FINANCIAL ACCOUNTING EXAM 1 LATEST 2025 WITH 350 ACTUAL EXAM QUESTIONS AND CORRECT ANSWERS INTRO TO FINANCIAL ACCOUNTING EXAM 1 (BRAND NEW)

TestgBankgForgFinancialgAccountinggIfrsg3rdgEditiongWeygandtgKimmelgKie
so
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gbank-weygandt-kimmel-kieso/


InstructorgManual,gSolutionsgManualgAnswergAllgChapters,gMatchag
CreationsgProblem,gSolutionsgForgAppendixgChaptersgForgFinancialg
AccountinggIfrsg3rdgEditiongBygJerrygJ.gWeygandt,gPaulgD.gKimmel,g
DonaldgE.gKieso
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CHAPTER 3 g



ADJUSTINGgTHEgACCOUNTS



CHAPTERgLEARNINGgOBJECTIVES
1. Explaingthegtimegperiodgassumption.gThegtimegperiodgassumptiongassumesgthatgthegeco
nomicglifegofgagbusinessgisgdividedgintogartificialgtimegperiods.
2. Explaingthegaccrualgbasisgofgaccounting.gAccrual-
basisgaccountinggmeansgthatgcompaniesgrecordgeventsgthatgchangegagcompany'sgfinancialg
statementsgingthegperiodsgingwhichgthosegeventsgoccur,grathergthangingthegperiodsgingwhichg
thegcompanygreceivesgorgpaysgcash.
3. Explaingthegreasonsgforgadjustinggentries.gCompaniesgmakegadjustinggentriesgatgthegen
dg ofgangaccountinggperiod.gSuchgentriesgensuregthatgcompaniesgrecordgrevenuesgingthegpe
riodgingwhichgthegperformancegobligationgisgsatisfiedgandgrecognizegexpensesgingthegperiod
gingwhichgtheygaregincurred.

4. Identifygthegmajorgtypesgofgadjustinggentries.gThegmajorgtypesgofgadjustinggentriesgareg
deferralsg(prepaidgexpensesgandgunearnedgrevenues)gandgaccrualsg(accruedgrevenuesgand
gaccruedgexpenses).

5. Preparegadjustinggentriesgforgdeferrals.gDeferralsgaregeithergprepaidgexpensesgorg unear
nedgrevenues.gCompaniesgmakegadjustinggentriesgforgdeferralsgtogrecordgthegportiongofgthe
gprepaymentgthatgrepresentsgthegexpensegincurredgorgthegrevenuegforgservicesgperformedgi
ngthegcurrentgaccountinggperiod.
6. Preparegadjustinggentriesgforgaccruals.gAccrualsgaregeithergaccruedgrevenuesgorgaccrue
dgexpenses.g Companiesg makeg adjustingg entriesg forg accrualsg tog recordg revenuesg forg serv
ices

,3g-g2 TestgBankgforgFinancialgAccounting:gIFRSgEdition,g3
e
performedgandgexpensesgincurredgingthegcurrentgaccountinggperiodgthatghavegnotgbeengrec
ognizedgthroughgdailygentries.
7. Describegthegnaturegandgpurposegofgangadjustedgtrialgbalance.gAngadjustedgtrialgbalan
cegshowsgthegbalancesgofgallgaccounts,gincludinggthosegthatghavegbeengadjusted,gatgthegen
dgofg angaccountinggperiod.gItsgpurposegisgtogprovegthegequalitygofgthegtotalgdebitgbalancesg
andgtotalgcreditgbalancesgingthegledgergaftergallgadjustments.
a
8.g Preparegadjustinggentriesgforgthegalternativegtreatmentgofgdeferrals.gCompaniesgmaygi
nitiallygdebitgprepaymentsgtogangexpensegaccount.gLikewisegtheygmaygcreditgunearnedgreve
nuesgtogagrevenuegaccount.gAtgthegendgofgthegperiod,gthesegaccountsgmaygbegoverstated.gT
hegadjustinggentriesgforgprepaidgexpensesgincludegagdebitgtogangassetgaccountgandgagcredit
g togangexpensegaccount.gAdjustinggentriesgforgunearnedgrevenuesgincludegagdebitgtogag rev
enuegaccountgandgagcreditgtogagliabilitygaccount.
a9.g Discussgfinancialgreportinggconcepts.gTogbegjudgedguseful,ginformationgshouldghavegtheg

primarygcharacteristicsgofgrelevancegandgfaithfulgrepresentation.gIngaddition,gitgshouldgbegco
mparable,gconsistent,gverifiable,gtimely,gandgunderstandable.
Thegmonetarygunitgassumptiongrequiresgthatgcompaniesgincludegingthegaccountinggrecordsg
onlygtransactiongdatagthatgcangbegexpressedgingtermsgofgmoney.gThegeconomicgentitygassu
mptiongstatesgthatgeconomicgeventsgcangbegidentifiedgwithgagparticulargunitgofgaccountability
.gThegtimegperiodgassumptiongstatesgthatgthegeconomicglifegofgagbusinessgcang begdividedgi
ntogartificialgtimegperiodsgandgthatgmeaningfulgaccountinggreportsgcangbeg preparedgforgeac
hgperiod.gTheggoinggconcerngassumptiongstatesgthatgthegcompanygwillgcontinuegingoperatio
nglonggenoughgtogcarrygoutgitsgexistinggobjectivesgandgcommitments.
Theghistoricalgcostgprinciplegstatesgthatgcompaniesgshouldgrecordgassetsgatgtheirgcost.gThe
g fairgvaluegprinciplegindicatesgthatgassetsgandgliabilitiesgshouldgbegreportedgatgfairgvalue.gT
hegrevenuegrecognitiongprinciplegrequiresgthatgcompaniesgrecognizegrevenuegingthegaccoun
tinggperiodgingwhichgthegperformancegobligationgisgsatisfied.gThegexpensegrecognitiongprinci
plegdictatesgthatgeffortsg(expense)gbegmatchedgwithgresultsg(revenues).gThegfullgdisclosureg
principlegrequiresgthatgcompaniesgdisclosegcircumstancesgandgeventsgthatgmattergtogfinanci
algstatementsgusers.
Thegcostgconstraintgweighsgthegcostgthatgcompaniesgincurgtogprovidegagtypegofginformationg
againstgitsgbenefitsgtogfinancialgstatementgusers.

, AdjustinggthegAccounts 3g-g3

TRUE-FALSEgSTATEMENTS
1. Manygbusinessgtransactionsgaffectgmoregthangonegtimegperiod.
Ans:gT,gLOg1,gBT:gC,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgSolving

2. Theg timeg periodg assumptiong statesg thatg theg economicg lifeg ofg ag businessg entityg cang
begdividedgintogartificialgtimegperiods.
Ans:T,gLOg1,gBT:gK,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgSolving

3. Thegtimegperiodgassumptiongisgoftengreferredgtogasgthegexpensegrecognitiongprinciple.
Ans:gF,gLOg1,gBT:gK,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgSolving

4. Agcompany'sgcalendargyeargandgfiscalgyeargaregalwaysgthegsame.
Ans:gF,gLOg1,gBT:gC,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gCommunications,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolvi
ng

5. Accountinggtimegperiodsgthatgaregonegyearginglengthgaregreferredgtogasginterimgperiods.
Ans:gF,gLOg1,gBT:gK,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gMeasurement,gAICPAgPC:gProblemgsolving

6. Underg Internationalg Financialg Reportingg Standardsg (IFRS)g theg timeg periodg assumptio
ngmeansgcompaniesgmustgissuegfinancialgstatementsgusinggagcalendargyeargtimegperiod.
Ans:gF,gLOg1,gBT:gK,gDifficulty:gMedium,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gMeasurement,gAICPAgPC:gProblemgsolvin
g

7. InternationalgFinancialgReportinggStandardsg(IFRS)gincludegagrevenuegrecognitiongprincip
legthatgstatesgthatg“letgthegrevenuesgfollowgthegexpenses.”
Ans:gF,gLOg2,gBT:gK,gDifficulty:gMedium,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gMeasurement,gAICPAgPC:gProblemgsolvin
g

8. Underg Internationalg Financialg Reportingg Standardsg (IFRS)g revenuesg occurg wheng asse
tsgaregusedgupgorgwhengliabilitiesgaregincurredgtoggenerategrevenue.
Ans:gF,gLOg2,gBT:gK,gDifficulty:gMedium,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gMeasurement,gAICPAgPC:gProblemgsolvin
g

9. Underg Internationalg Financialg Reportingg Standardsg (IFRS)g theg cash-
basisg ofg accountinggrequiresgcompaniesgtogrecordgtransactionsgingthegperiodgingwhichgth
egeventsgoccur.
Ans:gF,gLOg2,gBT:gK,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gMeasurement,gAICPAgPC:gProblemgsolving

10. Incomegwillgalwaysgbeggreatergundergthegcashgbasisgofgaccountinggthangundergthegaccru
algbasisgofgaccounting.
Ans:gF,gLOg2,gBT:gC,gDifficulty:gMedium,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gMeasurement,gAICPAgPC:gProblemgsolvin
g


11. ThegcashgbasisgofgaccountinggisgnotgingaccordancegwithgIFRS.
Ans:gT,gLOg2,gBT:gK,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

12. Thegexpensegrecognitiongprinciplegrequiresgthatgeffortsgbegmatchedgwithgaccomplishments.
Ans:gT,gLOg2,gBT:gK,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

13. Expensegrecognitiongisgtiedgtogrevenuegrecognition.
Ans:gT,gLOg2,gBT:gC,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gMeasurement,gAICPAgPC:gProblemgsolving

14. Thegrevenuegrecognitiongprinciplegdictatesgthatgrevenuegbegrecognizedgingthegaccounting
g periodgingwhichgcashgisgreceived.

Ans:gF,gLOg2,gBT:gK,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

, 3g-g4 TestgBankgforgFinancialgAccounting:gIFRSgEdition,g3
e
15. Adjustinggentriesgaregnotgnecessarygifgthegtrialgbalancegdebitgandgcreditgcolumnsgbalance
sgaregequal.
Ans:gF,gLOg3,gBT:gC,gDifficulty:gMedium,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

16. Angadjustinggentrygalwaysginvolvesgtwogstatementgofgfinancialgpositiongaccounts.
Ans:gF,gLOg3,gBT:gK,gDifficulty:gMedium,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

17. Adjustinggentriesgaregoftengmadegbecausegsomegbusinessgeventsgaregnotgrecordedgasgth
eygoccur.
Ans:gT,gLOg3,gBT:gK,gDifficulty:gMedium,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

18. Adjustinggentriesgaregrecordedgingtheggeneralgjournalgbutgaregnotgpostedgtogthegaccounts
gingtheggeneralgledger.

Ans:gF,gLOg3,gBT:gK,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

19. Agcompanygmustgmakegadjustingg entriesgeverygtimegitgpreparesgangincomegstatementgan
dg agstatementgofgfinancialgposition.
Ans:gT,gLOg3,gBT:gK,gDifficulty:gMediumgTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

20. Adjustingg entriesg areg neededg tog enableg financialg statementsg tog conformg tog Internation
algFinancialgReportinggStandardsg(IFRS).
Ans:gT,gLOg3,gBT:gK,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

21. Typesg ofg adjustingg entriesg includeg deferralg ofg unearnedg revenue,g whichg requiresg the
g companygtogrecordgagliabilitygongthegstatementgofgfinancialgposition.

Ans:gT,gLOg4,gBT:gK,gDifficulty:gHard,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

22. Revenuegreceivedgbeforegitgisgearnedgandgexpensesgpaidgbeforegbeinggusedgorgconsume
dgaregbothginitiallygrecordedgasgliabilities.
Ans:gF,gLOg4,gBT:gC,gDifficulty:gMedium,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

23. Accruedgrevenuesgaregrevenuesgwhichghavegbeengreceivedgbutgnotgyetgearned.
Ans:gF,gLOg4,gBT:gK,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

24. Theg bookg valueg ofg ag depreciableg assetg isg alwaysg equalg tog itsg marketg valueg becaus
egdepreciationgisgagvaluationgtechnique.
Ans:gF,gLOg5,gBT:gC,gDifficulty:gMedium,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

25. AccumulatedgDepreciationgisgagliabilitygaccountgandghasgagcreditgnormalgaccountgbalance.
Ans:gF,gLOg5,gBT:gK,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

26. Ag liability—
revenueg accountg relationshipg existsg withg ang unearnedg rentg revenueg adjustinggentry.
Ans:gT,gLOg5,gBT:gC,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

27. ThegbalancesgofgthegDepreciationgExpensegandgthegAccumulatedgDepreciationgaccounts
g shouldgalwaysgbegthegsame.

Ans:gF,gLOg5,gBT:gC,gDifficulty:gMedium,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving

28. Unearnedg revenueg isg ag prepaymentg thatg requiresg ang adjustingg entryg wheng servicesg a
regperformed.
Ans:gT,gLOg5,gBT:gC,gDifficulty:gEasy,gTOT:g2gmin.,gAACSB:gAnalytic,gAICPAgBB:gNone,gAICPAgFN:gReporting,gAICPAgPC:gProblemgsolving