in greater net income than cash basis accounting. 5 points Question 3 1. On September 1, 2018, Real Estate Professionals Company paid $5,000 in advance for an eight-month rental space covering the period of September 1, 2018 through April 30, 2019. The deferred expense was initially recorded as an asset. The company makes adjusting entries once a year at year-end. The adjusting entry on December 31, 2018 would include a __________. debit of $5,000 to Cash credit of $5,000 to Prepaid Rent debit of $2,500 to Rent Expense credit of $2,500 to Rent Expense 5 points Question 4 1. On January 1, 2017, the Accounts Receivable of Martha Company had a debit balance of $190,000. During January, the company provided services for $400,000 on account. The company collected $240,000 from its customers on account in January. What was the ending balance in the Accounts Receivable account at the end of January? $160,000 $590,000 $350,000 $400,000 5 points Question 5 1. Metro Event Planning Services collects fees from its customers in advance. On January 1, 2019, the balance of its unearned revenue account was $5,000 (credit. During January and February, the company collected $2,000 and $700 as advance fees, respectively. During the two-month period, it performed services of $4,500 related to the deferred revenue. What is the balance in unearned revenue at the end of February? Debit balance of $5,000 Credit balance of $5,000 Debit balance of $3,200 Credit balance of $3,200 5 points Question 6 1. A company receives payment from one of its customers on August 5 for services performed on July 21. Which of the following entries would be recorded if the company uses accrual basis accounting? Cash Accounts Receivable Accounts Payable Cash Cash Service Revenue Service Revenue Cash 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 5 points Question 7 1. Mercury Company sells tickets in advance for its weekly productions and records the proceeds as Unearned Revenue. At the end of each month, the company makes an adjusting entry to account for the tickets used during the month (ticket revenue.) On March 1, the Unearned Revenue account had a credit balance of $5,000. During March, Mercury sold 500 tickets at $40 each, and 450 tickets were used during the month. What is the balance in Unearned Revenue at the end of March? Credit balance of $7,000 Debit balance of $5,000 Credit balance of $5,000 Debit balance of $7,000 5 points Question 8 1. A business purchased equipment for $145,000 on January 1, 2019. The equipment will be depreciated over the five years of its estimated useful life using the straight-line depreciation method. The business records depreciation once a year on December 31. Which of the following is the adjusting entry required to record depreciation on the equipment for the year 2019? (Assume the residual value of the acquired equipment to be zero.) Debit $145,000 to Equipment, and credit $145,000 to Cash. Debit $145,000 to Depreciation Expense-Equipment, and credit $145,000 to Accumulated Depreciation-Equipment. Debit $29,000 to Depreciation Expense-Equipment, and credit $29,000 to Accumulated Depreciation-Equipment. Debit $29,000 to Depreciation Expense, and credit $29,000 to Equipment. 5 points Question 9 1. If a company is using accrual basis accounting, when should it record revenue? When cash is received, even though services may be performed at a later date When services are performed, even though cash may be received at a later date Before services are performed When cash is received, 30 days after the completion of the services 5 points Question 10 1. Anthony Delivery Service has a weekly payroll of $34,000. December 31 falls on Tuesday and Anthony will pay its employees the following Monday (January 6) for the previous full week. Assume that Anthony has a five-day workweek and has an unadjusted balance in Salaries Expense of $925,000 at December 31. What is the December 31 balance of Salaries Expense after adjusting entries are recorded and posted? $925,000 $959,000 $945,400 $938,600 5 points Question 11 1. ABC Tax Planning Service started business in January 2018. The company rented an office for $1,800 per month starting from January 1, 2018. On that day, ABC prepaid the rent through June 30. The company makes adjusting entries at the end of each month. What is the balance in the Prepaid Rent account as of April 30, 2018? $3,600 $300 $1,800 $900 5 points Question 12 1. Hudson Landscaping Service bought equipment for $10,800 on January 1, 2019. It has an estimated useful life of five years and zero residual value. Hudson uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month. As of June 30, 2019, the book value of this equipment shown on its balance sheet will be __________. $9,720 $10,800 $11,880 $10,980 5 points Question 13 1. The sum of all the depreciation expense recorded to date for a depreciable asset is called __________. book value residual value depreciation expense accumulated depreciation 5 points Question 14 1. An adjusting entry is completed __________. at the beginning of the accounting period at the end of the accounting period after all performance obligations are satisfied when accounts need to be balanced in the ledger 5 points Question 15 1. Advance cash payments of future expenses are called __________. accrued revenues deferred expenses deferred revenues accrued expenses 5 points Question 16 1. Accumulated depreciation is a(n) __________ account and carries a normal __________ balance. revenue; debit expense; debit contra asset; credit liability; credit 5 points Question 17 1. Which of the following accounting terms assumes that a business's activities can be divided into small segments and that financial statements can be prepared for specific periods of time? Adjusting entry concept Economic entity concept Matching principle Time period concept 5 points Question 18 1. Princeton Financial Services Company purchased computers that are to be used in its consulting services. Based on the matching principle, what account, other than Computers, should appear on the balance sheet as of December 31 of that same year? Depreciation Expense - Equipment Service Revenue Accumulated Depreciation - Equipment Equipment Expense 5 points Question 19 1. Which of the following is considered a fiscal year? Six months Three months Twelve months Four months 5 points Question 20 1. The asset account, Office Supplies had a beginning balance of $5,700. During the accounting period, office supplies were purchased, on account, for $5,100. A physical count, on the last day of the accounting period, shows $2,000 of office supplies on hand. What is the amount of Supplies Expense for the accounting period? $5,100 $2,600 $8,800 $3,700 5 points