HOMEWORK 2 MBA 700 LSUS: Topic-Based Questions
With Correct Solutions
The expense recognition principle states that: Correct Answer - Expense
should be recognized in the period incurred.
On September 1, 2022, LSUS Magazine sold 100 one-year subscriptions for
$120 each. The total amount received was credited to Unearned Revenue.
What would be the required adjusting entry at December 31, 2022? Correct
Answer - Debit unearned revenue by $4,000, credit service revenue by
$4,000
Adjusting entries: Correct Answer - Always involve at least one
revenue/expense and one balance sheet account.
An adjusted trial balance: Correct Answer - Is a list of all accounts and
their balances after adjusting entries.
Making insurance payments in advance is an example of: Correct Answer -
A prepaid expense
LSUS Consulting provides 3 months consulting service for 6,000 to Scheinert
Inc. starting Jan 1, 2023. The payment is due on March 31st. Please assume
service are performed evenly throughout months. On Jan 31, 2023 LSUS
prepare a financial statement, what would LSUS consulting record as the
adjusting entry for this consulting work on Jan 31, 2023? Correct Answer -
Debit accounts receivable for 2,000; Credit consulting services for 2,000
On April 1, a $4,800 premium on a one-year insurance policy on equipment
was paid and charged to Prepaid Insurance. At the end of the year, the
adjusting entry would be: Correct Answer - debit insurance Expense,
$3,600; credit prepaid Insurance $3,600.
At the beginning of December, LSUS Corporation had $1,000 in supplies on
hand. During the month, supplies purchased amounted to $2,000, but by the
end of the month the supplies balance was only $200. What is the appropriate
,month-end adjusting entry? Correct Answer - Debit Supplies Expense
$2,800, credit Supplies $2,800.
At beginning of year 1, LSUS purchased a $10,000 manufacturing equipment
that is estimated to be used for five years. (no residue value after five years) If
the equipment is going to be depreciated evenly over five years, what would
be the correct adjusting entry at end of year1 for this equipment? Correct
Answer - Debit depreciation expense for $2,000; credit accumulated
depreciation for $2,000
Mod Inc.'s beginning of October supplies was $400. Mod purchased $800
worth of supplies during October. At the end of October Mod's balance of
supplies was $500. What will be Mod's end of October adjusting entry for
supplies? Correct Answer - Debit supplies expenses for $700; Credit
supplies for $700
The primary difference between accrual-basis and cash-basis accounting is:
Correct Answer - The timing of when revenues and expenses are recorded.
The income statement reports earned income on _____, and the cashflow
statement is based on ______. Correct Answer - An accrual-basis, cash-
basis accounting
The employees of smallshop work Monday through Friday. Every Friday the
company issues payroll checks totaling $5,000. The current pay period ends
on Friday, January 3. Smallshop is now preparing financial statements for the
year ended December 31, (which is a Tuesday). What is the adjusting entry to
record accrued salaries at the end of the year? Correct Answer - debit
salaries expense by 2,000, credit salaries payable by 2,000
LSUS consulting incurred $500 utility expense during their first month of
operation. They will pay 20 days later when the bill is due. What would be the
adjusting entry at the end of the month when LSUS prepare the financial
statement? Correct Answer - Debit utility expense for $500; Credit utility
payable for $500
The closing entry for revenues includes: Correct Answer - A debit to
Revenues and a credit to Retained Earnings.
, The closing entry for expenses includes: Correct Answer - A debit to
Retained Earnings and a credit to all expense accounts.
Permanent accounts would not include: Correct Answer - interest
expense
The closing process includes which of the following? Correct Answer -
Closing the balances of revenue, expense and dividend accounts to zero.
The trial balance best for prepare income statement is: Correct Answer -
adjusted trial balance
When preparing balance sheet you have the choices of using the following
trial balances: the unadjusted, adjusted, and post-closing balance. Which one
of the three would make the preparation process the easiest (least steps) as
well as ensure the accuracy of the financial statement? Correct Answer -
post-closing trial balance
The purpose of closing entries is to transfer: Correct Answer - Balances
in temporary accounts to a permanent account.
When a company makes an end-of-period adjusting entry which includes a
debit to Utilities Expense, the usual credit entry is made to: Correct Answer
- Accounts (utilities) Payable.
Which of the following accounts is NOT involved in closing entries? Correct
Answer - Prepaid Insurance
Which one of the following accounts would go to zero after closing entries?
Correct Answer - Dividends
A list of all accounts and their balances after posting closing entries is referred
to as: Correct Answer - A post-closing trial balance.
Borchardt Corporation has provided the following data concerning last
month's operations.
With Correct Solutions
The expense recognition principle states that: Correct Answer - Expense
should be recognized in the period incurred.
On September 1, 2022, LSUS Magazine sold 100 one-year subscriptions for
$120 each. The total amount received was credited to Unearned Revenue.
What would be the required adjusting entry at December 31, 2022? Correct
Answer - Debit unearned revenue by $4,000, credit service revenue by
$4,000
Adjusting entries: Correct Answer - Always involve at least one
revenue/expense and one balance sheet account.
An adjusted trial balance: Correct Answer - Is a list of all accounts and
their balances after adjusting entries.
Making insurance payments in advance is an example of: Correct Answer -
A prepaid expense
LSUS Consulting provides 3 months consulting service for 6,000 to Scheinert
Inc. starting Jan 1, 2023. The payment is due on March 31st. Please assume
service are performed evenly throughout months. On Jan 31, 2023 LSUS
prepare a financial statement, what would LSUS consulting record as the
adjusting entry for this consulting work on Jan 31, 2023? Correct Answer -
Debit accounts receivable for 2,000; Credit consulting services for 2,000
On April 1, a $4,800 premium on a one-year insurance policy on equipment
was paid and charged to Prepaid Insurance. At the end of the year, the
adjusting entry would be: Correct Answer - debit insurance Expense,
$3,600; credit prepaid Insurance $3,600.
At the beginning of December, LSUS Corporation had $1,000 in supplies on
hand. During the month, supplies purchased amounted to $2,000, but by the
end of the month the supplies balance was only $200. What is the appropriate
,month-end adjusting entry? Correct Answer - Debit Supplies Expense
$2,800, credit Supplies $2,800.
At beginning of year 1, LSUS purchased a $10,000 manufacturing equipment
that is estimated to be used for five years. (no residue value after five years) If
the equipment is going to be depreciated evenly over five years, what would
be the correct adjusting entry at end of year1 for this equipment? Correct
Answer - Debit depreciation expense for $2,000; credit accumulated
depreciation for $2,000
Mod Inc.'s beginning of October supplies was $400. Mod purchased $800
worth of supplies during October. At the end of October Mod's balance of
supplies was $500. What will be Mod's end of October adjusting entry for
supplies? Correct Answer - Debit supplies expenses for $700; Credit
supplies for $700
The primary difference between accrual-basis and cash-basis accounting is:
Correct Answer - The timing of when revenues and expenses are recorded.
The income statement reports earned income on _____, and the cashflow
statement is based on ______. Correct Answer - An accrual-basis, cash-
basis accounting
The employees of smallshop work Monday through Friday. Every Friday the
company issues payroll checks totaling $5,000. The current pay period ends
on Friday, January 3. Smallshop is now preparing financial statements for the
year ended December 31, (which is a Tuesday). What is the adjusting entry to
record accrued salaries at the end of the year? Correct Answer - debit
salaries expense by 2,000, credit salaries payable by 2,000
LSUS consulting incurred $500 utility expense during their first month of
operation. They will pay 20 days later when the bill is due. What would be the
adjusting entry at the end of the month when LSUS prepare the financial
statement? Correct Answer - Debit utility expense for $500; Credit utility
payable for $500
The closing entry for revenues includes: Correct Answer - A debit to
Revenues and a credit to Retained Earnings.
, The closing entry for expenses includes: Correct Answer - A debit to
Retained Earnings and a credit to all expense accounts.
Permanent accounts would not include: Correct Answer - interest
expense
The closing process includes which of the following? Correct Answer -
Closing the balances of revenue, expense and dividend accounts to zero.
The trial balance best for prepare income statement is: Correct Answer -
adjusted trial balance
When preparing balance sheet you have the choices of using the following
trial balances: the unadjusted, adjusted, and post-closing balance. Which one
of the three would make the preparation process the easiest (least steps) as
well as ensure the accuracy of the financial statement? Correct Answer -
post-closing trial balance
The purpose of closing entries is to transfer: Correct Answer - Balances
in temporary accounts to a permanent account.
When a company makes an end-of-period adjusting entry which includes a
debit to Utilities Expense, the usual credit entry is made to: Correct Answer
- Accounts (utilities) Payable.
Which of the following accounts is NOT involved in closing entries? Correct
Answer - Prepaid Insurance
Which one of the following accounts would go to zero after closing entries?
Correct Answer - Dividends
A list of all accounts and their balances after posting closing entries is referred
to as: Correct Answer - A post-closing trial balance.
Borchardt Corporation has provided the following data concerning last
month's operations.
