1 An adjusting entry often includes an entry to cash.

True False

2 The last four steps in the accounting cycle include preparing the adjusted trial balance, preparing financial statements, and recording closing and adjusting entries. TrueFalse

 3 An annual reporting period consisting of any twelve-consecutive months is known as:

Natural business year.

Interim financial period.

Seasonal year. Calendar year.

Fiscal year.

 4 On April 1, Santa Fe, Inc. paid Griffith PublishingCompany $1,548 for 36-month subscriptions to several differentmagazines. Santa Fe debited the prepayment to a PrepaidSubscriptions account, and the subscriptions started immediately.What adjusting entry should be made by Santa Fe, Inc. for theadjustment on December 31 of the first year assuming the company isusing a calendar reporting period and no previous adjustments had been made?

Debit Prepaid Subscriptions $516 and credit Subscription Expense$516.

Debit Subscription Expense $516 and credit Prepaid Subscriptions$516.

Debit Unearned Subscriptions $387 and credit SubscriptionExpense $387.

Debit Subscription Expense $387 and credit Prepaid Subscriptions$387.

Debit Subscription Expense $387 and credit Cash $387.

 5 In preparing statements from the adjusted trial balance, the balance sheet must be prepared first.

True False

QUESTION 6 Closing entries are required at the end of each accounting period to close all ledger accounts.

True False

QUESTION 7 Two common subgroups for liabilities on a classified balance sheet are:

Current liabilities and long-term liabilities.

Present liabilities and operating liabilities.

Current liabilities and intangible liabilities.

General liabilities and specific liabilities.

Intangible liabilities and long-term liabilities.

QUESTION 8 Which of the following errors would cause the balance Sheet columns of a worksheet to be out of balance?

Entering a liability amount in the Balance Sheet Credit column.

Entering an expense amount in the Balance Sheet Debit column.

Entering a liability amount in the Income Statement Credit column.

Entering a revenue amount in the Balance Sheet Debit column.

Entering an asset amount in the Income Statement Debit column.

QUESTION 9 Adjusting entries are made after the preparation of financial statements.

True False

QUESTION 10 On July 1 Plum Co. paid $7,500 cash for management services to be performed over a two-year period. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On July 1 Plum should record:

A credit to a prepaid expense and a debit to Cash for$7,500.

A debit to Cash for $7,500 and a credit to an expense for$7,500.

A debit to an expense and credit to a prepaid expense for$7,500.

A debit to an expense and credit to Cash for $7,500.

A debit to a prepaid expense and a credit to Cash for$7,500.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below False An adjusting entry may include a ... View the full answer