79 adjusting entries made at the end of an accounting period accomplish all of the f 4295858
79.Adjusting entries made at the end of an accounting period accomplish all of the following except:
A.Updating liability and asset accounts to their proper balances.
B.Assigning revenues to the periods in which they are earned.
C.Assigning expenses to the periods in which they are incurred.
D.Assuring that financial statements reflect the revenues earned and the expenses incurred.
E.Assuring that external transaction amounts remain unchanged.
80.The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:
A.Cash basis accounting.
B.The matching principle.
C.The time period assumption.
D.Accrual basis accounting.
E.Revenue basis accounting.
81.Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of:
A.Items that require contra accounts.
B.Items that require adjusting entries.
C.Asset and equity.
E.Income statement accounts.
82.The accrual basis of accounting:
A.Is generally accepted for external reporting because it is more useful than cash basis for most business decisions.
B.Is flawed because it gives complete information about cash flows.
C.Recognizes revenues when received in cash.
D.Recognizes expenses when paid in cash.
E.Eliminates the need for adjusting entries at the end of each period.
83.Which of the following statements is incorrect?
A.Adjustments to prepaid expenses and unearned revenues involve previously recorded assets and liabilities.
B.Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded.
C.Adjusting entries can be used to record both accrued expenses and accrued revenues.
D.Prepaid expenses, depreciation, and unearned revenues often require adjusting entries to record the effects of the passage of time.
E.Adjusting entries affect only balance sheet accounts.
84.An adjusting entry could be made for each of the following except:
85.A company made no adjusting entry for accrued and unpaid employee wages of $28,000 on December 31. This oversight would:
A.Understate net income by $28,000.
B.Overstate net income by $28,000.
C.Have no effect on net income.
D.Overstate assets by $28,000.
E.Understate assets by $28,000.
86.If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:
A.Assets overstated and equity understated.
B.Assets and equity both understated.
C.Assets overstated, net income understated, and equity overstated.
D.Assets, net income, and equity understated.
E.Assets, net income, and equity overstated.
87.If a company failed to make the end-of-period adjustment to move the amount of management fees that were earned from the Unearned Management Fees account to the Management Fees Revenue account, this omission would cause:
A.An overstatement of net income.
B.An overstatement of assets.
C.An overstatement of liabilities.
D.An overstatement of equity.
E.An understatement of liabilities.
88.A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees. If the company fails to make the end-of-period adjusting entry to move the portion of these fees that has been earned to a revenue account, one effect will be:
A.An overstatement of equity.
B.An understatement of equity.
C.An understatement of assets.
D.An understatement of liabilities.
E.An overstatement of assets.