SOLUTIONS FOR FUNDAMENTAL
ACCOUNTING PRINCIPLES, 17TH CANADIAN
EDITION LARSON WITH DETAILED VERIFIED
ANSWERS (100% CORRECT ANSWERS) //
ALREADY GRADED A+
Although it is possible to find an exception to the following statement, the vast
majority of adjusting entries follow which pattern described below?
A) One of the accounts debited or credited is an income statement account while
the second account debited or credited is a balance sheet account.
B) Both of the accounts debited or credited are income statement accounts.
C) Both of the accounts debited or credited are balance sheet accounts.
D) Both of the accounts debited or credited are part of the statement of owner's
equity.
E) None of the above is correct. - ANSWER-A) One of the accounts debited or
credited is an income statement account while the second account debited or
credited is a balance sheet account.
A company purchased a two-year fire insurance policy on May 1, 2012. It paid the
$2,400 premium in cash on the same date and recorded the entry with a debit to
Prepaid Insurance for $2,400. The company has adopted a 12-month accounting
period ending on January 31 of each year. If the company uses the accrual basis of
accounting, how much insurance expense will be recorded for the periods ended
January 31, 2013, and January 31, 2014, respectively?
A) $1,800 and $2,400.
B) $900 and $1,200.
C) $2,400 and $0.
D) $0 and $2,400.
E) None of the above. - ANSWER-B) $900 and $1,200.
The theoretical reason for recording periodic depreciation expense rather than
immediately expensing the cost of a plant asset in the period it is acquired is to
adhere to the:
A) Cost principle.
,B) Monetary unit principle.
C) Going-concern principle.
D) Materiality principle.
E) Matching principle. - ANSWER-E) Matching principle.
A company adopts the accounting practice whereby all external transactions
involving prepaid expenses, such as prepaid insurance, prepaid rent, and office
supplies are initially debited to the asset account when acquired. If the company
fails to adjust any one of these accounts for the current year, what will be the effect
on (1) the current year's total expenses, (2) total revenues, (3) net income, and (4)
ending owner's equity?
A) Understated, understated, understated, and understated.
B) Understated, overstated, overstated, and overstated.
C) Understated, no effect, overstated, and overstated.
D) Overstated, overstated, no effect, and no effect.
E) Understated, no effect, overstated, and understated. - ANSWER-C)
Understated, no effect, overstated, and overstated.
Boron Company is a sole proprietorship. Its bookkeeper has prepared the adjusted
trial balance as of December 31, 2013. Even though this adjusted trial balance is
correct in every respect, there is still one account whose balance does not represent
the correct end-of-the-period balance. Which account is it?
A) Accounts Receivable.
B) Cash.
C) Accumulated Depreciation.
D) Owner's equity.
E) None of these. - ANSWER-D) Owner's equity.
At the end of the accounting period, the business had $5,000 of office supplies on
hand. At the beginning of the period, the number of supplies on hand was $2,000.
If the business purchased $12,000 of office supplies during the year, what amount
of office supplies were used during the year?
A) $7,000.
B) $14,000.
C) $10,500.
D) $9,000.
E) None of the above. - ANSWER-D) $9,000.
,You own a CPA firm. You have agreed to provide accounting services on behalf of
a client for a fee of $650 per month. Your services will be rendered uniformly
during the year, and you begin your work on April 16. You use the accrual basis of
accounting for your own company and prepare monthly financial statements for
your firm. Your client makes his first payment of $650 to you on May 16. Which
of the following entries will you record on May 16 when you receive the $650 cash
payment?
A) Cash, debit, $325; Accounts Receivable, credit, $325.
B) Cash, debit, $650; Accounts Receivable, credit, $325; Fees Earned, credit,
$325.
C) Cash, debit, $650; Fees Earned, credit, $650.
D) Accounts Receivable, debit, $650; Cash, credit, $325; Fees Earned, credit,
$325.
E) None of the above. - ANSWER-B) Cash, debit, $650; Accounts Receivable,
credit, $325; Fees Earned, credit, $325.
A tenant rented space in your company's office building on October 1 at $1,800 per
month, paying seven months' rent in advance. The bookkeeper recognized a current
liability of $12,600. How much of this amount remains unearned as of December
31?
A) $12,600.
B) $5,400.
C) $7,200.
D) $0.
E) None of the above. - ANSWER-C) $7,200.
An NBA basketball team sells season tickets worth $48 million before the
basketball season starts, late in the year. Assume this $48 million is debited to
Cash and credited to Unearned Ticket Revenue. By the end of the calendar year,
which also happens to be the end of the team's accounting period, 25% of the
games have been played. What adjusting journal entry should be made at the end
of the year?
A) Unearned Ticket Revenue, debit, $12 million; Cash, credit, $12 million.
B) Ticket Revenue, debit, 12 million; Unearned Ticket Revenue, credit, $12
million.
, C) Unearned Ticket Revenue, debit, $12 million; Ticket Revenue, credit, $12
million.
D) Ticket Revenue, debit, $12 million; Cash, credit, $12 million.
E) None of the above. - ANSWER-C) Unearned Ticket Revenue, debit, $12
million; Ticket Revenue, credit, $12 million.
This principle presumes that an organization's activities can be divided into
specific time periods such as a month, a three-month quarter, a six-month interval,
or a year.
A) Continuing-concern principle.
B) Monetary unit principle.
C) Revenue recognition principle.
D) Time-period principle.
E) Business entity principle. - ANSWER-D) Time-period principle.
A business rented space in an office building on October 1, at $600 per month,
paying 9 months of rent in advance. The bookkeeper recognized a prepaid asset of
$5,400 when the payment was made. No year-end adjustment was recorded. As a
consequence of not recording the required adjustment, which of following
occurred?
A) Expenses were overstated and assets were understated.
B) Expenses were understated and assets were overstated.
C) Expenses were overstated and assets were overstated.
D) Expenses were understated and assets were understated.
E) None of the above. - ANSWER-B) Expenses were understated and assets were
overstated.
Dee Hellings, Inc. performed $3,000 worth of services for a client during
December but did not get paid until the first week of February of the next year. No
year-end adjusting entry was recorded on December 31. As a consequence of this
oversight, which of the following occurred?
A) Assets were understated and revenue was understated.
B) Assets were overstated and revenue was understated.
C) Assets were understated and revenue was overstated.
D) Assets were overstated and revenue was overstated.
E) Liabilities were understated and revenue was understated. - ANSWER-A)
Assets were understated and revenue was understated.
ACCOUNTING PRINCIPLES, 17TH CANADIAN
EDITION LARSON WITH DETAILED VERIFIED
ANSWERS (100% CORRECT ANSWERS) //
ALREADY GRADED A+
Although it is possible to find an exception to the following statement, the vast
majority of adjusting entries follow which pattern described below?
A) One of the accounts debited or credited is an income statement account while
the second account debited or credited is a balance sheet account.
B) Both of the accounts debited or credited are income statement accounts.
C) Both of the accounts debited or credited are balance sheet accounts.
D) Both of the accounts debited or credited are part of the statement of owner's
equity.
E) None of the above is correct. - ANSWER-A) One of the accounts debited or
credited is an income statement account while the second account debited or
credited is a balance sheet account.
A company purchased a two-year fire insurance policy on May 1, 2012. It paid the
$2,400 premium in cash on the same date and recorded the entry with a debit to
Prepaid Insurance for $2,400. The company has adopted a 12-month accounting
period ending on January 31 of each year. If the company uses the accrual basis of
accounting, how much insurance expense will be recorded for the periods ended
January 31, 2013, and January 31, 2014, respectively?
A) $1,800 and $2,400.
B) $900 and $1,200.
C) $2,400 and $0.
D) $0 and $2,400.
E) None of the above. - ANSWER-B) $900 and $1,200.
The theoretical reason for recording periodic depreciation expense rather than
immediately expensing the cost of a plant asset in the period it is acquired is to
adhere to the:
A) Cost principle.
,B) Monetary unit principle.
C) Going-concern principle.
D) Materiality principle.
E) Matching principle. - ANSWER-E) Matching principle.
A company adopts the accounting practice whereby all external transactions
involving prepaid expenses, such as prepaid insurance, prepaid rent, and office
supplies are initially debited to the asset account when acquired. If the company
fails to adjust any one of these accounts for the current year, what will be the effect
on (1) the current year's total expenses, (2) total revenues, (3) net income, and (4)
ending owner's equity?
A) Understated, understated, understated, and understated.
B) Understated, overstated, overstated, and overstated.
C) Understated, no effect, overstated, and overstated.
D) Overstated, overstated, no effect, and no effect.
E) Understated, no effect, overstated, and understated. - ANSWER-C)
Understated, no effect, overstated, and overstated.
Boron Company is a sole proprietorship. Its bookkeeper has prepared the adjusted
trial balance as of December 31, 2013. Even though this adjusted trial balance is
correct in every respect, there is still one account whose balance does not represent
the correct end-of-the-period balance. Which account is it?
A) Accounts Receivable.
B) Cash.
C) Accumulated Depreciation.
D) Owner's equity.
E) None of these. - ANSWER-D) Owner's equity.
At the end of the accounting period, the business had $5,000 of office supplies on
hand. At the beginning of the period, the number of supplies on hand was $2,000.
If the business purchased $12,000 of office supplies during the year, what amount
of office supplies were used during the year?
A) $7,000.
B) $14,000.
C) $10,500.
D) $9,000.
E) None of the above. - ANSWER-D) $9,000.
,You own a CPA firm. You have agreed to provide accounting services on behalf of
a client for a fee of $650 per month. Your services will be rendered uniformly
during the year, and you begin your work on April 16. You use the accrual basis of
accounting for your own company and prepare monthly financial statements for
your firm. Your client makes his first payment of $650 to you on May 16. Which
of the following entries will you record on May 16 when you receive the $650 cash
payment?
A) Cash, debit, $325; Accounts Receivable, credit, $325.
B) Cash, debit, $650; Accounts Receivable, credit, $325; Fees Earned, credit,
$325.
C) Cash, debit, $650; Fees Earned, credit, $650.
D) Accounts Receivable, debit, $650; Cash, credit, $325; Fees Earned, credit,
$325.
E) None of the above. - ANSWER-B) Cash, debit, $650; Accounts Receivable,
credit, $325; Fees Earned, credit, $325.
A tenant rented space in your company's office building on October 1 at $1,800 per
month, paying seven months' rent in advance. The bookkeeper recognized a current
liability of $12,600. How much of this amount remains unearned as of December
31?
A) $12,600.
B) $5,400.
C) $7,200.
D) $0.
E) None of the above. - ANSWER-C) $7,200.
An NBA basketball team sells season tickets worth $48 million before the
basketball season starts, late in the year. Assume this $48 million is debited to
Cash and credited to Unearned Ticket Revenue. By the end of the calendar year,
which also happens to be the end of the team's accounting period, 25% of the
games have been played. What adjusting journal entry should be made at the end
of the year?
A) Unearned Ticket Revenue, debit, $12 million; Cash, credit, $12 million.
B) Ticket Revenue, debit, 12 million; Unearned Ticket Revenue, credit, $12
million.
, C) Unearned Ticket Revenue, debit, $12 million; Ticket Revenue, credit, $12
million.
D) Ticket Revenue, debit, $12 million; Cash, credit, $12 million.
E) None of the above. - ANSWER-C) Unearned Ticket Revenue, debit, $12
million; Ticket Revenue, credit, $12 million.
This principle presumes that an organization's activities can be divided into
specific time periods such as a month, a three-month quarter, a six-month interval,
or a year.
A) Continuing-concern principle.
B) Monetary unit principle.
C) Revenue recognition principle.
D) Time-period principle.
E) Business entity principle. - ANSWER-D) Time-period principle.
A business rented space in an office building on October 1, at $600 per month,
paying 9 months of rent in advance. The bookkeeper recognized a prepaid asset of
$5,400 when the payment was made. No year-end adjustment was recorded. As a
consequence of not recording the required adjustment, which of following
occurred?
A) Expenses were overstated and assets were understated.
B) Expenses were understated and assets were overstated.
C) Expenses were overstated and assets were overstated.
D) Expenses were understated and assets were understated.
E) None of the above. - ANSWER-B) Expenses were understated and assets were
overstated.
Dee Hellings, Inc. performed $3,000 worth of services for a client during
December but did not get paid until the first week of February of the next year. No
year-end adjusting entry was recorded on December 31. As a consequence of this
oversight, which of the following occurred?
A) Assets were understated and revenue was understated.
B) Assets were overstated and revenue was understated.
C) Assets were understated and revenue was overstated.
D) Assets were overstated and revenue was overstated.
E) Liabilities were understated and revenue was understated. - ANSWER-A)
Assets were understated and revenue was understated.
