Question

Multiple Choice Account questions

1.The effect of an adjustment on the financial statements is usually to:

a.Match revenues and assets

b.increase net income

c.make the balance sheet balance

d.increase the accuracy of both the balance sheet and income statement

2.The balance in the wages payable account was $25,000 at the beginning of the month. Wages accrued during the month totaled $54,000. Wages paid during the month were $63,000

a.wages expenses for the month totaled $79,000

b.wages expense for the month totaled $63,000

c.the balance of the wages payable account at the end of the month was $16,000

d.the balance of the wages payable account at the end of the month was $34,000

3. A chart of accounts:

a.is where transactions are initially recorded

b.is the same as a T-account, with depots on the left and credits on the right

c.is where transactions are posted to after they are initially recorded

d.serves as an index to the ledger, with each account numbered to facilitate frequent references that are made to it

Answer 1

Answers

1.The effect of an adjustment on the financial statements is usually to:

Correct Answer = Option d.increase the accuracy of both the balance sheet and income statement
This is because, without adjustments, most of the revenues, expenses, assets and liabilities would be understated or overstated which will not make the financial statement be accurate.

2.The balance in the wages payable account was $25,000 at the beginning of the month. Wages accrued during the month totaled $54,000. Wages paid during the month were $63,000

Correct Answer = Option c.the balance of the wages payable account at the end of the month was $16,000
Ending balances in Wages Payable = Beginning balance + Wages accrued – Wages paid = 25000 + 54000 – 63000 = $ 16,000

3. A chart of accounts:

Correct Answer = Option d.serves as an index to the ledger, with each account numbered to facilitate frequent references that are made to it.
Chart of accounts contains a LIST of all the accounts name that are being used in recording the transaction along with their reference number.