MBA700: Exam 2 ACTUAL UPDATED
Questions and CORRECT Answers
expense should be recognized in the period incurred - CORRECT ANSWER the expense
recognition principle states that:
adjusting entries - CORRECT ANSWER always involve at least one revenue/expense and
one balance sheet account
adjusted trial balance - CORRECT ANSWER a list of all accounts and their balances after
adjusting entries
Debit Supplies Expense $2,800, credit Supplies $2,800 - CORRECT ANSWER At the
beginning of December, LSUS Corporation had $1,000 in supplies on hand. During the month,
supplies purchased amounted to $2,000, but by the end of the month the supplies balance was
only $200. What is the appropriate month-end adjusting entry?
a prepaid expense - CORRECT ANSWER Making insurance payments in advance is an
example of:
Debit accounts receivable for 2,000; Credit consulting services for 2,000 - CORRECT
ANSWER LSUS Consulting provides 3 months consulting service for 6,000 to Scheinert
Inc. starting Jan 1, 2023. Please assume service are performed evenly throughout months. On Jan
31, 2023 LSUS prepare a financial statement, what would LSUS consulting record as the
adjusting entry for this consulting work on Jan 31, 2023?
debit insurance Expense, $3,600; credit prepaid Insurance $3,600. - CORRECT
ANSWER On April 1, a $4,800 premium on a one-year insurance policy on equipment
was paid and charged to Prepaid Insurance. At the end of the year, the adjusting entry would be:
Debit unearned revenue by $4,000, credit service revenue by $4,000 - CORRECT
ANSWER On September 1, 2022, LSUS Magazine sold 100 one-year subscriptions for
, $120 each. The total amount received was credited to Unearned Revenue. What would be the
required adjusting entry at December 31, 2022?
Debit depreciation expense for $2,000; credit accumulated depreciation for $2,000 - CORRECT
ANSWER At beginning of year 1, LSUS purchased a $10,000 manufacturing equipment
that is estimated to be used for five years. (no residue value after five years) If the equipment is
going to be depreciated evenly over five years, what would be the correct adjusting entry at end
of year1 for this equipment?
Debit supplies expenses for $700; Credit supplies for $700 - CORRECT ANSWER Mod
Inc.'s beginning of October supplies was $400. Mod purchased $800 worth of supplies during
October. At the end of October Mod's balance of supplies was $500. What will be Mod's end of
October adjusting entry for supplies?
A debit to Revenues and a credit to Retained Earnings. - CORRECT ANSWER The
closing entry for revenues includes:
A debit to Retained Earnings and a credit to all expense accounts. - CORRECT
ANSWER The closing entry for expenses includes:
interest expense - CORRECT ANSWER Permanent accounts would not include:
closing process - CORRECT ANSWER Closing the balances of revenue, expense and
dividend accounts to zero - is what type of process?
debit salaries expense by 2,000, credit salaries payable by 2,000 - CORRECT
ANSWER The employees of smallshop work Monday through Friday. Every Friday the
company issues payroll checks totaling $5,000. The current pay period ends on Friday, January
3. Smallshop is now preparing financial statements for the year ended December 31, (which is a
Tuesday). What is the adjusting entry to record accrued salaries at the end of the year?
The timing of when revenues and expenses are recorded. - CORRECT ANSWER The
primary difference between accrual-basis and cash-basis accounting is:
Questions and CORRECT Answers
expense should be recognized in the period incurred - CORRECT ANSWER the expense
recognition principle states that:
adjusting entries - CORRECT ANSWER always involve at least one revenue/expense and
one balance sheet account
adjusted trial balance - CORRECT ANSWER a list of all accounts and their balances after
adjusting entries
Debit Supplies Expense $2,800, credit Supplies $2,800 - CORRECT ANSWER At the
beginning of December, LSUS Corporation had $1,000 in supplies on hand. During the month,
supplies purchased amounted to $2,000, but by the end of the month the supplies balance was
only $200. What is the appropriate month-end adjusting entry?
a prepaid expense - CORRECT ANSWER Making insurance payments in advance is an
example of:
Debit accounts receivable for 2,000; Credit consulting services for 2,000 - CORRECT
ANSWER LSUS Consulting provides 3 months consulting service for 6,000 to Scheinert
Inc. starting Jan 1, 2023. Please assume service are performed evenly throughout months. On Jan
31, 2023 LSUS prepare a financial statement, what would LSUS consulting record as the
adjusting entry for this consulting work on Jan 31, 2023?
debit insurance Expense, $3,600; credit prepaid Insurance $3,600. - CORRECT
ANSWER On April 1, a $4,800 premium on a one-year insurance policy on equipment
was paid and charged to Prepaid Insurance. At the end of the year, the adjusting entry would be:
Debit unearned revenue by $4,000, credit service revenue by $4,000 - CORRECT
ANSWER On September 1, 2022, LSUS Magazine sold 100 one-year subscriptions for
, $120 each. The total amount received was credited to Unearned Revenue. What would be the
required adjusting entry at December 31, 2022?
Debit depreciation expense for $2,000; credit accumulated depreciation for $2,000 - CORRECT
ANSWER At beginning of year 1, LSUS purchased a $10,000 manufacturing equipment
that is estimated to be used for five years. (no residue value after five years) If the equipment is
going to be depreciated evenly over five years, what would be the correct adjusting entry at end
of year1 for this equipment?
Debit supplies expenses for $700; Credit supplies for $700 - CORRECT ANSWER Mod
Inc.'s beginning of October supplies was $400. Mod purchased $800 worth of supplies during
October. At the end of October Mod's balance of supplies was $500. What will be Mod's end of
October adjusting entry for supplies?
A debit to Revenues and a credit to Retained Earnings. - CORRECT ANSWER The
closing entry for revenues includes:
A debit to Retained Earnings and a credit to all expense accounts. - CORRECT
ANSWER The closing entry for expenses includes:
interest expense - CORRECT ANSWER Permanent accounts would not include:
closing process - CORRECT ANSWER Closing the balances of revenue, expense and
dividend accounts to zero - is what type of process?
debit salaries expense by 2,000, credit salaries payable by 2,000 - CORRECT
ANSWER The employees of smallshop work Monday through Friday. Every Friday the
company issues payroll checks totaling $5,000. The current pay period ends on Friday, January
3. Smallshop is now preparing financial statements for the year ended December 31, (which is a
Tuesday). What is the adjusting entry to record accrued salaries at the end of the year?
The timing of when revenues and expenses are recorded. - CORRECT ANSWER The
primary difference between accrual-basis and cash-basis accounting is:
