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Which of the following account balances would not be affected by closing entries?


A) Interest expense.
B) Accumulated depreciation.
C) Dividends.
D) Retained earnings.

E) B) and C)
F) A) and C)

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Which of the following transactions does not create a deferral?


A) Paying cash to purchase a three-month insurance policy.
B) Receiving cash from a customer for services to be provided in the future.
C) Paying cash to employees for wages they have earned.
D) Paying cash to purchase a two-month supply of office supplies.

E) A) and C)
F) A) and B)

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At December 31, 2016, the following adjusting entries were recorded in the accounts of ABD Company.

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Which is the correct sequence of the following steps in the accounting cycle?


A) Prepare journal entries, analyze transactions, prepare adjusted trial balance.
B) Prepare adjusted trial balance, prepare closing entries, and prepare financial statements.
C) Post adjusting journal entries, prepare adjusted trial balance, prepare financial statements.
D) Post closing entries, prepare financial statements, prepare adjusted trial balance.

E) None of the above
F) All of the above

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Which of the following accounts requires a debit to close the account at year-end?


A) Prepaid rent.
B) Sales revenue.
C) Unearned revenue.
D) Wage expense.

E) A) and D)
F) B) and D)

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Failure to make an adjusting entry to recognize rent revenue receivable would cause which of the following?


A) An understatement of assets, net income, and stockholders' equity.
B) An overstatement of assets and stockholders' equity and an understatement of net income.
C) No effect on assets, liabilities, net income, or stockholders' equity.
D) An overstatement of assets, net income, and stockholders' equity.

E) A) and C)
F) B) and C)

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At the end of the accounting period, the balances in the temporary accounts are closed while the balances in the permanent accounts are carried forward to the next accounting period.

A) True
B) False

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Which of the following account balances would be closed at year-end by crediting the account?


A) Investment revenue.
B) Loss on sale of building.
C) Sales revenue.
D) Unearned revenues.

E) All of the above
F) B) and C)

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On November 1, 2016, Bug Busters collected $6,000 in advance for three months of service to be provided beginning on that date. Bug credited unearned service revenue for $6,000. The books are adjusted only at year-end. Required: Prepare the adjusting entry required on December 31, 2016.

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blured image ($6,000 ÷ 3) = $2,0...

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Which of the following transactions and events results in a decrease in both total assets and net income?


A) The accrual of wages expense at year-end.
B) Collecting cash from an account receivable.
C) Recognizing previously recorded deferred revenue as revenue.
D) Adjustment of the prepaid rent account for rent used during the perioD.Adjusting prepaid rent for rent used during the period reduces the prepaid rent (asset) account and recognizes a rent expense.The rent expense decreases net income.

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

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Which of the following does not correctly describe an adjusting journal entry that debits interest expense and credits interest payable?


A) The entry increases expenses and decreases retained earnings.
B) The entry decreases net income and decreases stockholders' equity.
C) The entry increases expenses and increases liabilities.
D) The entry decreases assets and decreases stockholders' equity.

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

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On January 1, 2016, Ryan Company paid the premium on a three-year insurance policy in the amount of $6,000. At that time, the full amount paid was recorded as prepaid insurance. After recording the adjusting entry for the insurance policy on December 31, 2016, what would be the balance in Ryan Company's prepaid insurance account?


A) $6,000.
B) $2,000.
C) $3,000.
D) $4,000.

E) None of the above
F) All of the above

Correct Answer

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Which of the following correctly describes the accounts reported on the post-closing trial balance?


A) They include permanent and temporary accounts with non-zero balances.
B) The ending retained earnings balance includes the current period net income.
C) They include only temporary account balances.
D) They do not include stockholders' equity account balances.

E) A) and B)
F) A) and C)

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On January 1, 2016, the balance in the prepaid insurance account was $2,500. On December 31, 2016, after the 2016 adjusting entries were made, the balance of the prepaid insurance account was $1,200. During 2016, cash payments for insurance premiums amounted to $5,000, which was debited to the prepaid insurance account. Prepare the adjusting entry, which must have been made at December 31, 2016.

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blured image $2,500 + ...

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The total asset turnover ratio measures sales dollars generated per dollar of assets and is a measure of efficient management of assets.

A) True
B) False

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On July 1, 2016, Goode Company borrowed $100,000. The company signed a note payable with interest at 6 percent per year. The note and interest are due on December 31, 2016. On December 31, 2016, Goode paid $103,000 to settle the debt in full. Assuming no accruals for interest have been made during the year, transaction analysis of the $103,000 cash payment on December 31, 2016 should reflect which of the following?


A) A decrease in assets of $103,000 and a decrease in liabilities of $103,000.
B) A decrease in assets of $100,000, a decrease in stockholders' equity of $3,000, and a decrease in liabilities of $103,000.
C) A decrease in stockholders' equity of $100,000, a decrease in liabilities of $3,000, and a decrease in assets of $103,000.
D) A decrease in liabilities of $100,000, a decrease in stockholders' equity of $3,000, and a decrease in assets of $103,000.

E) A) and D)
F) A) and C)

Correct Answer

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Which of the following correctly describes the following adjusting journal entry? Which of the following correctly describes the following adjusting journal entry? A) Total assets decrease. B) Liabilities will increase. C) Stockholders' equity is not affected. D) Net income increases.


A) Total assets decrease.
B) Liabilities will increase.
C) Stockholders' equity is not affected.
D) Net income increases.

E) A) and B)
F) A) and C)

Correct Answer

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Which of the following transactions and events results in an increase in liabilities and a decrease in net income?


A) The accrual of wages expense at year-end.
B) Collecting cash from a customer for services to be provided in the future.
C) The accrual of revenue earned at year-end.
D) Adjustment of the unearned revenue account for revenue earned during the perioD.The accrual of wages expense at year-end recognizes an expense that decreases net income, and creates wages payable which increases liabilities.

E) A) and B)
F) B) and C)

Correct Answer

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Which of the following correctly describes the effects of accruing income tax expense at year-end?


A) A cash payment is made to pay the taxes due.
B) Liabilities are not affected.
C) Retained earnings decreases.
D) Net income increases.

E) A) and B)
F) None of the above

Correct Answer

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Describe the adjusted trial balance.

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The adjusted trial balance is not a fina...

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