Chapter 03 – Adjustments: Accruals and Deferrals
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DATE CREATED:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
79. Which account would normally not require an adjusting entry?
a.
Wages Expense
b.
Accounts Receivable
c.
Accumulated Depreciation
d.
Cash
ANSWER:
d
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03–01 – LO: 03–01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
80. The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four
months’ rent paid on December 1. The adjusting entry required on December 31 is
a.
b.
c.
d.
ANSWER:
a
RATIONALE:
Rent expense per month = $32,000 / 4 = $8,000
Debit Credit
December 31 Rent Expense 8,000
Prepaid Rent 8,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03–03 – LO: 03–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
81. The balance in the office supplies account on January 1 was $7,000, supplies purchased during January were $3,000,
and the supplies on hand at January 31 were $2,000. The amount to be used for the appropriate adjusting entry is
Chapter 03 – Adjustments: Accruals and Deferrals
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Page 32
a.
$4,300
b.
$12,000
c.
$5,000
d.
$8,000
ANSWER:
d
RATIONALE:
Amount to be used for the appropriate adjusting entry = Balance in the office supplies
account on January 1 + Supplies purchased during January – Supplies on hand at
January 31 = $7,000 + $3,000 – $2,000 = $8,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03–03 – LO: 03–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
82. Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment
of $14,000 and unexpired insurance of $3,000, for the fiscal year ending on April 30?
a.
debit Insurance Expense, $3,000; credit Prepaid Insurance, $3,000
b.
debit Insurance Expense, $14,000; credit Prepaid Insurance, $14,000
c.
debit Prepaid Insurance, $11,000; credit Insurance Expense, $11,000
d.
debit Insurance Expense, $11,000; credit Prepaid Insurance, $11,000
ANSWER:
d
RATIONALE:
Insurance expense = Prepaid insurance account balance before adjustment – Unexpired
insurance = $14,000 – $3,000 = $11,000
Debit Credit
April 30 Insurance Expense 11,000
Prepaid Insurance 11,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03–03 – LO: 03–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
Copyright Cengage Learning. Powered by Cognero.
Page 33
83. The entry to adjust for the cost of supplies used during the accounting period is
a.
debit Supplies Expense; credit Supplies
b.
debit Stockholders’ Equity; credit Supplies
c.
debit Accounts Payable; credit Supplies
d.
debit Supplies; credit Stockholders’ Equity
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03–03 – LO: 03–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
84. Buster Industries pays weekly salaries of $30,000 on Friday for a five-day week ending on that day. The adjusting
entry necessary at the end of the fiscal period ending on Tuesday is
a.
debit Salaries Payable, $12,000; credit Cash, $12,000
b.
debit Salary Expense, $12,000; credit Dividends, $12,000
c.
debit Salary Expense, $12,000; credit Salaries Payable, $12,000
d.
debit Dividends, $12,000; credit Cash, $12,000
ANSWER:
c
RATIONALE:
Salary expense per day = $30,000 / 5 = $6,000
Salary expense for 2 days = $6,000 × 2 = $12,000
Debit Credit
Salary Expense 12,000
Salaries Payable 12,000
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:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
85. The difference between the balance of a fixed asset account and the related accumulated depreciation account is
termed
Chapter 03 – Adjustments: Accruals and Deferrals
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Page 34
a.
historical cost
b.
contra asset
c.
book value
d.
market value
ANSWER:
c
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03–04 – LO: 03–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.13 – Long-term Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
86. The adjusting entry to record the depreciation of a building for the fiscal period is
a.
debit Depreciation Expense; credit Building.
b.
debit Depreciation Expense; credit Accumulated Depreciation.
c.
debit Accumulated Depreciation; credit Depreciation Expense.
d.
debit Building; credit Depreciation Expense.
ANSWER:
b
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:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
87. As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease
in usefulness, the cost of fixed assets is systematically allocated to expense through a process called
a.
equipment allocation
b.
depreciation
c.
accumulation
d.
matching
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
Chapter 03 – Adjustments: Accruals and Deferrals
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Page 38
b.
expense, debit
c.
liability, credit
d.
liability, debit
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03–02 – LO: 03–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
95. Data for an adjusting entry described as “accrued wages, $2,020″ requires a
a.
debit to Wages Expense and a credit to Wages Payable
b.
debit to Wages Payable and a credit to Wages Expense
c.
debit to Accounts Receivable and a credit to Wages Expense
d.
debit to Dividends and a credit to Wages Payable
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Remembering
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:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
96. Supplies are recorded as assets when purchased. Therefore, the credit to Supplies in the adjusting entry is for the
amount of supplies
a.
still on hand
b.
purchased
c.
used
d.
required for the next accounting period
ANSWER:
c
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
Chapter 03 – Adjustments: Accruals and Deferrals
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Page 40
a.
assets
b.
liabilities
c.
common stock
d.
prepaid expenses
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03–02 – LO: 03–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.ACBSP.APC.15 – Current Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
100. Prepaid advertising, representing payment for the next quarter, would be reported on the balance sheet as a(n)
a.
asset
b.
liability
c.
contra asset
d.
stockholders’ equity
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.03–03 – LO: 03–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.ACBSP.APC.15 – Current Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 5:31 PM
DATE MODIFIED:
10/16/2017 4:29 PM
101. Prepaid rent, representing rent for the next six months’ occupancy, would be reported on the tenant’s balance sheet as
a(n)
a.
asset
b.
liability
c.
stockholders’ equity account
d.
contra liability
ANSWER:
a
POINTS:
1