9th Edition

Financial and
Managerial Accounting
Warren/Reeve

Chapter Test 3A

TEST 3A (Concluded)

FILL-IN-THE-BLANKPRINCIPLES AND TERMINOLOGY

INSTRUCTIONS: Complete each of the following statements by writing the appropriate words in the Answers column.

Answers
0.

The accounting principle that requires the matching of revenues and

expenses is called the ................................................................................

1.

The expense associated with the decrease in economic usefulness of a

fixed asset with the passage of time is ......................................................

matching concept

For
Scoring
0. ____
1. ____

2.

Accumulated depreciation accounts that are offset against fixed asset

accounts are ...............................................................................................

2. ____

3.

The process of posting adjusting and closing entries in the ledger at the
end of an accounting period is called the ..................................................

3. ____

4.

The journal entries at the end of the accounting period to properly match
revenues and expenses are called ...........................................................

5.

Payments that have been initially recorded as assets but are expected to
become expenses through the normal operations of the business are
called ..........................................................................................................

4. ____

5. ____

TEST 3A (Concluded)

6.

Revenues that have been earned but have not been recorded in the
accounts are called ....................................................................................

6. ____

PROBLEM 1ADJUSTING ENTRIES

INSTRUCTIONS: Indicate the accounts to be debited and credited in recording the selected transactions described
below by inserting the letter designations in the appropriate columns.
A. Accounts Receivable
B. Accumulated Depreciation

F. Fees Earned
G. Land

K. Rent Revenue
L. Salaries Expense

O. Supplies Expense
P. Taxes Expense

C. Advertising Expense
D. Depreciation Expense
E. Equipment

H. Prepaid Advertising
I. Prepaid Rent
J. Rent Expense

M. Salaries Payable
N. Supplies

DESCRIPTIONS
0. Adjust for rent accrued at the end of the period on property rented
to others ....................................................................................................

Debit
A

Q. Taxes Payable
R. Unearned Fees

For
Scoring
0. ____

Credit
K

For
Scoring
0. ____

1-2. Adjust for the cost of supplies used during the period .............................

1. ____

2. ____

3-4. Adjust for salaries accrued at the end of the period ................................

3. ____

4. ____

TEST 3A (Concluded)

5-6. Adjust for depreciation of equipment for the period .................................

5. ____

6. ____

7-8. Adjust for the rent expired for the period ..................................................

7. ____

8. ____

9-10. Adjust for prepaid advertising expired during the period ..........................

9. ____

10. ____

11-12. Adjust for taxes accrued at the end of the period ....................................

11. ____

12. ____

13-14. Adjust for fees collected in advance and now earned ..............................

13. ____

14. ____

PROBLEM 2PROBLEMS
INSTRUCTIONS: Solve the following problems and record the answers in the Answers column. Circle over or under
when applicable.
Answers
0. If the unearned rent account has a balance of $9,000, representing
receipt of three months rent beginning on December 1, the rent revenue
for December is ............................................................................................

$3,000

For
Scoring

0. ____

TEST 1A (Concluded)

1. The amount reported as a liability at December 31, based on the data in

Question 0, is ................................................................................................

1. ____

2-7. The adjusting entry to record depreciation expense at the end of the
current year was not made. Indicate the effect of the omission
(overstated, understated, or not affected) on each of the following:
2. Revenues for the current year ......................................................................

2. ____

3. Expenses for the current year ......................................................................

3. ____

4. Net income for the current year ....................................................................

4. ____

5. Total assets at the end of the current year ...................................................

5. ____

6. Total liabilities at the end of the current year ................................................

6. ____

TB1-56

7. Total owners equity at the end of the current year ......................................

8. The net income reported on the income statement is $65,000. However,
adjusting entries have not been made at the end of the period for
depreciation expense of $15,000 and accrued fees earned of $4,500.
Net income, as corrected, is .........................................................................

7. ____

8. ____

9. Total owners equity will be misstated (overstated or understated) by .........

over $
under $

9. ____

10. Total revenues will be misstated (overstated or understated) by ..................

over $
under $

10. ____

9-11. If the errors in Question 8 are not discovered and corrected, the effect on
the financial statements will be as follows:

TEST 1A (Concluded)

11. Total assets will be misstated (overstated or understated) by ......................

over $
under $

11. ____

12. If the balance in the supplies account on January 1 is $13,500, supplies

purchased during the last 12 months were $15,500, and the supplies
on hand at December 31 were $13,000, the amount for the appropriate
adjusting entry at December 31 is ................................................................

12. ____

13. The amount of supplies reported on the balance sheet at December 31,
based on the data in Question 12, is ............................................................

13. ____

14. If the prepaid insurance account has a debit balance of $11,600 at the
end of the month, before adjustment, and if the unexpired insurance
at the end of the month was $2,600, the amount of prepaid insurance

TB1-58

that would appear on the balance sheet, after adjustment, is .....................

14. ____

15-20. If the adjusting entry for supplies used is not recorded at the end
of a year, how will the following be affected at the end of the year?
(Answer using one of the following: not affected, overstated, or
understated.)
15. Assets at end of year ....................................................................................

15. ____

16. Liabilities at end of year ................................................................................

16. ____

17. Owners equity at end of year .......................................................................

17. ____

18. Revenues for year .........................................................................................

18. ____

19. Expenses for year .........................................................................................

19. ____

TEST 1A (Concluded)

20. Net income for year ......................................................................................

ACHIEVEMENT TEST SOLUTIONSCHAPTER 3

TEST 3A
Fill-in-the-Blank
Principles and Terminology

TB1-60

20. ____

1.
2.
3.
4.
5.
6.

depreciation
contra (asset) accounts
adjusting process
adjusting entries
prepaid (deferred) expenses
accrued revenues (assets)

Problem 1
Adjusting Entries

TEST 1A (Concluded)

1.
3.
5.
7.
9.
11.
13.

Debit
O
L
D
J
C
P
R

2.
4.
6.
8.
10.
12.
14.

Credit
N
M
B
I
H
Q
F

TB1-62

Problem 2
Problems
1.
2.
3.
4.
5.
6.

$6,000
not affected
understated
overstated
overstated
not affected

TEST 1A (Concluded)

7.
8.
9.
10.
11.
12.
13.
14.
15.
16.

overstated
$54,500
over $10,500
under $4,500
over $10,500
$16,000
$13,000
$2,600
overstated
not affected

TB1-64

17.
18.
19.
20.

overstated
not affected
understated
overstated

TEST 1A (Concluded)

TEST 3B
Fill-in-the-Blank
Principles and Terminology
1.
2.
3.
4.
5.
6.

book value
cash basis
adjusting process
unearned (deferred) revenues
accrued expenses (liabilities)
contra (asset) accounts

TB1-66

Problem 1
Adjusting Entries

1.
3.
5.
7.

Debit
P
C
J
M

2.
4.
6.
8.

Credit
Q
B
G
L

TB3-67

TEST 1A (Concluded)

9.
11.
13.

A
A
O

10.
12.
14.

K
I
K

Problem 2
Problems
1. $2,500
2. $2,000

TB1-68

3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

$5,500
$30,000
over $10,000
under $5,000
over $15,000
$13,450
not affected
understated
overstated
overstated

TB3-69

TEST 1A (Concluded)

13.
14.
15.
16.
17.
18.
19.
20.

not affected
overstated
understated
not affected
understated
understated
not affected
understated

TB1-70