BKAL1013 Tutorial 2 A121

2012

Tutorial 2: COMPLETING THE ACCOUNTING CYCLE: DUE DATE: 22-10-2012

1. Adjusting entries are made to ensure that: A. Expenses are recognized in the period in which they are incurred. B. Revenues are recorded in the period in which they are earned C. Statement of financial position and statement of comprehensive income have correct balances at the end of accounting period D. All of the above 2. Each of the following is a major type (or category) of adjusting entries except: A. Prepaid expenses B. Accrued revenue C. Accrued expenses D. Earned revenues 3. The trial balance show Supplies RM1,350 and Supplies expense RM0. If RM600 supplies are on hand at the end of the period, the adjusting entry is: A. Supplies 600 Supplies Expense 600 B. Supplies 750 Supplies Expense 750 C. Supplies Expense 750 Supplies 750 D. Supplies Expenses 750 Supplies 600 4. On December 15, 2011, a company receives an order from a customer for services to be performed on December 28, 2011. Due to a backlog of orders, the company does not perform the services until January 3, 2012. The customer pays for the services on January 6, 2012. The matching principle requires the revenue to be recorded by the company on: A. December 15, 2011. B. January 3, 2012. C. December 28, 2011. D. January 6, 2012. 5. Adjustments for prepaid expenses: A. Decrease assets and increase revenues B. Decrease expenses and increase assets C. Decrease assets and increase expenses D. Decrease revenues and increase assets

BKAL1013 Tutorial 2 A121

2012

6. The Unearned Revenue account was not adjusted for work performed in the current period. What is the effect of this error? A. The assets will be understated and expenses will be understated. B. The assets will be overstated and liabilities will be overstated. C. The liabilities will be overstated and revenues will be understated. D. The liabilities will be understated and revenues will be understated. 7. AG Enterprises paid RM105,000 for office furniture. The furniture is depreciated using the straight-line method and has an estimated service life of 7 years. After three years of use, the book value of the furniture will be: A. RM45,000. B. RM60,000. 105000 0 = 15000 105000-15000 = 90000 C. RM90,000. 7 D. RM105,000. 8. Which of the following are in accordance with generally accepted accounting principles? A. Accrual basis accounting B. Cash basis accounting C. Both accrual basis and cash basis accounting D. Neither accrual basis nor cash basis accounting 9. The Accounts Receivable account has a RM20,000 debit balance in the unadjusted trial balance. There is a RM1,000 debit adjustment to Accounts Receivable. The adjusted trial balance will show Accounts Receivable as a: A. RM19,000 debit balance. B. RM21,000 credit balance. C. RM21,000 debit balance. D. RM19,000 credit balance. 10. Pedro Torreh & Partners purchased machineries by paying cash of RM24,000 and issuing a note payable of RM36,000. Which of the following journal entries would be recorded? A. B. C. D. Cash is credited for RM24,000; Equipment is credited for RM60,000; and payable is debited for RM36,000. Cash is credited for RM24,000; Equipment is credited for RM36,000; and payable is debited for RM12,000. Cash is debited for RM24,000; Equipment is debited for RM36,000; and payable is credited for RM60,000. Cash is credited for RM24,000; Equipment is debited for RM60,000; and payable is credited for RM36,000. Notes Notes Notes Notes

11. If a resource has been consumed but a bill has not been received at the end of the accounting period, then A. an expense should be recorded when the bill is received. B. an expense should be recorded when the cash is paid out. C. an adjusting entry should be made recognizing the expense. D. it is optional whether to record the expense before the bill is received.
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BKAL1013 Tutorial 2 A121

2012

12. Which of the following accounts is not a commonly adjusted in an adjusting entry? A. cash - adjusted to match the bank statement B. office supplies - adjusted to record supplies used during the period C. prepaid rent - adjusted to record rent expense D. equipment - adjusted to record depreciation 13. Annual equipment depreciation is calculated as RM5,000. What is the adjusting journal entry? A. debit equipment and credit depreciation expense for RM5,000 B. debit depreciation expense and credit accumulated depreciation for RM5,000 C. debit accumulated depreciation and credit equipment for RM5,000 D. debit accumulated depreciation and credit depreciation expense for RM5,000 14. Employees are paid every two weeks. On December 31, employees are owed RM2,500 in salaries since the last payday on December 22. What is the adjusting journal entry? A. debit cash and credit salaries expense B. debit salaries expense and credit cash C. debit salaries payable and credit salaries expense D. debit salaries expense and credit salaries payable 15. Which is correct concerning the adjusted trial balance A. An adjusted trial balance lists all ledger account balances separated by assets and liabilities. B. An adjusted trial balance is a method used to prove the accounting to date has been posted properly. C. An adjusted trial balance is prepared after adjusting entries have been journalized and posted. D. The balance sheet accounts in the adjusted trial balance have the proper financial statement amounts. 16. Which of the following is not an adjusting entry? A. The supplies used during the period. B. The cash payment on a note from the bank. C. The depreciation of equipment. D. The salaries owed but not yet paid 17. A journal entry contains a debit to a liability account and a credit to a revenue account. This is an example of a(n): A. accrued expense. B. deferred expense. C. unearned revenue. D. accrued revenue.

BKAL1013 Tutorial 2 A121

2012

18. Which of the following accounts is a closing entry? A. Accounts receivable is closed to reflect the amounts paid during the year. B. Salary expense is closed to reflect the salaries owed but not yet paid C. Revenues are closed to allow an accurate account of annual revenue D. equity is closed to reflect the withdrawals during the year 19. The entry to close Income Summary A. depends on the total amount of revenues and total amount of expenses. B. is always a debit to Income Summary and a credit to Owner's Equity. C. is always a debit to Owner's Equity and a credit to Income Summary. D. never occurs. 20. Permanent accounts include: A. cash, service revenue and land. B. cash, prepaid expenses and unearned revenue. C. cash, land and salaries expense. D. service revenue, salaries expense and utilities expense. 21. A post-closing trial balance A. only reflects the Statement of Financial Position. B. only reflects the changes during the year. C. shows every account has a zero balance D. does not show total debits equal total credits. 22. What is the correct way to close withdrawals? A. Debit withdrawals and credit Owner's equity B. Debit Owner's equity and credit withdrawals C. Debit withdrawals and credit Income Summary D. Debit Income Summary and credit withdrawals 23. Which of the following statements is associated with the accrual basis of accounting? A. The timing of cash receipts and disbursements is emphasized. B. A minimum amount of record keeping is required. C. This method is used less frequently by businesses than the cash method of accounting. D. Revenues are recognized in the period they are earned, regardless of the time period the cash is received.

24. Statements best describes the purpose of closing entries? A. To faciliate posting and taking a trial balance. B. To determine the amount of net income or net loss for the period. C. To reduce the balances of revenue and expense accounts to zero so that they may be used to accumulate the revenues and expenses of the next period. D. To complete the record of various transactions that were started in a prior period
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BKAL1013 Tutorial 2 A121

2012

25. A tired accountant failed to record the adjusting entry for accrued salaries. How does this error affect net income? A. The assets for the period will be understated. B. The net income for the period will be understated. C. The net income for the period will be overstated. D. The net income for the period will not be affected