31
Adjusting entries are made:
A.
B.
C.
D.
Answer & Solution
Adjusting entries are recorded at the end of the accounting period to update revenues, expenses, and other accounts before financial statements are prepared.
32
Which of the following accounts would typically require an adjusting entry?
A.
B.
C.
D.
Answer & Solution
Prepaid expenses like Prepaid Rent require adjustments to recognize the portion that has expired as an expense.
33
Which of the following is an example of an adjusting entry?
A.
B.
C.
D.
Answer & Solution
Accrued salaries (or wages) must be recognized as an expense at the end of the period, even if payment has not yet been made.
34
What type of account is always affected by an adjusting entry?
A.
B.
C.
D.
Answer & Solution
Adjusting entries always affect nominal accounts (revenues and expenses) because they ensure proper matching of revenues and expenses in the correct period.
35
Adjusting entries are necessary to comply with which accounting principle?
A.
B.
C.
D.
Answer & Solution
Adjusting entries ensure that expenses and revenues are recognized in the same period, following the Matching Principle.
36
If an adjusting entry for accrued revenue is not recorded, what will be the effect?
A.
B.
C.
D.
Answer & Solution
Accrued revenue means revenue earned but not yet received. If not recorded, revenue and net income will be understated.
37
Which of the following adjusting entries records depreciation?
A.
B.
C.
D.
Answer & Solution
Depreciation reduces asset value over time. Depreciation Expense (debit) is recorded, while Accumulated Depreciation (credit) tracks the total depreciation.
38
Which of the following adjusting entries is required for unearned revenue?
A.
B.
C.
D.
Answer & Solution
Unearned revenue is a liability that decreases as services or products are delivered, requiring an adjustment to recognize revenue earned.
39
If supplies purchased during the period were initially recorded as an asset, the adjusting entry to reflect usage will include:
A.
B.
C.
D.
Answer & Solution
When supplies are used, Supplies Expense (debit) is recognized, and the Supplies account (credit) is reduced.
40
What happens if adjusting entries are not recorded?
A.
B.
C.
D.
Answer & Solution
Without adjusting entries, revenues and expenses may be misstated, leading to inaccurate financial statements.
