The accountant for Barnes Auto Repair Company failed to make an adjusting entry to record​ $5,000 of unpaid salaries for the last two weeks of the year. Which of the following is an effect of this​ omission?

The accountant for Barnes Auto Repair Company failed to make an adjusting entry to record​ $5,000 of unpaid salaries for the last two weeks of the year. Which of the following is an effect of this​ omission?

A.

The net income will be overstated.

B.

The total assets will be overstated.

C.

The net income will be understated.

D.

The total assets will be understated.

Financial statements are prepared from the balances in​ a(n) ________.

A.

adjusted trial balance

B.

unadjusted trial balance

C.

general journal

D.

chart of accounts

The accountant of Residential Architectural Services failed to make an adjusting entry to record​ $7,000 of depreciation expense. Which of the following statements is​ true?

A.

The equity will be understated.

B.

The total assets will be understated.

C.

The total liabilities will be overstated.

D.

The total assets will be overstated.

The accountant of Newton Legal Services failed to make an adjusting entry for supplies that had been used for the year. Assume the supplies were initially recorded as an asset. Which of the following statements is​ true?

A.

The equity will be understated.

B.

The total assets will be overstated.

C.

The total liabilities will be overstated.

D.

The total assets will be understated.

Salaries are​ $4,000 per week for five working days and are paid weekly at the end of the day on Fridays. The end of the month falls on a Thursday. The accountant for Sunset Company made the appropriate accrual adjustment and posted it to the ledger. The balance of Salaries​ Payable, as shown on the adjusted trial​ balance, will be a​ ________. (Assume that there was no beginning balance in the Salaries Payable​ account.)

A.

credit balance of​ $800

B.

debit balance of​ $800

C.

debit balance of​ $3,200

D.

credit balance of​ $3,200

On the first day of​ January, Builders Company borrowed $2,000  on a  one−year note payable bearing interest at 33​% per year. The note specifies that principal and interest must be paid in full at the end of the one−year period. On June​ 30, the adjusted trial balance will show Interest Payable of​ ________.

A.$30 credit

B.$60 debit

C.$60 credit

D.$30 debit

What is the effect of the adjusting entry for Depreciation​ Expense?

A.

It decreases total assets and increases total expenses.

B.

It increases total liabilities and increases total expenses.

C.

It increases total assets and increases total expenses.

D.

It decreases total liabilities and increases total expenses.

The purpose of the adjusted trial balance is to ensure that no errors were made during the adjusting process.

True

False

The adjusted trial balance is prepared after the adjustments have been journalized and posted.

True

False

Princeton Financial Services Company purchased computers that are to be used in its consulting services. Based on the matching​ principle, what​ account, other than​ Computers, should appear on the balance sheet as of December​ 31, 2018?

A.

Accumulated

Depreciationdash–Equipment

B.

Equipment Expense

C.

Service Revenue

D.

Depreciation

Expensedash–Equipment

On January​ 1, 2018, the Prepaid Insurance account of Dogwood Company had a beginning balance of $1,200. Three months of insurance premiums remain in this beginning balance. On February​ 21, 2018, the company paid an annual insurance premium in the amount of $3,800 for the period beginning March 1. On February​ 28, 2018, the balance in Prepaid Insurance is $800.

True

False

In the case of a deferred​ expense, the adjusting entry required at the end of a period will consist of a debit to the Prepaid Expense account. Assume the deferred expense was initially recorded as an asset.

True

False

The depreciation method that allocates an equal amount of depreciation to each year is called the straight–line method.

True

False

Which of the following is not a type of adjusting​ entry?

A.

deferred expenses

B.

accrued revenues

C.

unearned expenses

D.

deferred revenues

Accrual basis accounting requires the business to review the unadjusted trial balance and determine whether any additional revenues and expenses need to be recorded.

True

False

A good or service is considered transferred when the customer places an order or requests a service.

True

False

The time period concept states that​ ________.

A.

expenses incurred during a period should be matched against the revenues of the period

B.

financial statements can be prepared for specific periods

C.

all expenses should be recorded when they are incurred during the period

D.

companies should record revenue when it has been earned

The accounting period used for the annual financial statements is called the fiscal year.

True

False

The time period concept assumes that the activities of a business can be sliced into small time segments.

True

False

The key differences between the cash basis and accrual basis of accounting can be explained by understanding the time period concept and the revenue recognition and matching principles.

True

False