Master Adjusting Journal Entries: Enhance Your Accounting Skills

Question 1

Which of the following is not considered a type of adjusting entry?

Accepted Answer

Revenue earned

Answer

Accruals

Answer

Deferrals

Answer

Prepayments

Question 2

Amortization refers to the process of:

Accepted Answer

Spreading the cost of an intangible asset over its useful life

Answer

Spreading the cost of a tangible asset over its useful life

Answer

Recognizing revenue earned but not yet received

Answer

Recording expenses incurred but not yet paid

Question 3

The primary purpose of adjusting entries is to:

Accepted Answer

Update accounting records to reflect the actual financial status

Answer

Correct accounting errors

Answer

Conclude the accounting cycle at period-end

Answer

Prepare financial statements

Question 4

Which of the following is not an advantage of using adjusting entries?

Accepted Answer

Allowing businesses to manipulate their financial results

Answer

Ensuring accurate financial statements

Answer

Preventing errors from persisting in future accounting periods

Answer

Simplifying the closing of accounting records at period-end

Question 5

When preparing adjusting entries, which of the following factors is not typically considered?

Accepted Answer

The auditor's opinion

Answer

The nature of the business

Answer

The accounting period

Answer

The significance of the adjustment

Question 6

Which of the following is not a primary purpose of adjusting entries?

Accepted Answer

To record transactions that have not yet occurred

Answer

To update accounting records at the end of an accounting period

Answer

To ensure that financial statements accurately reflect the business's position

Answer

To correct errors made during the accounting period

Question 7

Which type of adjusting entry records an expense that has been incurred but not yet paid?

Accepted Answer

Accrual

Answer

Deferral

Answer

Prepayment

Answer

Depreciation

Question 8

Which of the following is an example of a deferral?

Accepted Answer

Recording unearned revenue for services not yet performed

Answer

Recording rent expense for the month

Answer

Recording depreciation expense for a building

Answer

Recording supplies expense for supplies used

Question 9

What is the primary purpose of recording depreciation expense?

Accepted Answer

To allocate the cost of a long-lived asset over its useful life

Answer

To reduce the carrying value of an asset on the balance sheet

Answer

To recognize revenue from an asset

Answer

To increase the value of an asset on the balance sheet

Question 10

Which of the following is not a factor to consider when calculating depreciation expense?

Accepted Answer

Fair market value

Answer

Cost of the asset

Answer

Estimated useful life

Answer

Salvage value

Question 11

What is the purpose of recording amortization expense?

Accepted Answer

To allocate the cost of an intangible asset over its useful life

Answer

To reduce the carrying value of an intangible asset on the balance sheet

Answer

To recognize revenue from an intangible asset

Answer

To increase the value of an intangible asset on the balance sheet

Question 12

Which of the following is a benefit of using adjusting entries?

Accepted Answer

Improved accuracy of financial statements

Answer

More timely financial reporting

Answer

Reduced risk of errors

Answer

Increased profitability

Question 13

When should adjusting entries be recorded?

Accepted Answer

At the end of each accounting period

Answer

At the beginning of each accounting period

Answer

When a material transaction occurs

Answer

When financial statements are prepared

Question 14

Which of the following is not a type of adjusting entry commonly used in accounting?

Accepted Answer

Reversals

Answer

Accruals

Answer

Deferrals

Answer

Prepayments

Question 15

The formula for calculating depreciation expense is:

Accepted Answer

(Cost of asset - Salvage value) / Useful life

Answer

Cost of asset / Salvage value * Useful life

Answer

(Cost of asset + Salvage value) / Useful life

Answer

Cost of asset / (Salvage value * Useful life)

Question 16

In an amortization adjusting entry, which account is debited?

Accepted Answer

Amortization expense

Answer

Accumulated amortization

Answer

Intangible asset

Answer

Cash

Question 17

The primary purpose of a prepaid expense account is to record:

Accepted Answer

Expenses that have been paid but not yet used

Answer

Expenses that have been used but not yet paid

Answer

Assets that have been acquired but not yet used

Answer

Liabilities that have been incurred but not yet recorded

Question 18

Which of the following is a key benefit of making adjusting entries?

Accepted Answer

Ensuring the accuracy of financial statements

Answer

Simplifying the recording of transactions

Answer

Eliminating the need for closing entries

Answer

Reducing paperwork

Question 19

To record accrued interest, the adjusting entry involves:

Accepted Answer

Debiting Interest expense and crediting Interest payable

Answer

Debiting Interest receivable and crediting Interest income

Answer

Crediting Interest expense and debiting Interest payable

Answer

Crediting Interest receivable and debiting Interest income

Question 20

In a deferral adjusting entry, which account is increased?

Accepted Answer

Deferred expense

Answer

Deferred revenue

Answer

Expense

Answer

Revenue

Question 21

Which of the following is an adjusting entry used to recognize expenses incurred but not yet paid?

Accepted Answer

Accrual

Answer

Deferral

Answer

Prepayment

Answer

Depreciation

Question 22

What is the purpose of a deferral adjusting entry?

Accepted Answer

To split expenses over multiple accounting periods.

Answer

To record expenses incurred but not yet paid

Answer

To record revenue earned but not yet received

Answer

To record depreciation expense on a building

Question 23

Which of the following assets are typically depreciated?

Accepted Answer

Buildings

Answer

Inventory

Answer

Investments

Answer

Cash

Question 24

What is the primary purpose of amortization in accounting?

Accepted Answer

To spread the cost of an intangible asset over its useful life

Answer

To record expenses incurred but not yet paid

Answer

To adjust the balance of an asset account for any impairment

Answer

To record revenue earned but not yet received

Question 25

Which of the following is an example of an adjusting entry for impairment?

Accepted Answer

Recording a decrease in the fair value of an asset

Answer

Recording an increase in the estimated salvage value of an asset

Answer

Recording a reversal of a previous impairment adjustment

Answer

Recording depreciation expense on a building

Question 26

When are adjusting entries typically made?

Accepted Answer

At the end of an accounting period

Answer

Daily

Answer

Weekly

Answer

Monthly

Question 27

Which of the following accounts is considered a permanent account?

Accepted Answer

Assets

Answer

Revenue

Answer

Income Summary

Answer

Liabilities

Question 28

Which of the following is not a primary purpose of adjusting entries?

Accepted Answer

To reclassify expenses as assets

Answer

To update accounting records to reflect actual financial performance

Answer

To ensure compliance with accounting regulations

Answer

To correct for unrecorded transactions

Question 29

Which type of adjusting entry is used to record expenses incurred but not yet paid?

Accepted Answer

Accrual

Answer

Deferral

Answer

Depreciation

Answer

Amortization

Question 30

Depreciation expense is recorded to:

Accepted Answer

Allocate the cost of a tangible asset over its useful life

Answer

Recognize the decline in value of an intangible asset

Answer

Adjust for the prepayment of an expense

Answer

Record the accrual of an expense

Question 31

Which type of adjusting entry is used to record revenue earned but not yet received?

Accepted Answer

Accrual

Answer

Deferral

Answer

Depreciation

Answer

Amortization

Question 32

When recording depreciation expense, the accumulated depreciation account is:

Accepted Answer

Credited

Answer

Debited

Answer

Not affected

Answer

Increased by the amount of depreciation expense

Question 33

Adjusting entries are typically made:

Accepted Answer

Monthly

Answer

Daily

Answer

Weekly

Answer

Annually

Question 34

Which type of adjusting entry is NOT used to record expenses or revenues that have occurred but have not yet been recorded?

Accepted Answer

Reversals

Answer

Accruals

Answer

Deferrals

Answer

Prepayments

Question 35

What type of adjusting entry is required to record an expense that has been incurred but not yet recorded?

Accepted Answer

Debit Expense, Credit Liability

Answer

Debit Asset, Credit Revenue

Answer

Debit Liability, Credit Income

Answer

Debit Revenue, Credit Asset

Question 36

What account is debited when recording the amortization of an intangible asset?

Accepted Answer

Amortization Expense

Answer

Accumulated Amortization

Answer

Asset

Answer

Revenue

Question 37

What is the primary purpose of an adjusting entry?

Accepted Answer

To update accounting records to reflect the financial position of the business at the end of the accounting period

Answer

To correct errors in the accounting records

Answer

To allocate expenses and revenues to the appropriate accounting periods

Answer

To simplify the accounting process

Question 38

Which of the following is an example of a deferral?

Accepted Answer

Prepaid Rent

Answer

Accrued Interest Payable

Answer

Depreciation Expense

Answer

Amortization Expense

Question 39

Which of the following is NOT a benefit of using adjusting entries?

Accepted Answer

Allows for the manipulation of financial statements

Answer

Provides more accurate financial statements

Answer

Helps to avoid overstating or understating expenses and revenues

Answer

Improves the efficiency of the accounting system

Question 40

What is the primary purpose of making adjusting entries?

Accepted Answer

To update accounting records and ensure accurate financial statements.

Answer

To close temporary accounts and prepare for the new period.

Answer

To record transactions that occurred during the period.

Question 41

Which of the following is an example of an accrual adjustment?

Accepted Answer

Recording expenses incurred but not yet paid.

Answer

Recording prepaid expenses.

Answer

Recording accounts receivable.

Question 42

What is the purpose of a deferral adjustment?

Accepted Answer

To record expenses or revenues that have been paid or received but not yet earned or incurred.

Answer

To record accruals.

Answer

To adjust for depreciation or amortization.

Question 43

Which of the following accounts are affected by a prepayment adjustment?

Accepted Answer

Prepaid expenses and cash.

Answer

Accounts receivable and unearned revenue.

Answer

Supplies and supplies expense.

Question 44

What is the formula for calculating depreciation expense using the straight-line method?

Accepted Answer

Depreciation expense = (Asset cost - Salvage value) / Useful life.

Answer

Depreciation expense = (Asset cost + Salvage value) / Useful life.

Answer

Depreciation expense = Asset cost / Useful life.

Question 45

Which of the following is a tangible asset?

Accepted Answer

Building.

Answer

Copyright.

Answer

Trademark.

Answer

Goodwill.

Question 46

What is the purpose of an amortization adjustment?

Accepted Answer

To gradually reduce the value of an intangible asset.

Answer

To record accruals.

Answer

To adjust for depreciation.

Question 47

Which of the following is an intangible asset?

Accepted Answer

Patent.

Answer

Land.

Answer

Cash.

Question 48

What is the main objective of a bank reconciliation?

Accepted Answer

To reconcile the cash balance per bank statement with the cash balance per company records.

Answer

To identify errors and fraud.

Question 49

Which of the following transactions would be classified as an adjusting entry?

Accepted Answer

Recording interest revenue earned but not yet received.

Answer

Recording a cash sale.

Answer

Paying a creditor.

Answer

Issuing stock.

Question 50

Which adjusting entry is used to recognize revenue earned but not yet billed?

Accepted Answer

Accrued Revenue

Answer

Deferred Revenue

Answer

Prepaid Expense

Answer

Depreciation Expense

Question 51

An adjusting entry records the depreciation of equipment for the current period. What type of adjusting entry is this?

Accepted Answer

Expense Recognition

Answer

Cash Flow Adjustment

Answer

Liability Recognition

Answer

Revenue Recognition

Question 52

Which of the following describes deferred expenses?

Accepted Answer

Expenses paid in advance for services not yet received.

Answer

Recorded as assets on the balance sheet.

Answer

Adjusted only at the end of the fiscal year.

Question 53

An adjusting entry is made to record the use of supplies during the period. Which accounts are affected?

Accepted Answer

Supplies Expense and Supplies

Answer

Supplies Expense and Accounts Payable

Answer

Prepaid Supplies and Supplies Expense

Answer

Supplies and Cash

Question 54

What is the primary purpose of an adjusting entry?

Accepted Answer

To ensure accurate financial statements at the end of an accounting period.

Answer

To record transactions that have not yet occurred.

Answer

To correct errors made in previous accounting periods.

Question 55

An adjusting entry records the accumulation of interest on a loan. What type of adjusting entry is this?

Accepted Answer

Accrued Liability

Answer

Prepaid Expense

Answer

Amortization Expense

Answer

Deferred Revenue

Question 56

Which of the following is an example of a prepaid expense?

Accepted Answer

Insurance

Answer

Rent Expense

Answer

Depreciation Expense

Answer

Utilities Expense

Question 57

An adjusting entry records the depreciation of a building. What type of adjusting entry is this?

Accepted Answer

Expense Recognition

Answer

Cash Flow Adjustment

Answer

Liability Recognition

Answer

Revenue Recognition

Question 58

Which of the following is a benefit of using adjusting entries?

Accepted Answer

Improved financial statement accuracy.

Answer

Reduced need for external audits.

Answer

Increased employee morale.

Answer

Simplified tax filing.

Question 59

Which adjusting entry recognizes revenue earned but not yet collected?

Accepted Answer

Accrued Revenue

Answer

Deferred Revenue

Answer

Prepaid Expense