Exam II Review: Adjusting Entries and
Financial Statements UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Adjusting Journal Entries - Correct answers✔✔Prepared at period end to update accounts.
Accounts Receivable - Correct answers✔✔Revenue recorded before cash is received.
Payroll Deductions - Correct answers✔✔Reductions from gross earnings for taxes and benefits.
Interest Expense - Correct answers✔✔Cost incurred for borrowing, recorded annually.
Prepaid Expenses - Correct answers✔✔Payments made in advance for future expenses.
Accumulated Depreciation - Correct answers✔✔Contra asset account reflecting total
depreciation.
Book Value - Correct answers✔✔Asset cost minus accumulated depreciation.
Closing Entries - Correct answers✔✔Transfer temporary account balances to Retained Earnings.
Dividends Declared - Correct answers✔✔Reported in Statement of Retained Earnings.
Sales Revenue - Correct answers✔✔Income from selling goods or services.
Financial Statements UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Adjusting Journal Entries - Correct answers✔✔Prepared at period end to update accounts.
Accounts Receivable - Correct answers✔✔Revenue recorded before cash is received.
Payroll Deductions - Correct answers✔✔Reductions from gross earnings for taxes and benefits.
Interest Expense - Correct answers✔✔Cost incurred for borrowing, recorded annually.
Prepaid Expenses - Correct answers✔✔Payments made in advance for future expenses.
Accumulated Depreciation - Correct answers✔✔Contra asset account reflecting total
depreciation.
Book Value - Correct answers✔✔Asset cost minus accumulated depreciation.
Closing Entries - Correct answers✔✔Transfer temporary account balances to Retained Earnings.
Dividends Declared - Correct answers✔✔Reported in Statement of Retained Earnings.
Sales Revenue - Correct answers✔✔Income from selling goods or services.
