Quiz 3

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•             Question 1
5 out of 5 points
               
                Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $800. Fragmental collected the entire $6,400 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made by Fragmental Co. on December 31 would be:                                           
                Selected Answer:             A debit to Unearned Rent and a credit to Rent Revenue for $2,400.
                                               
•             Question 2
5 out of 5 points
               
                Adjustments must be entered in the journal and posted to the ledger after the work sheet is prepared.                                  
                Selected Answer:             True
                                               
•             Question 3
5 out of 5 points
               
                Which of the following statements regarding reporting under GAAP and IFRS is not true:                                
                Selected Answer:             Both GAAP and IFRS define the initial asset value as replacement value.
                                               
•             Question 4
5 out of 5 points
               
                If accrued salaries were recorded on December 31 with a debit to Salaries Expense and a credit to Salaries Payable, and no reversing entries were made on January 1, the entry to record payment of these wages on the following January 5 would include:                                          
                Selected Answer:             A debit to Salaries Payable and a credit to Cash.
                                               
•             Question 5
5 out of 5 points
               
                Interim financial statements report a company's business activities for a one-year period.                                             
                Selected Answer:             False
                                               
•             Question 6
5 out of 5 points
               
                Intangible assets are long-term resources that benefit business operations that usually lack physical form and have uncertain benefits.                                              
                Selected Answer:             True
                                               
•             Question 7
5 out of 5 points
               
                Recording revenues early overstates current-period income; recording revenues late understates current period income.                                 
                Selected Answer:             True
                                               
•             Question 8
5 out of 5 points
               
                In preparing statements from the adjusted trial balance, the balance sheet must be prepared first.                                           
                Selected Answer:             False
                                               
•             Question 9
5 out of 5 points
               
                Which of the following statements related to U.S. GAAP and IFRS is incorrect?                                    
                Selected Answer:             U.S. GAAP does not require items to be separated by current and noncurrent classifications on the balance sheet.
                                               
•             Question 10
5 out of 5 points
               
                All of the following are true regarding prepaid expenses except:                               
                Selected Answer:             The adjusting entry for prepaid expenses increases expenses and decreases liabilities.
                                               
•             Question 11
5 out of 5 points
               
                Adjusting entries:                                           
                Selected Answer:             Affect both income statement and balance sheet accounts.
                                               
•             Question 12
5 out of 5 points
               
                On December 31, Winters Company received a $385 bill for the purchase of supplies in December that it will not pay for until January 15. Winters follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry needed on December 31 to accrue this cost is:                                             
                Selected Answer:             Debit Supplies $385; credit Accounts Payable $385.
                                               
•             Question 13
0 out of 5 points
               
                On April 1, Santa Fe, Inc. paid Griffith Publishing Company $1,548 for 36-month subscriptions to several different magazines. Santa Fe debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What adjusting entry should be made by Santa Fe, Inc. for the adjustment on December 31 of the first year assuming the company is using a calendar-year reporting period and no previous adjustments had been made?                                 
                Selected Answer:             Debit Unearned Subscriptions $387 and credit Subscription Expense $387.
                                               
•             Question 14
5 out of 5 points
               
                Revenue and expense balances are transferred from the adjusted trial balance to the income statement.                                
                Selected Answer:             True
                                               
•             Question 15
0 out of 5 points
               
                Profit margin reflects the percent of profit in each dollar of revenue.                                      
                Selected Answer:             False
                                               
•             Question 16
5 out of 5 points
               
                Reversing entries:                                           
                Selected Answer:             Are optional.
                                               
•             Question 17
5 out of 5 points
               
                Adjusting entries are usually entered in the work sheet before they are entered in the general journal.                                    
                Selected Answer:             True
                                               
•             Question 18
5 out of 5 points
               
                Reversing entries:                                           
                Selected Answer:             Will often result temporarily in abnormal account balances in some accounts.
                                               
•             Question 19
5 out of 5 points
               
                The accounting cycle refers to the sequence of steps used in preparing the work sheet.                                  
                Selected Answer:             False
                                               
•             Question 20
5 out of 5 points
               
                The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750. The Adjustments columns shows a credit of $425 for supplies used during the period. The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:                                          

                Selected Answer:             $325 debit.

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