3. Preparation of Financial Statements

Trial Balance Adjustments — Quiz

Test your understanding of trial balance adjustments with 5 practice questions.

Practice Questions

Question 1

A company has an unadjusted trial balance showing 'Unearned Revenue' of $$ \$4,000 $. By the end of the accounting period, $ \$1,500 $$ of this revenue has been earned. Which of the following is the correct adjusting entry?

Question 2

A company uses the straight-line method of depreciation. An asset was purchased for $$ \$50,000 $ with an estimated useful life of 5 years and a salvage value of $ \$5,000 $$. What is the book value of the asset at the end of the second year?

Question 3

A company's accounts receivable balance is $$ \$80,000 $. The existing provision for doubtful debts has a debit balance of $ \$500 $. If the company estimates that $ 4\% $$ of its accounts receivable will be uncollectible, what is the amount of the adjustment for the provision for doubtful debts?

Question 4

Which of the following adjustments is required when a business has paid for an expense that will benefit future accounting periods?

Question 5

A company received $$ \$1,800 $$ on December 1st for services to be provided equally over three months. What is the amount of revenue that should be recognized in the current year's income statement if the accounting period ends on December 31st?