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Exam 3: Adjusting the Accounts

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Question 31

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Can financial statements be prepared directly from the adjusted trial balance?

A) They cannot. The general ledger must be used.
B) Yes adjusting entries have been recorded in the general journal and posted to the ledger accounts.
C) No the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose.
D) They can because that is the only reason that an adjusted trial balance is prepared.

E) B) and D)
F) B) and C)

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Question 32

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Prepare adjusting entries for the following transactions. Omit explanations. 1. Depreciation on equipment is $600 for the accounting period. 2. There was no beginning balance of supplies and purchased $600 of supplies during the period. At the end of the period $150 of supplies were on hand. 3. Prepaid rent had a $1200 normal balance prior to adjustment. By year end $400 was unexpired.

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Question 33

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Depreciation expense for a period is the

Accrued revenues are amounts recorded and received but not yet recognized.

On June 1 during its first month of operations Crooked Rain purchased supplies for $4500 and debited the supplies account for that amount. At June 30 an inventory of supplies showed $1000 of supplies on hand. What adjusting journal entry should be made for June?

Valuing assets at their fair value rather than at their cost is inconsistent with the:

Which one of the following is not a justification for adjusting entries?

If business pays rent in advance and debits a Prepaid Rent account the company receiving the rent payment will credit

Gwynn Company has an accounting fiscal year which ends on June 30. The company also has a policy of paying the weekly payroll on Friday. Payroll records indicate the following salary costs were incurred. $\begin{array} { l l r } & \text { Date } & \text { Amount } \\\text { Monday } & \text { June 28 } & \$ 3,000 \\\text { Tuesday } & \text { June 29 } & 3,800 \\\text { Wednesday } & \text { June 30 } & 3,300 \\\text { Thursday } & \text { July 1 } & 3,500 \\\text { Friday } & \text { July 2 } & 2,400\end{array}$ Instructions (a) Prepare any necessary adjusting journal entries that should be made at year end on June 30. (b) Prepare the journal entry to record the payment of the weekly payroll on July 2.

An asset-expense relationship exists with

A company shows a balance in Salaries and Wages Payable of $34000 at the end of the month. The next payroll amounting to $50000 is to be paid in the following month. What will be the journal entry to record the payment of salaries? a. $\begin{array}{lrr} \text { Salaries and Wages Expense. } & 50,000 & \\ \text { Salaries and Wages Payable... } & & 50,000 \\\end{array}$ b. $\begin{array}{lrr} \text { Salaries and Wages Expense. } & 50,000 & \\ \text { Cash} & & 50,000 \\\end{array}$ c. $\begin{array}{lrr} \text { Salaries and Wages Expense } & 16,000 & \\ \text { Cash. } & & 16,000 \\\end{array}$ d. $\begin{array}{lrr}\text { Salaries and Wages Expense... } & 16,000 & \\ \text { Salaries and Wages Payable } & 34,000 & \\\text { Cash. } & & 50,000 \\\end{array}$

Characteristics associated with relevant accounting information are

For prepaid expense adjusting entries

Which one of the following is not an enhancing quality of useful information?

Many business transactions affect more than one time period.

Revenue recognition fraud is

A new accountant working for Brady Company records $700 Depreciation Expense on store equipment as follows: $\begin{array}{lrr} \text {Dr. \quad Depreciation Expense } &700\\ \text { Cr. \quad Cash} &&700\\\end{array}$ The effect of this entry is to

The quality of consistency pertains to the use of the same accounting principles by firms in the same industry.

The expense recognition principle requires that expenses be matched with revenues.

A law firm received $5000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made this would cause