Free Practice Quiz Question List

4 Accrual Accounting and Adjusting Entries Online Quiz Questions

Use this free practice quiz with 20 questions to review 4 Accrual Accounting and Adjusting Entries, test your knowledge, and prepare for your next test or exam.

20 questions

Written response

1 point

According to accrual accounting, when is revenue recognized, regardless of when the customer pays? Enter the two-word phrase.

Fill in the blank

1 point

Employees have earned wages by the reporting date, but the business has not yet paid them. The adjusting entry credits .

Written response

1 point

A business later collects cash for work whose revenue it had already recorded as accrued revenue. Which account is credited to record the collection? Enter the account name or its common abbreviation.

Fill in the blank

1 point

A prepaid amount begins as an asset because it provides a future benefit. As that benefit is used, the used portion becomes an .

Written response

1 point

By period-end, employees have earned $800 in wages that will be paid later. Wages Payable already has a $250 credit balance from this period. How many dollars should the adjusting entry credit Wages Payable? Enter the number only.

True or false

1 point

True or false: Under accrual accounting, revenue is generally recognized when it is earned, even if the customer has not yet paid.

A
True
B
False

Choose one

1 point

A business receives cash for services it will provide next month. Before providing the services, how should it classify the amount received?

A
Accrued revenue
B
Unearned revenue
C
Accrued expense
D
Prepaid expense

Choose one

1 point

By period-end, a design firm has completed $1,250 of work but has not billed or collected from the customer. Which adjusting entry records the work in the correct period?

A
Debit Cash; credit Service Revenue
B
Debit Service Revenue; credit Accounts Receivable
C
Debit Accounts Receivable; credit Service Revenue
D
Debit Accounts Payable; credit Service Revenue

Written response

1 point

A business pays $2,400 for eight months of maintenance coverage and initially records the payment as a prepaid asset. After three months of coverage have expired, how many dollars of the asset remain? Enter only the number of dollars, without a currency symbol.

Choose one

1 point

A business received $1,800 in advance for three months of service and recorded it as Unearned Revenue. By period-end, it has provided one month of service. Which adjusting entry is appropriate?

A
Debit Unearned Revenue $600; credit Service Revenue $600
B
Debit Service Revenue $600; credit Unearned Revenue $600
C
Debit Cash $600; credit Service Revenue $600
D
Debit Unearned Revenue $1,800; credit Service Revenue $1,800

Choose one

1 point

Employees have earned $920 of wages by period-end, but the business will pay them later. Which adjusting entry records the expense in the period the work was performed?

A
Debit Wages Payable; credit Wages Expense
B
Debit Cash; credit Wages Expense
C
Debit Wages Expense; credit Cash
D
Debit Wages Expense; credit Wages Payable

Choose one

1 point

Which statement best describes how accrual accounting treats expenses that help generate revenue but cannot be directly linked to a particular sale?

A
Every expense must be linked to a specific sale, or it cannot be recognized.
B
Related costs may be reported in the same period as revenue they help generate, but expenses are recognized when incurred even if they cannot be tied to a particular sale.
C
Expenses are recognized only when the related customer pays.
D
Costs that cannot be linked to a sale are always recorded when cash is paid.

Choose one

1 point

A business pays wages that it had accrued as a liability in the prior period. Which entry records the payment without recognizing the expense a second time?

A
Debit Wages Expense; credit Cash
B
Debit Cash; credit Wages Payable
C
Debit Wages Payable; credit Cash
D
Debit Wages Payable; credit Wages Expense

Choose one

1 point

At period-end, a business has incurred $380 of utility costs. Its accounts already include $250 of that amount as Utilities Expense and Utilities Payable. Which adjusting entry records the remaining unrecorded cost?

A
Debit Utilities Expense $380 and credit Utilities Payable $380.
B
Debit Utilities Expense $130 and credit Utilities Payable $130.
C
Debit Utilities Payable $130 and credit Utilities Expense $130.
D
Make no entry because part of the cost has already been recorded.

Choose one

1 point

A business has incurred $240 of interest by its reporting date, but the amount is not yet due, paid, or recorded. Which adjusting entry is appropriate?

A
Debit Interest Expense and credit Interest Payable.
B
Debit Interest Payable and credit Interest Expense.
C
Debit Cash and credit Interest Revenue.
D
Debit Interest Expense and credit Cash.

Choose all

1 point

A reviewer is checking the steps used to analyze a period-end adjustment. Select all actions that follow the practical method described in the material.

A
Identify what has been earned, used, incurred, or remains owed by the reporting date.
B
Compare the relevant amount with what the accounts already show.
C
Record the full amount of the condition, even if some of it is already reflected in the accounts.
D
Adjust only the difference between what should be recorded and what is already recorded.
E
Check that the entry has equal debits and credits and updates the relevant income-statement and balance-sheet accounts.

Choose all

1 point

Which statements correctly describe period-end adjusting entries? Select all that apply.

A
They update accounts so revenues and expenses appear in the appropriate period.
B
They record a new cash receipt or payment as part of every adjustment.
C
They generally involve at least one income-statement account and one balance-sheet account.
D
Their debit and credit amounts must be equal.
E
They change only income-statement accounts, never balance-sheet accounts.

True or false

1 point

A period-end adjustment can help report both the appropriate revenue or expense for the period and the related asset or liability balance at period-end.

A
True
B
False

True or false

1 point

If an account already reflects part of a condition at period-end, the adjusting entry should still record the full amount of that condition.

A
True
B
False

Open ended

1 point

Describe a practical four-step method for analyzing and checking a period-end adjusting entry.