Examples of adjusting entries could include all of the following except:

A) Recording interest earned on bank account balances.

B) Recording the expiration of prepaid insurance.

C) Recording unpaid taxes.

D) Recording the purchase of office supplies.

Answer: D

Which of the following regarding adjusting entries is correct?

A) Adjusting entries are recorded for all external transactions.

B) Adjusting entries are recorded to make sure all cash inflows and outflows are recorded in the current period.

C) Adjusting entries are needed because we use accrual-basis accounting.

D) After adjusting entries, all temporary accounts should have a balance of zero.

Answer: C

Adjusting entries are primarily needed for:

A) Cash-basis accounting.

B) Accrual-basis accounting.

C) Current value accounting.

D) Manual accounting systems.

Answer: B

Consider the following events for Sophia Incorporated:April 5 Sophia purchases volleyballs for $200 on account.

Consider the following events for Sophia Incorporated:

April 5 Sophia purchases volleyballs for $200 on account.

April 6 Sophia advertises a sand volleyball camp for $20 a person.

April 12 Thirty people sign up for the camp paying a total of $600.

April 21 Sophia hosts the sand volleyball camp.

April 23 Sophia pays for the volleyballs purchased on April 5.

Under cash-basis accounting, what is the appropriate day to record the revenues related to the sand volleyball camp?

A) April 5.

B) April 12.

C) April 21.

D) April 23.

Answer: B

Which one of the following best describes the characteristics of adjusting entries?

A) Adjusting entries reduce the balance of revenue, expense, and dividend accounts to zero.

B) Adjusting entries update balances for the recognition of cash flows.

C) Adjusting entries update balances for the recognition of investments from and distributions to stockholders.

D) Adjusting entries update balances for the recognition of revenue and expenses.

Answer: D

Consider the following events for Sophia Incorporated:

April 5 Sophia purchases volleyballs for $200 on account.

April 6 Sophia advertises a sand volleyball camp for $20 a person.

April 12 Thirty people sign up for the camp paying a total of $600.

April 21 Sophia hosts the sand volleyball camp.

April 23 Sophia pays for the volleyballs purchased on April 5.

Under cash-basis accounting, what is the appropriate day to record the expenses related to the sand volleyball camp?

A) April 5.

B) April 12.

C) April 21.

D) April 23.

Answer: D

Consider the following events for Betterment Incorporated:January 1 Betterment purchases gasoline for $200 on account.

Consider the following events for Betterment Incorporated:

January 1 Betterment purchases gasoline for $200 on account.

January 7 Betterment advertises lawn mowing services for $100 per lawn.

January 9 Betterment signs up 8 customers who pay a total of $800 cash.

January 12 Betterment mows the lawns of the 8 customers and all gasoline purchased on January 1 is used.

January 13 Betterment pays for the gasoline purchased on January 1.

Under cash-basis accounting, what is the appropriate day to record the expenses related to the gasoline?

A) January 1.

B) January 9.

C) January 12.

D) January 13.

Answer: D

Consider the following events for Sophia Incorporated:

April 5 Sophia purchases volleyballs for $200 on account.

April 6 Sophia advertises a sand volleyball camp for $20 a person.

April 12 Thirty people sign up for the camp paying a total of $600.

April 21 Sophia hosts the sand volleyball camp.

April 23 Sophia pays for the volleyballs purchased on April 5.

Under accrual-basis accounting, what is the appropriate day to record the revenues from the sand volleyball camp?

A) April 5.

B) April 6.

C) April 12.

D) April 21.

Answer: D

Consider the following events for Sophia Incorporated:

April 5 Sophia purchases volleyballs for $200 on account.

April 6 Sophia advertises a sand volleyball camp for $20 a person.

April 12 Thirty people sign up for the camp paying a total of $600.

April 21 Sophia hosts the sand volleyball camp.

April 23 Sophia pays for the volleyballs purchased on April 5.

Under accrual-basis accounting, what is the appropriate day to record the expenses related to the sand volleyball camp?

A) April 5.

B) April 12.

C) April 21.

D) April 23.

Answer: C

The following information pertains to Sooner Company:May 1 Customer ordered an installation service to be done by Sooner Company on May 15.

The following information pertains to Sooner Company:

May 1 Customer ordered an installation service to be done by Sooner Company on May 15.

May 2 Customer paid cash for the installation job to be done on May 15.

May 8 The Sooner Company purchased installation supplies on account for the job.

May 15 The installation job was started and completed.

May 20 Amount owed for supplies purchased on May 8 is paid.

Assuming that Sooner Company uses accrual-basis accounting, when would the company record the expense related to the supplies?

A) May 2.

B) May 8.

C) May 15.

D) May 20.

Answer: C

For the month of September, the company sold 35 units. What is cost of goods sold under the weighted-average cost method? (Round weighted-average unit cost to 4 decimals)

A) $121.

B) $116.

C) $124.

D) $131.

Answer: $121.

FIFO is considered a balance-sheet approach for reporting inventory because it:

A) Better approximates the value of ending inventory.

B) Always results in a lower amount of inventory being reported.

C) Better approximates inventory cost necessary to generate revenue.

D) Always results in a higher amount of inventory being reported

Answer: Better approximates the value of ending inventory.

Which inventory method is better described as having a balance-sheet focus and why is it considered as such?

A) FIFO; better approximates the value of ending inventory.

B) LIFO; better approximates the value of ending inventory.

C) LIFO; better approximates inventory cost necessary to generate revenue.

D) FIFO; better approximates inventory cost necessary to generate revenue.

Answer: FIFO; better approximates the value of ending inventory.

What is the ending inventory balance for Julia & Company assuming that it uses FIFO?

A) $125.

B) $100.

C) $110.

D) $85.

Answer: $85.

LIFO is considered an income-statement approach for reporting inventory because it:

A) Always results in a higher amount of net income being reported.

B) Better approximates the value of ending inventory.

C) Better approximates inventory cost necessary to generate revenue.

D) Always results in a lower amount of net income being reported.

Answer: Better approximates inventory cost necessary to generate revenue.

Marvin sold 2,300 units of inventory during the month. Cost of goods sold assuming weighted-average cost would be:

Marvin sold 2,300 units of inventory during the month. Cost of goods sold assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimals)

A) $16,733.

B) $17,408.

C) $16,713.

D) $16,089.

Answer: $16,713.

The company reports cost of goods sold of $16,000. Which inventory cost method is the company using?

A) FIFO.

B) LIFO.

C) Weighted-average.

D) The answer cannot be determined with the information given.

Answer: FIFO.

What is the cost of goods sold for Julia & Company assuming it uses LIFO?

A) $125.

B) $100.

C) $110.

D) $85.

Answer: $110.

Marvin sold 2,300 units of inventory during the month. Ending inventory assuming weighted-average cost would be:

Marvin sold 2,300 units of inventory during the month. Ending inventory assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimals)

A) $5,087.

B) $5,107.

C) $5,077.

D) $5,005.

Answer: $5,087.

Marvin sold 2,300 units of inventory during the month. Ending inventory assuming FIFO would be:

A) $5,140.

B) $5,080.

C) $5,060.

D) $5,050.

Answer: $5,140.

Marvin sold 2,300 units of inventory during the month. Cost of goods sold assuming FIFO would be:

A) $16,800.

B) $16,760.

C) $16,540.

D) $16,660.

Answer: $16,660.