Ch.4 Quiz

Instructions
Read the questions carefully.

This assessment is worth 100 points.

  1. Adjusting entries ordinarily do not affect the Cash account.   (4 points)

      
      

  2. Unearned revenue is income and should be reported on the income statement.   (4 points)

      
      

  3. Unpaid expenses should never be included as an expense on the income statement.   (4 points)

      
      

  4. All assets should be depreciated.   (4 points)

      
      

  5. Materiality is a well defined concept and is not a matter of professional judgment.   (4 points)

      
      

  6. Which of the following activities is least likely to be limited to "year-end"?   (4 points)

    a.  
    b.  
    c.  
    d.  

  7. The purpose of adjusting entries is to:   (4 points)

    a.  
    b.  
    c.  
    d.  

  8. The entry to record depreciation is an example of an adjusting entry:   (4 points)

    a.  
    b.  
    c.  
    d.  

  9. ASK Systems prepares monthly financial statements. ASK would record a prepaid expense in each of the following situations except:   (4 points)

    a.  
    b.  
    c.  
    d.  

  10. The balance of an unearned revenue account:   (4 points)

    a.  
    b.  
    c.  
    d.  

  11. The adjusting entry to recognize an unrecorded expense is necessary:   (4 points)

    a.  
    b.  
    c.  
    d.  

  12. An adjusting entry involving recognition of unrecorded revenue is necessary at the end of March in which of the following situations?   (4 points)

    a.  
    b.  
    c.  
    d.  

  13. Which of the following is not considered an end-of-period adjusting entry?   (4 points)

    a.  
    b.  
    c.  
    d.  

  14. The concept of materiality:   (4 points)

    a.  
    b.  
    c.  
    d.  

  15. The book value of an asset equals:   (4 points)

    a.  
    b.  
    c.  
    d.  

  16. Unearned revenue appears:   (4 points)

    a.  
    b.  
    c.  
    d.  

  17. Which of the following is considered an adjusting entry?   (4 points)

    a.  
    b.  
    c.  
    d.  

  18. Which statement is true about an adjusted trial balance?   (4 points)

    a.  
    b.  
    c.  
    d.  

  19. On the adjusted trial balance, retained earnings is:   (4 points)

    a.  
    b.  
    c.  
    d.  

  20. Depreciation is:   (4 points)

    a.  
    b.  
    c.  
    d.  

  21. Hampton Jewelers purchased display shelves on March 1 for $9,000. If this asset has an estimated useful life of five years, what is the book value of the display shelves on April 30?   (4 points)

    a.  
    b.  
    c.  
    d.  

  22. Video Connection offered books of video rental coupons to its patrons at $30 per book. Each book contained a certain number of coupons for video rentals. During the current period 1,000 books were sold for $30,000, and this amount was credited to Unearned Rental Revenue. At the end of the period it was determined that $10,000 worth of book coupons had been used by customers to rent videos. The appropriate adjusting entry at the end of the period would be:   (4 points)

    a.  
    b.  
    c.  
    d.  

  23. The accountant for ProTex Painting forgot the following two adjustments at the end of 1999:
    (a) The entry to record depreciation: $1,000.
    (b) The entry to record the portion of fees received in advance which have now been earned: $1,000.

    As a result of these two omissions:   (4 points)

    a.  
    b.  
    c.  
    d.  



  24. Freeon Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31:

    (1) A one-year bank loan of $150,000 at an annual interest rate of 12% had been obtained on December 1.
    (2) The company's to pay all employees up-to-date on each Friday. Since December 31 fell on Monday, there was a liability to employees at December 31 for one day's pay amounting to $4,200.
    (3) On December 1 rent on the office building had been paid for three months. Monthly rent is $3,000.
    (4) Depreciation of office equipment is based on a lifetime of five years. The balance in the Office Equipment account is $45,000; no change has occurred in the account during the year.
    (5) Fees of $8,000 were earned during the month for clients who had paid in advance. Failure to make the appropriate adjustment to the Salary Expense account will result in:   (4 points)

    a.  
    b.  
    c.  
    d.  

  25. Darnell, Inc. adjusts its books each month but closes its books at the end of the year. The trial balance at January 31 before adjustments is as follows:


    Employees are owed $500 for services since the last payday in January, to be paid the first week in February. The amount to be reported in the January income statement for salaries expense is:   (4 points)

    a.  
    b.  
    c.  
    d.  



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