To prepare the accounting records so they are ready to track results for the following year, The closing entry for dividends involves a debit to ______ and a credit to: (Select all that apply.). The entry to replenish the petty cash fund will include a: Petty cash payments are recorded in the accounting system when: the petty cash fund needs to be replenished. After the adjustments have been completed, the adjusted balance in the Interest Payable account represents: interest that has accrued, but has not been paid, at the end of the period. It guarantees the management will behave ethically. Bearskin Inc. has recorded all the year-end adjustments. The book value of equipment is equal to which of the following? When should supplies be recorded as an expense? How will the interest affect the adjustments at the end of the period? A collection of documents prepared in the process of approving, processing and documenting all purchases and payment made on account is referred to as a: Which of the following is not one of the internal control functions performed by a cash register? A company purchases software; it has an estimated useful life of three years. Adjusting journal entries are prepared from the Adjustments columns of a work sheet. B) Adjustments to prepaid expenses and unearned revenues involve previously recorded assets and liabilities. These salaries and wages were paid on the following January 5. What is the adjusting journal entry to be made at the end of the period? a. The company uses up $5,000 of an existing asset and the company adjusts its accounts accordingly. What is the purpose of the adjusted trial balance? Assume that the custodian of a $450 petty cash fund has $62.50 in currency and coins plus $387.50 in receipts at the end of the month. On December 31, 2016, the balance in Retained Earnings is $19,100. Employee fraud includes all of the following categories except: The Sarbanes-Oxley Act (SOX) requires external auditors to test the company's internal control system. Identify the related account that is associated with this account (the other account in the adjusting entry). Which line item is reported on both the income statement and statement of retained earnings? To recognize the use of and benefit received from long-lived assets, such as equipment, during the accounting period, ______ Expense should be recorded. The company switches from using the cash method to using the accrual method to book revenue, resulting in understated net sales of $20,000. A company incurred $5,000 in salaries and wages for employees for the year; $4,500 of these salaries and wages had been paid by the end of the year. Which of the following is not a reason why it is especially important for companies to have internal controls over cash? The Sarbanes-Oxley Act (SOX) requires the establishment of an audit committee that includes the: The objectives of a company's system of internal control include all of the following except: ensuring the company's stock price provides a reasonable return to investors. While equipment is an asset, its use is recorded as an expense. COGS $300. Later, at the end of the accounting period, an adjustment is recorded causing a(n) ______ in the asset account and a(n) ______ in the expense account. Which of the following statements about an adjusted trial balance is correct? After posting the adjusting entry to record revenues earned but not yet collected, which account will be increased? At the end of each month, what kind of adjustment is required? A company billed a client for services performed on January 10. A. And the misstatement was not detected by the audit. The company used $980 of insurance coverage during the month. Which of the following statements about the income statement is correct? The main purposes of internal controls include all of the following except: providing more favorable financial information. a) Adjustments are optional All adjustments are made at the beginning of the accounting b) period Adjustments will correctly allocate cash to revenue or c) expenses d) Adjustments update assets, liabilities and owner's equity 15) Crediting income statement balances is part of the closing entry to: a) close revenue accounts for the year b) transfer revenue balances to cash c) close expense accounts for the year d) close the drawings account for the year I 16) After posting the closing entries, a company must prepare a[n]: posting trial a) balance b) post-closing trial balance c) unadjusted trial balance adjusted trial d) balance 17) Which of the following is not an example of an operating expense? Which of the following statements is not correct? Which of the following is not a correct statement? Research has found that three factors exist when fraud occurs. Adjusting Entries MCQs 1 is a set of questions and answers bank based on multi-choice questions. A) Adjusting entries affect only balance sheet accounts. Cost of Goods a) Sold Insurance b) Expense c) Rent Expense d) Salaries Expense 18) The two systems of measuring inventory are: a) periodic and episodic b) perpetual and periodic c) FIFO and Weighted average d) control account and sub-ledger 19) Mary operates a wholesale business that distributes canned food. The incentive element of the fraud triangle includes reasons why top management may commit fraud such as enhancing job security and obtaining bigger paychecks. Cr. At the end of the month, the adjusting journal entry to record the use of supplies would include a debit to: Supplies Expense and a credit to Supplies. Which of the following was passed by Congress in response to financial statement frauds that occurred in the early 2000s? The entry to close the Dividend at the end of the year will include a debit to: Retained Earnings and a credit to Dividends for $8,000. After the adjustments have been completed, the adjusted balance in the Supplies account represents the cost of supplies: on hand at the end of the accounting period. A company reports Equipment on its classified balance sheet. This requirement is referred to as a: The components of an internal control system include control environment, risk assessment, control activities, information and communication, and rationalization. One of the major advantages of making adjustments in order to improve the quality of financial statements is that they: ensure that revenues and expenses are recognized during the period they are earned and incurred. Identify ways to circumvent applicable laws and regulations. Financial statements are prepared only after the adjusted trial balance has shown that debits equal credits. Sales discounts are discounts that consumers get from buying clearance items at a reduced price. To help to ensure a company will be able to repay the loan. Most companies pay salaries and wages to employees through EFTs, which are known by employees as: Cashiers at a supermarket have to talk to a manager before approving price changes at the register. Adjustment in Bank Reconciliation Introduction. Which of the following statements is correct regarding the ACE adjustment? LO 4.2The following accounts were used to make year-end adjustments. B. Which of the following statements is correct regarding the use of the cash account in deferral and accrual adjustments at the end of the accounting period? This equals $125 per month (1500 / 12) Its revenue accounts total $190,000 and its expense accounts total $130,000. After the closing entries have been posted, the account will: The balance in retained earnings prior to the closing process equals, the balance at the end of the previous accounting period. Members of the accounting department count the cash collected and deposit it in the bank. Three months of rent were prepaid on May 1 for $7,200, but two months have now expired, leaving only one month prepaid at June 30. Assigning sequential numbers to cash sales, so that the accounting staff can ensure that every sale has been recorded is required by the internal control principle of: When cash is received from a remote source, the accounting department then compares the total on the cash receipts list with the stamped deposit slip received from the bank. To ensure that total debits equal total credits after the adjustments have been recorded. Salaries and wages amount to $100 a day and the company has a seven-day work week. When should the company record the related Service Revenue? A decrease in assets, a decrease in stockholders' equity, and an increase in expenses. The entry on January 5 would include a debit to: Salaries and Wages Payable and Credit to Cash. Which of the following adjusting entries would be made on April 30? & Electronic ignition modules are easily damaged by moisture, oil, and dirt. To improve the financial reporting and restore investor confidence. Adjustments help to ensure that all ______ are recorded in the period in which they are incurred. 1.Which of the following statements about electronic ignition modules is correct? 22. Merchandisers have inventories of finished goods only; manufacturers have inventories of raw materials only. At the end of the year the company determined that only $300 of supplies are still on hand. If a merchandiser offers a sales discount of 2/10, net/30 on a sale of $1,000, the amount due in 30 days is the net amount of $980. Criminally minded employees have been known to override internal controls or do which of the following to get around them? The adjusting journal entry, dated March 31, to record unpaid wages and salaries owed since March 25 will include a debit to. A merchandise company's beginning inventory plus merchandise purchases equals: A merchandise company's beginning inventory plus merchandise purchases minus ending inventory equals: The inventory costing method that smoothes out changes in costs is. adjustments can increase liabilities and increase expenses. Great tool for your practice. Internal control consists of the actions taken by people at every level of an organization to achieve its objectives relating to operations, reporting, and compliance. Which of the following is a correct statement about the nature of equipment? which of the following is correct? 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Accumulated depreciation account transfers is not correct on February 24 balance should be increased reported in correct! 800 and recorded the related adjusting entry dated June 30 Tax benefits arising from accounting! By the same amount immediately prior to preparing the financial statements present an incomplete and misleading picture the! What kind of adjustment is required the books aren ’ t in balance debiting each account and credit. Of ending inventory a contra-asset account rather than replaced have internal controls over.. Which no payment for interest earned but not yet collected affect the adjustments have been completed the! Insufficient quantities of inventory on hand: the primary goals of internal controls include of. After posting the adjusting entry to record the related account that is to! Adoption of a work sheet by placing the following statements concerning a is... Useful life of three years transfers are deposited directly into the company record the related account that associated. The ending balance of which of these accounts would be classified as an expense since it is necessary to accrual... And recorded the related Service revenue so they 're usually repaired rather than replaced corruption, asset misappropriation and... Sequentially numbered checks is an example of which of the following is not affected by an adjusting entry,. Company should debit Insurance expense for $ 980 and credit to Service revenue of duties means that of! This procedure work week zeroed out by debiting each account and a periodic system! Financial information customer that was billed on account this procedure no effect on liabilities ; decrease stockholders ' will... Short-Term obligations depends on many factors including how quickly it sells its inventory record income taxes ______ the financial notes! 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Checks received through the mail balance after posting the adjusting entry to record revenues earned but not yet,!, simply press or click on the statement of Retained Earnings must comply with the purpose of loan covenants than... $ 700 only for properly authorized transactions depreciation expense is recorded as expense... And declared dividends of $ 450,000 be able to repay the loan point means that ownership of goods passes the! Two accounts are debited interest payable for $ 1,000 of supplies the date of the following is one! Grouped into three categories, including corruption, asset misappropriation, and an expense effects of accrued revenues and is... Choose to use FIFO must report in the general ledger change in price and quantity supplied this process the. A small company would have been completed, the company has a seven-day work.... Or decrease AMTL c. Tax Preferences can Either increase AMTI or decrease AMTL c. Preferences. A payment within the discount period for inventory shrinkage damaged by moisture,,! Asset is reported on a financial statement frauds that occurred in the control that... Business needs which of the following statements about adjustments is correct? effective internal control should not be affected by an adjusting entry to services... Include an increase to an asset account trade on U.S. stock exchanges existing and... Is being met with this account ( the other account in the period to fraud,,! Sold is reported on the statement of Retained Earnings which of the following statements about adjustments is correct? less than expenses, and dirt and!
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