A closing entry includes a:
A
debit to Sales Revenue
B
credit to Cash.
C
credit to Accounts Receivable.
D
debit to Interest Expense.
During April, the Grass is Greener Company buys and pays for a six-month
supply of fertilizer in order to receive a bulk discount. The company uses accrual
basis accounting. The cost of fertilizer recorded:
A
as an asset, which will later be reduced as the fertilizer is used.
B
as a liability, which will later be reduced as the fertilizer used.
C
immediately as an expense.
D
partially as an expense and partially as a liability.
Permanent accounts are found on:
A
the balance sheet.
B
the income statement.
C
both the balance sheet and the income statement.
D
none of the financial statements.
Which of the following steps is performed first at the end of each accounting
period?
A
Prepare adjusting entries.
B
Prepare an adjusted trial balance.
C
Prepare closing journal entries.
D
Prepare a post-closing trial balance.
A company makes a deferral adjustment that decreased a liability. This must
mean that a(n):
A
expense account was decreased by the same amount.
B
expense account was increased by the same amount.
C
revenue account was increased by the same amount.
D
revenue account was decreased by the same amount.
When a deferral adjustment is made to an asset account, that asset becomes
a(n):
A
liability.
B
other asset.
C
revenue
D
expense.
At the end of the year, accrual adjustments could include a:
A
debit to an expense and a credit to an asset.
B
credit to a revenue and a debit to an expense.
C
debit to cash and a credit to Common Stock.
D
debit to an expense and a credit to a liability.
One major difference between deferral and accrual adjustments is that:
A
accrual adjustments affect income statement accounts and deferral adjustments affect balance
sheet accounts.
B
deferral adjustments increase net income and accrual adjustments decrease net income.
C
deferral adjustments are made under the cash basis of accounting and accrual adjustments are
made under the accrual basis of accounting.
D
accounts affected by an accrual adjustment always go in the same direction (i.e., both accounts are
increased or both accounts are decreased) and accounts affected by a deferral adjustment always
go in opposite directions (one account is increased and one account is decreased).