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Multiple Choice Quiz
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1.
At the end of the fiscal year, an adjusting entry was made for accrued salaries of $500. The salaries for one week, $1,250, were paid on the first Friday of the new fiscal period. The entry to record paying the salaries expense for the week would be a
A)Sal. Exp., dr., $750; Salaries Payable, dr., $500; Cash, cr., $1,250
B)Sal. Exp., dr., $500; Salaries Payable, dr., $750; Cash, cr., $1,250
C)Salaries Exp., dr., $1,250; Cash, cr., $1,250
D)Salaries Exp., dr., $1,250; Salaries Payable, cr., $1,250
2.
The ________________ is the length of time into which the life of a business is divided for the purpose of preparing periodic financial statements.
A)natural business year
B)calendar year
C)accounting period
D)interim period
3.
The notion that the life of a business is divisible into equal time periods of equal length is known as the
A)continuing concern principle
B)time-period principle
C)business entity principle
D)recognition principle
4.
The adjusting process is based on two accounting principles. The two accounting principles are
A)realization and recognition
B)revenue recognition and matching
C)cost and business entity
D)continuing-concern and realization
5.
At the beginning of the year, a business had a two-year, $1,200 insurance policy on its office equipment. On July 1, it purchased a three-year, $1,800 policy on a newly constructed building. The December 31, year-end, adjusting entry would be
A)Insurance Expense, debit, $3,000; Prepaid Insurance, credit, $3,000
B)Insurance Expense, debit, $1,200; Prepaid Insurance, credit, $1,200
C)Insurance Expense, debit, $1,000; Prepaid Insurance, credit, $1,000
D)Insurance Expense, debit, $900; Prepaid Insurance, credit, $900
6.
At the beginning of the year, a business had a two-year, $1,200 insurance policy on its office equipment. On July 1 it purchased a three-year, $1,800 policy on a newly constructed building. A December 31, year-end, adjusting entry was made for the policy on the building but not for the policy on the office equipment. As a consequence of the oversight
A)expenses are understated and assets are overstated
B)expenses are overstated and assets are understated
C)expenses are understated and assets are understated
D)expenses are overstated and assets are overstated
7.
At the end of the accounting period, the business had $450 of office supplies on hand, which was a 50% increase over the beginning balance. If the business purchased $1,200 of office supplies during the year, then $_____ of office supplies were used during the year.
A)$975
B)$1,050
C)$1,650
D)$1,425
8.
A tenant rented space in our companies office building on September 1 at $450 per month, paying six months' rent in advance. The bookkeeper recognized a current liability of $2,700. The December 31, year-end adjusting entry would be
A)Unearned Rent, dr., $1,800; Rent Revenue, cr., $1,800
B)Unearned Rent, dr., $1,350; Rent Revenue, cr., $1,350
C)Rent Revenue, dr., $900; Unearned Rent, cr., $900
D)Cash, dr., $2,700; Rent Rev., cr., $1,800; Unearned Rent, cr., $900
9.
A tenant rented space in an office building on October 1 at $450 per month, paying six months' rent in advance. The bookkeeper recorded the October entry with a debit to Cash and a credit to Rent Revenue. The December 31, year-end adjusting entry would be
A)Unearned Rent, dr., $1,800; Rent Revenue, cr., $1,800
B)Unearned Rent, dr., $1,350; Rent Revenue, cr., $1,350
C)Rent Revenue, dr., $1,350; Unearned Rent, cr., $1,350
D)Cash, dr., $2,700; Rent Rev. cr., $1,350; Unearned Rent, cr., $1,350
10.
A tenant rented space in an office building on October 1, at $450 per month, paying six months' rent in advance. The bookkeeper recognized a current liability upon receipt of the $2,700. No year-end adjustment was recorded. As a consequence of overlooking the required adjustment,
A)revenue was overstated and liabilities were understated
B)revenue was understated and liabilities were understated
C)revenue was overstated and liabilities were overstated
D)revenue was understated and liabilities were overstated
11.
Dee Preciated rented an office space to Core Poration for three months at $500 per month, payable at the end of the third month, January 31. No year-end adjusting entry was recorded on December 31. As a consequence of this oversight,
A)assets were overstated and revenue was overstated
B)assets were overstated and revenue was understated
C)assets were understated and revenue was overstated
D)assets were understated and revenue was understated
12.
You have agreed to keep the accounting records for a business that has agreed to pay you $800 per month, beginning December 16. You use the accrual basis of accounting and recorded adjusting entries on December 31. When you receive the $800 on January 16, you will record the following entry
A)Cash, dr., $800; Acc. Rec., cr., $400; Fees Earned, credit, $400
B)Cash, dr., $400; Acc. Rec., cr., $400
C)Cash, dr., $800; Fees Earned, cr., $800
D)Acc. Rec., dr., $800; Cash, cr., $400; Fees Earned, cr., $400
13.
Which accounting principles lead most directly to the adjusting process?
A)the revenue recognition principle
B)the time period principle
C)the matching principle
D)all of the above.
14.
To adjust the amortization of an automobile, the transaction should be recorded:
A)debiting amortization expense, automobile, and crediting automobile.
B)debiting amortization expense, crediting cash.
C)debiting accumulated amortization, automobile, crediting amortization expense.
D)debiting amortization expense, automobile, crediting accumulated amortization, automobile.
15.
To adjust an unearned revenue account, the transaction should be recorded:
A)debiting cash, crediting revenue.
B)debiting unearned revenue, crediting revenue.
C)debiting accounts receivable, crediting unearned revenue.
D)debiting accounts receivable, crediting revenue.
16.
To record an accrued salaries expense transaction, the transaction should be recorded:
A)debiting salaries expense, crediting cash.
B)debiting salaries payable, crediting salaries expense.
C)debiting salaries expense, crediting salaries payable.
D)debiting salaries payable, crediting cash.





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