AFE Quiz 8: Adjusting Entries

What is an adjusting entry?

An entry made to correct errors
An entry made at the end of an accounting period to update account balances
An entry for recording cash receipts
An entry for recording inventory purchases

Which of the following is an example of an accrual adjusting entry?

Recording depreciation expense
Recording earned but unbilled revenue
Recording prepaid insurance
Recording supplies used

Which of the following is NOT a type of adjusting entry?

Accruals
Deferrals
Reclassifications
Investments

What is the main purpose of adjusting entries?

To ensure accounts reflect the correct amounts for the period
To record cash transactions
To post entries to the ledger
To close temporary accounts

Which of the following accounts usually requires an adjusting entry?

Cash
Supplies
Common Stock
Land

What type of adjusting entry is made when revenue has been earned but not yet received?

Accrued expense
Accrued revenue
Deferred expense
Deferred revenue

Which adjusting entry is required for prepaid insurance that has expired?

Debit Insurance Expense, Credit Prepaid Insurance
Debit Prepaid Insurance, Credit Insurance Expense
Debit Cash, Credit Insurance Expense
Debit Insurance Expense, Credit Cash

What is the effect of failing to make an adjusting entry for accrued expenses?

Expenses are overstated
Liabilities are overstated
Net income is overstated
Assets are understated

Which of the following is a deferral adjusting entry?

Recording interest earned but not yet received
Recording revenue earned but not yet billed
Recording supplies used during the period
Recording accrued salaries

Adjusting entries are typically made:

Daily
At the end of the accounting period
At the beginning of the year
Every time cash is received

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