Acct. 2010 Midterm Exam with
Accurate Solutions
The purpose of adjusting entries is to - ANS-(1) update amounts already recorded in the
accounting records and (2) include events that occurred but had not yet been recorded.
When a company pays its rent in advance its recorded as - ANS-an asset is reported on
the balance sheet
As a company uses supplies, an adjustment should be made to - ANS-decrease an
asset account and increase an expense account
The amount charged for a good or service provided to a customer on account is - ANS-
debited to Accounts Receivable and credited to the related revenue account at the time
the good or service is provided
An adjusted trial balance is prepared ________ the financial statements (income
statements) are prepared - ANS-before
If an expense has been incurred but will be paid later, then - ANS-a liability account is
created or increased and an expense is recorded.
An expense has been incurred but not yet paid in cash - ANS-accrual adjustment
Adjusting entries affect - ANS-both income statement and balance sheet accounts
Adjustments help to ensure that all ______ are recorded in the period in which they are
incurred. - ANS-expenses
Adjustments ensure that ____ balances are reported at amounts representing the
economic benefits that remain at the end of the period and will be used-up in future
periods. - ANS-asset
Adjustments to revenue accounts at the end of the accounting period are made to
adhere to accrual accounting principles, specifically the ______ principle. - ANS-
revenue recognition
The adjusting entry to record the amount earned that previously had been collected in
advance will: - ANS-decrease liabilities and increase revenue
, At the end of the month, the adjusting journal entry to record the use of supplies would
include a debit to: - ANS-Supplies Expense and a credit to Supplies.
During the month, a company uses up $4,000 of supplies. At the end of the month, the
related adjusting journal entry would result in a(n): - ANS-decrease in an asset and an
equal increase in expenses
A company started the year with $1,500 of supplies on hand. During the year the
company purchased additional supplies of $800 and recorded them as increase to the
supplies asset. At the end of the year the company determined that only $300 of
supplies are still on hand. What is the adjusting journal entry to be made at the end of
the period? - ANS-Debit Supplies Expense and credit Supplies for $2,000
Interest earned and receivable on a note receivable equals $50 for the month of March.
What adjusting entry, if any, should be recorded as of March 31? - ANS-Debit Cash $50
and credit Interest Revenue $50.
When should supplies be recorded as an expense? - ANS-in the period the supplies are
used, regardless of when they were purchased
When recording an adjustment for the use of equipment during the current accounting
period, which two accounts are affected - ANS-Accumulated Depreciation and
Depreciation Expense
Adjusting entries do not affect - ANS-Cash
The order of accounts on a trial balance is as follows: - ANS-assets, liabilities,
stockholders' equity, dividends, revenues and expenses.
After preparing adjusting entries, the equality of recorded debits and credits is checked
by preparing a(n): - ANS-adjusted trial balance
An adjusted trial balance should be prepared immediately - ANS-after posting adjusting
entries
An adjusted trial balance is prepared to check - ANS-that the accounting records are
still in balance, after having posted all adjusting entries to the T-accounts.
What is the purpose of the adjusted trial balance - ANS-To ensure that total debits equal
total credits after the adjustments have been recorded
Net income = - ANS-Ending retained earnings − Beginning retained earnings +
Dividends
Closing journal entries transfer what to retained earnings? - ANS-transfer net income (or
loss) and Dividends to Retained Earnings
Accurate Solutions
The purpose of adjusting entries is to - ANS-(1) update amounts already recorded in the
accounting records and (2) include events that occurred but had not yet been recorded.
When a company pays its rent in advance its recorded as - ANS-an asset is reported on
the balance sheet
As a company uses supplies, an adjustment should be made to - ANS-decrease an
asset account and increase an expense account
The amount charged for a good or service provided to a customer on account is - ANS-
debited to Accounts Receivable and credited to the related revenue account at the time
the good or service is provided
An adjusted trial balance is prepared ________ the financial statements (income
statements) are prepared - ANS-before
If an expense has been incurred but will be paid later, then - ANS-a liability account is
created or increased and an expense is recorded.
An expense has been incurred but not yet paid in cash - ANS-accrual adjustment
Adjusting entries affect - ANS-both income statement and balance sheet accounts
Adjustments help to ensure that all ______ are recorded in the period in which they are
incurred. - ANS-expenses
Adjustments ensure that ____ balances are reported at amounts representing the
economic benefits that remain at the end of the period and will be used-up in future
periods. - ANS-asset
Adjustments to revenue accounts at the end of the accounting period are made to
adhere to accrual accounting principles, specifically the ______ principle. - ANS-
revenue recognition
The adjusting entry to record the amount earned that previously had been collected in
advance will: - ANS-decrease liabilities and increase revenue
, At the end of the month, the adjusting journal entry to record the use of supplies would
include a debit to: - ANS-Supplies Expense and a credit to Supplies.
During the month, a company uses up $4,000 of supplies. At the end of the month, the
related adjusting journal entry would result in a(n): - ANS-decrease in an asset and an
equal increase in expenses
A company started the year with $1,500 of supplies on hand. During the year the
company purchased additional supplies of $800 and recorded them as increase to the
supplies asset. At the end of the year the company determined that only $300 of
supplies are still on hand. What is the adjusting journal entry to be made at the end of
the period? - ANS-Debit Supplies Expense and credit Supplies for $2,000
Interest earned and receivable on a note receivable equals $50 for the month of March.
What adjusting entry, if any, should be recorded as of March 31? - ANS-Debit Cash $50
and credit Interest Revenue $50.
When should supplies be recorded as an expense? - ANS-in the period the supplies are
used, regardless of when they were purchased
When recording an adjustment for the use of equipment during the current accounting
period, which two accounts are affected - ANS-Accumulated Depreciation and
Depreciation Expense
Adjusting entries do not affect - ANS-Cash
The order of accounts on a trial balance is as follows: - ANS-assets, liabilities,
stockholders' equity, dividends, revenues and expenses.
After preparing adjusting entries, the equality of recorded debits and credits is checked
by preparing a(n): - ANS-adjusted trial balance
An adjusted trial balance should be prepared immediately - ANS-after posting adjusting
entries
An adjusted trial balance is prepared to check - ANS-that the accounting records are
still in balance, after having posted all adjusting entries to the T-accounts.
What is the purpose of the adjusted trial balance - ANS-To ensure that total debits equal
total credits after the adjustments have been recorded
Net income = - ANS-Ending retained earnings − Beginning retained earnings +
Dividends
Closing journal entries transfer what to retained earnings? - ANS-transfer net income (or
loss) and Dividends to Retained Earnings
