Accounting Chapter 4

A company shows a balance in Salaries and Wages Payable of $50000 at the end of the month. The next payroll amounting to $75000 is to be paid in the following month. What will be the journal entry to record the payment of salaries? A. Salaries and Wages Payable 50000 Salaries and Wages Expense 25000 Cash 75000 B. Salaries and Wages Expense 75000 Salaries and Wages Payable 75000 C. Salaries and Wages Expense 75000 Cash 75000 D. Salaries and Wages Expense 25000 Cash 25000

A. Salaries and Wages Payable 50000 Salaries and Wages Expense 25000 Cash 75000

On January 1, 2017, M. Johanson Company purchased equipment for $54000. The company is depreciating the equipment at the rate of $750 per month. The book value of the equipment at December 31, 2017 is: A. $45000. B. $54000. C. $0. D. $9000.

Answer: A. $45000

The expense recognition principle matches: A. expenses with revenues. B. assets with liabilities. C. creditors with businesses. D. customers with businesses.

Answer: A. expenses with revenues

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true? A. The balance sheet and income statement will be misstated but the Retained Earnings statement will be correct for the current year. B. Net income will be overstated for the current year. C. Total expenses will be overstated at the end of the current year. D. Total assets will be understated at the end of the current year.

Answer: B. Net income will be overstated for the current year.

The closing entry process consists of closing: A. all permanent accounts. B. all temporary accounts. C. out the Retained Earnings account. D. all asset and liability accounts.

Answer: B. all temporary accounts

Accumulated Depreciation is a(n): A. liability account. B. contra asset account. C. expense account. D. stockholders' equity account.

Answer: B. contra asset account

The Vintage Laundry Company purchased $8500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $1500 on hand. The adjusting entry that should be made by the company on June 30 is: A. debit Supplies Expense, $1500; credit Supplies, $1500. B. debit Supplies Expense, $7000; credit Supplies, $7000. C. debit Supplies, $1500; credit Supplies Expense, $1500. D. debit Supplies, $7000; credit Supplies Expense, $7000.

Answer: B. debit Supplies Expense, $7000; credit Supplies, $7000

Walton Company collected $14400 in May of 2016 for 4 months of service which would take place from October of 2016 through January of 2017. The revenue reported from this transaction during 2016 would be: A. $14400. B. $0. C. $10800. D. $3600.

Answer: C. $10800

Depreciation is the process of: A. valuing an asset at its fair market value. B. writing down an asset to its real value each accounting period. C. allocating the cost of an asset to the periods in which it is used. D. increasing the value of an asset over the periods in which it is used.

Answer: C. allocating the cost of an asset to the periods in which it is used.

A post-closing trial balance will show: A. zero balances for balance sheet accounts. B. only income statement accounts. C. zero balances for all accounts. D. only balance sheet accounts.

Answer: D only balance sheet accounts

Using accrual accounting, expenses are recorded and reported only: A. when they are incurred and paid at the same time. B. if they are paid before they are incurred. C. if they are paid after they are incurred. D. when they are incurred whether or not cash is paid.

Answer: D. when they are incurred whether or not cash is paid.

If a company fails to adjust a Prepaid Rent account for rent that has expired, what effect will this have on that month's financial statements? A. Expenses will be overstated and net income and stockholders' equity will be understated. B. Failure to make an adjustment does not affect the financial statements. C. Assets will be overstated and net income and stockholders' equity will be understated. D. Assets will be overstated and net income and stockholders' equity will be overstated.

Answer: D. Assets will be overstated and net income and stockholders' equity will be overstated

Mary Richardo has performed $500 of CPA services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Mary make? A. Debit Unearned Service Revenue and credit Service Revenue B. Debit Cash and credit Unearned Service Revenue C. Debit Accounts Receivable and credit Unearned Service Revenue D. Debit Accounts Receivable and credit Service Revenue

Answer: D. Debit Accounts Receivable and credit Service Revenue

Snelling Tables paid employee wages on and through Friday, January 26, and the next payroll will be paid in February. There are three more working days in January (29-31). Employees work 5 days a week and the company pays $1200 a day in wages. What will be the adjusting entry to accrue wages expense at the end of January? A. Salaries and Wages Expense 6000 Salaries and Wages Payable 6000 B. No adjusting entry is required. C. Salaries and Wages Expense 1200 Salaries and Wages Payable 1200 D. Salaries and Wages Expense 3600 Salaries and Wages Payable 3600

Answer: D. Salaries and Wages Expense 3600 Salaries and Wages Payable 3600

Adjusting entries are made to ensure that: A. expense are recognized in the period in which they are incurred. B. revenues are recorded in the period in which the performance obligation is satisfied. C. balance sheet and income statement accounts have correct balances at the end of an accounting period. D. all of these answer choices are correct.

Answer: D. all of these answer choices are correct

Unearned revenues are: A. recognized but not yet received or recorded. B. recognized and recorded as liabilities before they are received. C. recognized and already received and recorded. D. received and recorded as liabilities before they are recognized.

Answer: D. received and recorded as liabilities before they are recognized.

The primary source used in the preparation of the financial statements is the: A. post-closing trial balance. B. general trial balance. C. adjusted trial balance. D. trial balance.

C. adjusted trial balance