1. Assume that the weekly payroll of In the Woods Camping Supplies is $300.

The end
of the accounting period, 31 December, falls on Tuesday, and In the Woods will pay its
employee on Friday for the full week. What adjusting entry will In the Woods make on
Tuesday, 31 December? (Use five days as a full work week.)
a. No adjustment is needed because the business will pay the payroll on Friday.
b. Dr. Salary payable / Cr. Salary expense $300
c. Dr. Salary expense / Cr. Salary payable $120
d. Dr. Salary expense / Cr. cash $180
2. Suhoza Companny accepts an advande fee of $200 for services Suhoza is to provide
next year. Suhoza’s entry to record this transaction would include a
a. Credit to Cash
b. Credit to Unearned Service Fees
c. Credit to Service Fees Earned
d. Debit to Accounts Receivable
3. The purpose of the financial statement that lists an entity’s total assets and total
capital/ liabilities is to show:
a.The financial position of the entity at a particular moment in time.
b. The financial performance of the entity over a period of time.
c. The amount of the entity could be sold for as a going concern
d. The amount of the entity could be sold for in liquidation
4. Accounting data flow from the:
a. income statement to the statement of changes in equity
b. balance sheet to the income statement
c. statement of changes in equity to the balance sheet
d. both a and b are correct
5. What are the distinctive features of accrual accounting and cash-basis accounting?
a. Accrual accounting is superior because it provides more information,
b. Cash-basis accounting records all transactions,
c. Accrual accounting records only receivables, payables and depreciation.
d. All the above are true.
6. The Crazy Cat Company has a $1,800 payroll for a 5-day workweek starting on
Monday and ending on Friday when cash is paid for weekly wages. If the fiscal year
ends on the Thursday, what will be the appropriate adjustment?
a. Dr Wages Expense $1,800 and Cr Wages Payable $1,800
b. Dr Wages Expense $360 and Cr Wages Payable $360
c. Dr Wages Expense $1,440 and Cr Cash $1,440
d. Dr Wages Expense $1,440 and Cr Wages Payable $1,440
7. The capital of a proprietorship would change as a result of:
a. Raw materials being purchased on credit
b. Non- current assets being purchased on credit
c. Personal petrol being paid for out of the business’s cash
d. A credit customer paying by cheque
8. The profit recognition principle says:
a. Record revenue after you receive cash.
b. Cost is the basis of profit
c. Record profit when revenues are earned and matched against expenses incurred
d. Divide time into annual periods to measure revenue properly
9. Which of the following accounts is a liability?
a. None of above
b. Prepaid Rent
c. Unearned Rental Fees
d. Rent Expense
10. Adjusting the accounts is the process of:
a. zeroing out account balances to prepare for the next period
b. recording transactions as they occur during the period
c. updating the accounts at the end of the period
d. subtracting expenses from revenues to measure profit or loss