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Chapter 03 - Adjustments: Accruals and Deferrals
Copyright Cengage Learning. Powered by Cognero.
Page 97
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a.
Record accrual of interest on loan.
b.
Record payment of interest on loan.
c.
Record interest due on account.
d.
Record interest expense paid.
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom's: Remembering
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03-02 - LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 - Adjusting Entries
ACCT.AICPA.FN.03 - Measurement
BUSPROG - Analytic
DATE CREATED:
8/23/2017 2:55 PM
DATE MODIFIED:
10/16/2017 4:29 PM
219. At the end of the fiscal year, the usual adjusting entry to recognize accrued revenues was omitted. Which of the
following is true?
a.
total assets will be understated at the end of the current year
b.
the balance sheet and income statement will be misstated but the statement of stockholders' equity will be
correct for the current year
c.
net income will be overstated for the current year
d.
total liabilities will be understated
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom's: Remembering
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03-02 - LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 - Adjusting Entries
ACCT.AICPA.FN.03 - Measurement
BUSPROG - Analytic
DATE CREATED:
8/23/2017 2:59 PM
DATE MODIFIED:
10/16/2017 4:29 PM
220. At the end of the fiscal year, the usual adjusting entry to accrue wages due on the last day of the fiscal period was
omitted. Which of the following is true?
a.
total assets will be understated at the end of the current year
b.
the balance sheet and income statement will be misstated but the statement of stockholders' equity will be
correct for the current year
c.
net income will be overstated for the current year
d.
total assets and total liabilities will be understated
Chapter 03 - Adjustments: Accruals and Deferrals
Copyright Cengage Learning. Powered by Cognero.
Page 98
ANSWER:
c
POINTS:
1
DIFFICULTY:
Bloom's: Remembering
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03-02 - LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 - Adjusting Entries
ACCT.AICPA.FN.03 - Measurement
BUSPROG - Analytic
DATE CREATED:
8/23/2017 3:02 PM
DATE MODIFIED:
10/16/2017 4:29 PM
221. The estimated amount of depreciation on office equipment for the current year is $3,500. The correct adjusting entry
to record this depreciation is
a.
debit Depreciation Expense, $3,500; credit Office Equipment, $3,500
b.
debit Accumulated Depreciation—Office Equipment, $3,500; credit Office Equipment, $3,500
c.
debit Depreciation Expense, $3,500; credit Accumulated Depreciation—Office Equipment, $3,500
d.
debit Office Equipment, $3,500; credit Depreciation Expense, $3,500
ANSWER:
c
POINTS:
1
DIFFICULTY:
Bloom's: Remembering
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03-04 - LO: 03-04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 - Adjusting Entries
ACCT.AICPA.FN.03 - Measurement
BUSPROG - Analytic
DATE CREATED:
8/23/2017 3:06 PM
DATE MODIFIED:
10/16/2017 4:29 PM
222. If the equipment account has a balance of $80,400 and its accumulated depreciation account has a balance of
$22,500, the book value of the equipment is
a.
$102,900
b.
$80,400
c.
$57,900
d.
$22,500
ANSWER:
c
POINTS:
1
DIFFICULTY:
Bloom's: Remembering
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03-04 - LO: 03-04
Chapter 03 - Adjustments: Accruals and Deferrals
Copyright Cengage Learning. Powered by Cognero.
Page 100
c.
Wages expense and supplies expense show a favorable trend, while rent and miscellaneous expenses show an
unfavorable trend.
d.
Wages expense and miscellaneous expense show an unfavorable trend, and rent and supplies expenses show
an unfavorable trend.
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom's: Applying
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03-07 - LO: 03-07
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 - Financial Statements
ACCT.ACBSP.APC.23 - Financial Statement Analysis
ACCT.AICPA.FN.03 - Measurement
BUSPROG - Analytic
DATE CREATED:
8/23/2017 3:14 PM
DATE MODIFIED:
10/16/2017 4:29 PM
225. The unadjusted and adjusted trial balances for Ellen’s Coiffures is shown below. Assume that all balances in the
unadjusted trial balance column and the amounts of the adjustments are correct. Further assume that $400 of insurance
expired during the year. Locate the errors in the accountant’s adjusting entries, assuming that none of the accounts was
affected by more than one adjusting entry.
Unadjusted
Trial Balance
Adjusted
Trial Balance
Debit
Balances
Credit
Balances
Debit
Balances
Credit
Balances
Cash
6,000
6,000
Accounts Receivable
2,800
2,800
Salon Supplies
1,400
2,000
Prepaid Insurance
800
400
Salon Equipment
42,000
38,000
Accumulated
Depreciation
18,000
18,000
Accounts Payable
1,250
2,500
Wages Payable
600
Common Stock
10,000
10,000
Retained Earnings
10,185
10,185
Salon Revenue
48,000
48,000
Wages Expense
28,500
28,500
Rent Expense
2,200
2,200
Utilities Expense
485
485
Depreciation
Expense
4,000
Salon Supplies
Expense
600
Chapter 03 - Adjustments: Accruals and Deferrals
ANSWER:
Error 1: Salon Supplies should have been credited for $600.
Error 2: Salon Equipment should not have been adjusted; the adjustment should have
been a $4,000 credit to Accumulated Depreciation—Salon Equipment.
Error 3: No change should have been made to Accounts Payable; its adjusted trial
balance column should be $1,250.
Error 4: Wages Expense should have been debited for $600 to complete the accrual
adjustment for accrued wages.
The changes result in an adjusted trial balance debit and credit of $92,035.
POINTS:
1
DIFFICULTY:
Bloom's: Applying
Challenging
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03-02 - LO: 03-02
FNMN.WAJO.19.03-03 - LO: 03-03
FNMN.WAJO.19.03-04 - LO: 03-04
FNMN.WAJO.19.03-05 - LO: 03-05
FNMN.WAJO.19.03-06 - LO: 03-06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 - Adjusting Entries
ACCT.AICPA.FN.03 - Measurement
BUSPROG - Analytic
DATE CREATED:
8/23/2017 3:19 PM
DATE MODIFIED:
10/16/2017 4:36 PM
Insurance Expense
400
Miscellaneous
Expense
3,250
Totals
87,435
87,435
88,635
89,285
226. Softex and Sanibel Solutions are manufacturers of cotton products. Their income statements for a current year are
below.
Softex
Sanibel Solutions
Revenues
$2,456,000
$1,985,000
Cost of services (expense)
(1,375,360)
(1,046,000)
Selling, general, and administrative
expenses
(785,920)
(592,500)
Depreciation and other expenses
(103,500)
(119,100)
Operating income
191,220
227,400
