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Understanding the Adjusting Process

This document contains a series of true/false questions about adjusting entries and the adjusting process. Specifically, it addresses how omitting various adjusting entries would impact financial statements, how adjusting entries are dated, potential errors that could be detected in an adjusted trial balance, and the purpose of an adjusted trial balance. The key ideas covered are that adjusting entries are necessary to accurately reflect accruals, deferrals, and other period-end items in order to prepare financial statements that comply with GAAP.

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Chloe Gabriel Evangeline Chase
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709 views2 pages

Understanding the Adjusting Process

This document contains a series of true/false questions about adjusting entries and the adjusting process. Specifically, it addresses how omitting various adjusting entries would impact financial statements, how adjusting entries are dated, potential errors that could be detected in an adjusted trial balance, and the purpose of an adjusted trial balance. The key ideas covered are that adjusting entries are necessary to accurately reflect accruals, deferrals, and other period-end items in order to prepare financial statements that comply with GAAP.

Uploaded by

Chloe Gabriel Evangeline Chase
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Chapter 3—The Adjusting Process

TRUE/FALSE
[Link] the adjustment for accrued salaries at the end of the period is inadvertently omitted, both liabilities and
owner's equity will be understated for the period.

ANS: T PTS: 1 DIF: Difficult OBJ: 03-03


NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

40. If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the
assets at the end of the period will be understated.

ANS: F PTS: 1 DIF: Difficult OBJ: 03-03


NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

41. If the adjustment of the unearned rent account at the end of the period to recognize the amount of rent
earned is inadvertently omitted, the net income for the period will be understated.

ANS: T PTS: 1 DIF: Difficult OBJ: 03-03


NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

42. If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at
the end of the period will be understated.

ANS: F PTS: 1 DIF: Difficult OBJ: 03-03


NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

43. Adjusting journal entries are dated on the last day of the period.

ANS: T PTS: 1 DIF: Easy OBJ: 03-03


NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

44. By ignoring and not posting the adjusting journal entries to the appropriate accounts, net income will
always be overstated.

ANS: F PTS: 1 DIF: Moderate OBJ: 03-03


NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

45. The financial statements are prepared from the unadjusted trial balance.

ANS: F PTS: 1 DIF: Easy OBJ: 03-04


NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-09-Financial Statements

46. The adjustment for accrued fees was debited to Accounts Payable instead of Accounts Receivable. This
error will be detected when the Adjusted Trial Balance is prepared.

ANS: F PTS: 1 DIF: Easy OBJ: 03-04


NAT: AACSB Analytic | AICPA FN-Measurement

47. The adjusted trial balance verifies that total debits equals total credits before the adjusting entries are
prepared.

ANS: F PTS: 1 DIF: Easy OBJ: 03-04


NAT: AACSB Analytic | AICPA FN-Measurement

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