48) A company started the year with no supplies. During this year they bought $200 worth of
supplies on account and later paid $150 of this debt. If there were $40 supplies left at the end of
this year, what was the supply expense for the period?
A) $160
B) $50
C) $40
D) $10
49) Which of the following is a TRUE statement regarding the Unearned Revenue account?
A) Unearned Revenue is accrued as the business provides goods or services.
B) Unearned Revenue is expensed as the business provides goods or services.
C) Unearned Revenue decreases as the business provides goods or services.
D) Unearned Revenue increases as the business provides goods or services.
50) Prepaid expenses are also called:
A) accrued expenses.
B) deferred expenses.
C) both A and B.
D) neither A or B.
51) On January 1 Corporate Condos, Inc received $96,000 for one year’s rent for building A.
What would the adjusting entry be on March 31?
A) Debit Rent Expense $8,000, credit Prepaid Rent $8,000
B) Debit unearned rent revenue $8,000, credit rent revenue $8,000
C) Debit Rent Expense $24,000, credit Prepaid Rent $24,000
D) Debit unearned rent revenue $24,000, credit rent revenue $24,000
52) On January 1, Daisy Company paid $5,400 for six months rent. What would the adjusting
entry be on March 31?
A) Debit Rent Expense $900, credit Prepaid Rent $900
B) Debit Rent Expense $900, credit Cash $900
C) Debit Rent Expense $2,700, credit Prepaid Rent $2,700
D) Debit Rent Expense $2,700, credit Cash $2,700
53) Annual depreciation on equipment at Charmed, Inc.is $1,200. The adjusting entry to record
one month’s worth of depreciation would be:
A) Debit Depreciation Expense $100, credit Cash $100
B) Debit Depreciation Expense $100, credit Accumulated Depreciation $100
C) Debit Depreciation Expense $1,200, credit Cash $1,200
D) Debit Depreciation Expense $1,200, credit Accumulated Depreciation $1,200
54) Safety First Supply Company purchased a 2-year insurance policy for $2,500. What would
the adjusting entry be at the end of the first year?
A) Debit Insurance Expense $2,500, credit Prepaid Insurance $2,500
B) Debit Insurance Expense $2,500, credit Cash $2,500
C) Debit Insurance Expense $1,250, credit Prepaid Insurance $1,250
D) Debit Insurance Expense $1,250, credit Cash $1,250
3.3 Questions
1) The adjusted trial balance is prepared before the adjusting entries are completed and posted.
2) After preparing the adjusted trial balance, those figures are used to complete the Balance
Sheet only.
3) The balance of Retained Earnings on the adjusted trial balance does not represent the final
Retained Earnings balance on the Balance Sheet.
4) Net income or net loss can be determined by the adjusted trial balance figures.
5) On the Income Statement, expenses are always listed in descending order from the largest to
the smallest amount.
6) Using the adjusted trial balance, the first financial statement to prepare is the Income
Statement.
7) Dividends are not included on an adjusted trial balance.
8) Expenses are always listed in alphabetical order on the Income Statement.
9) Of the following, which are reported on the Balance Sheet?
A) Assets
B) Revenues
C) Expenses
D) Net income or net loss
10) Of the following, which is NOT reported on the Balance Sheet?
A) cash
B) equipment
C) Depreciation Expense
D) account payable
11) Of the following, which would be reported on the Income Statement?
A) Rent Expense
B) rent revenue
C) Prepaid Rent
D) both A and B
12) The adjusted trial balance is the basis for the preparation of:
A) the Statement of Retained Earnings.
B) the Income Statement.
C) the Balance Sheet.
D) all financial statements.
13) Which of the following accounts does NOT go onto the Income Statement from the adjusted
trial balance?
A) Sales
B) Insurance Expense
C) Accounts Receivable
D) Rent Expense
14) Which of the following does NOT go onto the Balance Sheet from the adjusted trial balance?
A) Dividends
B) Accounts Payable
C) Land
D) Cash
15) The adjusted trial balance will directly show the:
A) amount of the adjustments made to expense accounts only.
B) final balance in the Retained Earnings account.
C) amount of the adjustment made to each account.
D) adjusted balances for every account affected by an adjusting entry.
16) The adjusted trial balance shows:
A) accounts that may still be out of balance.
B) revenues and expense amounts only.
C) numbers ready to be transferred to the financial statements.
D) assets, liabilities and Stockholders’ Equity amounts only.
17) The adjusted trial balance total:
A) is equal to the unadjusted trial balance total.
B) is greater than the unadjusted trial balance total.
C) is less than the unadjusted trial balance total.
D) has no direct relationship to the unadjusted trial balance total.
18) The balance in the Depreciation Expense account on the adjusted trial balance:
A) is generally equal to the balance on the unadjusted trial balance.
B) is generally greater than the balance on the unadjusted trial balance.
C) is generally less than the balance on the unadjusted trial balance.
D) has no relationship to the balance on the unadjusted trial balance.
19) The balance in the Supplies account on the adjusted trial balance:
A) is generally equal to the balance on the unadjusted trial balance.
B) is generally greater than the balance on the unadjusted trial balance.
C) is generally less than the balance on the unadjusted trial balance.
D) has no relationship to the balance on the unadjusted trial balance.
20) The balance in the Accumulated Depreciation account on the adjusted trial balance:
A) is equal to the balance on the unadjusted trial balance.
B) is greater than the balance on the unadjusted trial balance.
C) is less than the balance on the unadjusted trial balance.
D) has no relationship to the balance on the unadjusted trial balance.
21) The balance for the Land account on the adjusted trial balance:
A) must be equal to the balance on the unadjusted trial balance.
B) must be greater than the balance on the unadjusted trial balance.
C) must be less than the balance on the unadjusted trial balance.
D) has no relationship to the balance on the unadjusted trial balance.
22) The Income Statement that is prepared from the adjusted trial balance begins with the:
A) first asset account listed on the adjusted trial balance.
B) first liability account listed on the adjusted trial balance.
C) first revenue account listed on the adjusted trial balance.
D) first expense account listed on the adjusted trial balance.
23) The Statement of Retained Earnings that is prepared from the adjusted trial balance begins
with the:
A) first stock account listed on the adjusted trial balance.
B) Retained Earnings balance on the adjusted trial balance.
C) first dividend account listed on the adjusted trial balance.
D) net income listed on the adjusted trial balance.
24) All financial statements must have, in order, the:
A) title of financial statement and specific date.
B) title of financial statement, name of company, and specific date.
C) name of company, title of financial statement, and specific date.
D) name of company, title of financial statement, and a specific date or period.
25) The adjusted trial balance proves that:
A) all adjusting entries have been recorded correctly.
B) debit totals equal credit totals.
C) no adjusting entry has been entered twice.
D) the balance of the adjusted trial balance is correct.
26) The unadjusted trial balance for Supplies shows a $434 balance. If $132 of supplies were
used during the period, the adjusted balance for Supplies would be a:
A) $302 credit.
B) $302 debit.
C) $132 debit.
D) $132 credit.
27) The unadjusted trial balance for Prepaid Insurance shows a $1,350 balance. $500 of the
balance was unexpired at year’s end. On the adjusted trial balance, the balance for Prepaid
Insurance is a:
A) $500 debit.
B) $500 credit.
C) $850 debit.
D) $850 credit.
28) The unadjusted trial balance shows a $780 balance for Depreciation Expense. Depreciation
of $235 was recorded for the period. The adjusted trial balance figure for Depreciation Expense
is now a:
A) $545 debit.
B) $545 credit.
C) $1,015 debit.
D) $1,015 credit.
29) The unadjusted trial balance shows a $12,000 balance for Prepaid Rent. At the end of the
year, $7,000 of the rent had been used. The adjusted trial balance reflects a balance for Prepaid
Rent of:
A) $5,000 debit.
B) $5,000 credit.
C) $7,000 debit.
D) $7,000 credit.
30) The unadjusted trial balance lists Supplies with a $678 balance. After taking an inventory of
supplies, it was found that $390 were on hand. The adjustment to Supplies Expense is a:
A) $390 debit.
B) $390 credit.
C) $288 debit.
D) $288 credit.
31) The unadjusted trial balance shows Accumulated Depreciation–Computer with a credit
balance of $190. After determining depreciation expense is $45, the adjusted balance in the
Accumulated Depreciation account for the computer will be a:
A) $45 debit.
B) $190 credit.
C) $235 credit.
D) $145 debit.
32) The unadjusted trial balance reflects a normal balance for Wages Expense of $750. Accrued
wages for the period are $1,045. The adjusted balance for Wages Expense is now a:
A) $295 debit.
B) $295 credit.
C) $1,795 debit.
D) $1,795 credit.
33) Unearned Ticket Revenue is $5,034 on the unadjusted trial balance. During the period,
$3,309 of that money has now been earned. The adjusted balance for Unearned Ticket Revenue
is a:
A) $3,309 debit.
B) $3,309 credit.
C) $1,725 debit.
D) $1,725 credit.
34) The adjusted balance for Prepaid Insurance is a $724 debit. Insurance Expense for the period
was $1,136. What was the balance for Prepaid Insurance on the unadjusted trial balance?
A) $412 debit
B) $412 credit
C) $1,860 debit
D) $1,136 debit
35) The adjusted balance for Supplies was $333. The unadjusted balance for Supplies was $509.
The amount of supplies expense would be recorded as a:
A) $333 debit.
B) $176 debit.
C) $176 credit.
D) $509 debit.
36) Interest Expense had an adjusted balance of $1,178. The adjusting entry for accrued interest
was for $382. The unadjusted balance for Interest Expense was a:
A) $382 debit.
B) $1,560 debit.
C) $1,560 credit.
D) $796 debit.