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Accounting Chapter 3
End-of-Chapter Quiz Questions
| Question | Answer |
|---|---|
| On October 1, River Place Apartments received $5,200 from a tenant for four months' rent. The receipt was credited to Unearned Rent Revenue. What adjusting entry is needed on December 31? | Unearned Rent Revenue 3,900 Rent Revenue 3,900 |
| The following normal balances appear on the adjusted trial balance of Greenville National Company: Equipment = $110,000; Accumulated depreciation, equipment = $22,000; Depreciation expense, equipment = $5,500. The book value of the equipment is: | $88,000 |
| Details, Inc., purchased supplies for $1,300 during 2010. At year end Details had $800 of supplies left. The adjusting entry should: | debit Supplies Expense $500 |
| The accountant for Exeter Corp. failed to make the adjusting entry to record depreciation for the current year. The effect of this error is: | Assets, net income, and stockholders' equity are all overstated |
| Interest earned on a note receivable at December 31 equals $375. What adjusting entry is required to accrue this interest? | Interest Receivable 375 Interest Revenue 375 |
| If a real estate company fails to accrue commission revenue.. | Assets are understated and net income is understated |
| True or False. A fiscal year ends on some date other than December 31. | True |
| True or False. The matching principle directs accountants to identify and measure all expenses incurred and deduct the from revenues earned during the same period. | True |
| True or False. Adjusting entries are required for a business that uses the cash basis. | False |
| True or False. Accrual accounting produces better information than cash-basis accounting. | True |
| The account Unearned Revenue is a(n) | Liability |
| What type of entry updates the accounts, are needed to measure the period's net income or net loss, and do not debit or credit cash? | Adjusting Entries |
| An adjusting entry that debits an expense and credits a liability is what type of expense? | Accrued Expense |
| Total assets $5,000 Current liabilities 500 Bonds payable 1,400 Common stock 1,000 Retained Earnings 2,100 Total liabilities and stockholder's equity 5,000 Geneva's current ratio at the end of 2010 is: | 5.00 |
| Total assets $5,000 Current liabilities 500 Bonds payable 1,400 Common stock 1,000 Retained Earnings 2,100 Total liabilities and stockholder's equity 5,000 Geneva's debt ratio at the end of 2010 is (rounded): | 38% |
| On a trial balance, what would indicate that an error has been made? | Service Revenue has a debit balance |
| The entry to close Management Fee Revenue would be? | Management Fee Revenue Retained Earnings |
| What account is not closed? | Accumulated Depreciation |
| UPS earns service revenue of $800,000. How does this transaction affect UPS's ratios? | Improves both ratios |
| Suppose Green Mountain Corporation borrows $20 million on a 20-year note payable. How does this transaction affect Green Mountain's current ratio and debt ratio? | Improves the current ratio and hurts the debt ratio |
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