Financial Accounting Quiz: Adjusted Trial Balance
20 questions · exam conditions
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Adjusted Trial BalanceQuestion 1 of 20

Mountain View Company's adjusted trial balance will show Accounts Receivable of $22,000 and Service Revenue of $95,000. During the adjusting process, the company recorded $3,500 of accrued revenue that had not been previously recorded. If no other transactions affected these accounts during the adjustment period, what were the unadjusted balances?

Accounts Receivable $18,500; Service Revenue $95,000 in the unadjusted trial balance
Accounts Receivable $25,500; Service Revenue $98,500 in the unadjusted trial balance
Accounts Receivable $22,000; Service Revenue $98,500 in the unadjusted trial balance
Accounts Receivable $18,500; Service Revenue $91,500 in the unadjusted trial balance
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Financial Accounting Quiz

Financial Accounting Quiz: Adjusted Trial Balance

Practice Adjusted Trial Balance in Financial Accounting with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Adjusted Trial Balance, giving you a quick way to practice the rules, question types, and explanations that matter most for Financial Accounting.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

Mountain View Company's adjusted trial balance will show Accounts Receivable of $22,000 and Service Revenue of $95,000. During the adjusting process, the company recorded $3,500 of accrued revenue that had not been previously recorded. If no other transactions affected these accounts during the adjustment period, what were the unadjusted balances?

  1. Accounts Receivable $18,500; Service Revenue $95,000 in the unadjusted trial balance
  2. Accounts Receivable $25,500; Service Revenue $98,500 in the unadjusted trial balance
  3. Accounts Receivable $22,000; Service Revenue $98,500 in the unadjusted trial balance
  4. Accounts Receivable $18,500; Service Revenue $91,500 in the unadjusted trial balance (correct answer)
Explanation: When you encounter adjusting entries for accrued revenue, remember that these entries increase both Accounts Receivable and Service Revenue from their unadjusted amounts. The key is working backward from the adjusted balances to find what existed before the adjustment. The adjusting entry for $3,500 of accrued revenue would be:
  • Debit Accounts Receivable $3,500
  • Credit Service Revenue $3,500
To find the unadjusted balances, you subtract the adjustment from the adjusted balances:
  • Accounts Receivable: $22,000 - $3,500 = $18,500
  • Service Revenue: $95,000 - $3,500 = $91,500
Answer D correctly shows these unadjusted amounts: Accounts Receivable $18,500 and Service Revenue $91,500. Answer A incorrectly suggests Service Revenue remained unchanged at $95,000, ignoring that accrued revenue increases this account. Answer B shows amounts that are higher than the adjusted balances, which is impossible since the adjustment increased both accounts. Answer C keeps Accounts Receivable unchanged while inflating Service Revenue, misunderstanding that accrued revenue affects both accounts equally. The critical error in wrong answers is misunderstanding the direction of the adjustment. Since accrued revenue increases both accounts, the unadjusted balances must be lower than the adjusted balances. Study tip: Always identify whether an adjusting entry increases or decreases each account, then work backward from adjusted balances. Draw T-accounts if needed to visualize how the adjustment flows through to find the starting point.

Question 2

On November 1, a company received $9,000 cash from a customer for services to be provided over the next six months. The company credited Unearned Revenue. By the December 31 year-end, the company failed to make any adjusting entry. How does this omission affect the balances on the adjusted trial balance?

  1. Liabilities are understated and revenues are understated.
  2. Assets are overstated and revenues are understated.
  3. Liabilities are overstated and equity is understated. (correct answer)
  4. Liabilities are overstated and equity is overstated.
Explanation: The company should have recognized two months of revenue (Nov, Dec). The monthly revenue is $9,000 / 6 = $1,500. The earned revenue is 2 * $1,500 = $3,000. The correct adjusting entry is a debit to Unearned Revenue for $3,000 and a credit to Service Revenue for $3,000. By omitting this entry, Unearned Revenue (a liability) is overstated by $3,000. Service Revenue is understated by $3,000, which causes Net Income, and therefore Retained Earnings (equity), to be understated by $3,000.

Question 3

At the end of the fiscal year, Jupiter Corp. determined it had performed $12,000 of services for a client, but had not yet billed the client or recorded the transaction. The unadjusted trial balance shows Accounts Receivable at $85,000 and Service Revenue at $310,000. What will be the balance of Service Revenue on the adjusted trial balance?

  1. $298,000
  2. $310,000
  3. $322,000 (correct answer)
  4. $397,000
Explanation: The company needs to make an adjusting entry to record the accrued revenue. The entry is a debit to Accounts Receivable for $12,000 and a credit to Service Revenue for $12,000. The unadjusted balance of Service Revenue was $310,000. After posting the adjusting entry, the new balance will be $310,000 + $12,000 = $322,000.

Question 4

A company pays its employees a total of $10,000 every Friday for a five-day work week (Monday-Friday). The company's fiscal year-end falls on a Wednesday. The unadjusted trial balance shows a zero balance for Salaries Payable. What balance will be reported for Salaries Payable on the adjusted trial balance?

  1. $4,000
  2. $6,000 (correct answer)
  3. $8,000
  4. $10,000
Explanation: First, calculate the daily salary expense: $10,000 / 5 days = $2,000 per day. If the fiscal year-end is on a Wednesday, the company has incurred salary expenses for Monday, Tuesday, and Wednesday that have not yet been paid. The total accrued salary expense is 3 days * $2,000/day = $6,000. The adjusting entry is Debit Salaries Expense $6,000 and Credit Salaries Payable $6,000. Since the beginning balance of Salaries Payable was zero, the ending balance on the adjusted trial balance will be $6,000.

Question 5

A company's unadjusted trial balance shows total debits of $450,000. The following adjustments are necessary at year-end:

  1. Accrued salaries of $8,000.

  2. Depreciation on equipment of $15,000.

  3. Recognition of $5,000 of rent expense from the Prepaid Rent account.

After these adjustments are posted, what will be the total of the debit column on the adjusted trial balance?

  1. $450,000
  2. $458,000
  3. $473,000 (correct answer)
  4. $478,000
Explanation: The unadjusted total is $450,000.
  1. Accrued salaries: Debit Salaries Expense $8,000, Credit Salaries Payable $8,000. This increases total debits by $8,000. New total: $458,000.
  2. Depreciation: Debit Depreciation Expense $15,000, Credit Accumulated Depreciation $15,000. This increases total debits by $15,000. New total: $458,000 + $15,000 = $473,000.
  3. Rent expense recognition: Debit Rent Expense $5,000, Credit Prepaid Rent $5,000. This entry reclassifies amounts already on the trial balance (an asset to an expense). It does not change the total debits. Therefore, the final adjusted trial balance debit total is $473,000.

Question 6

On October 1, a company paid $4,800 for a 12-month advertising campaign and incorrectly debited Advertising Expense for the full amount. No correction was made. What adjusting entry is required on December 31 to ensure the accounts are correctly stated for financial reporting?

  1. Debit Prepaid Advertising $3,600; Credit Advertising Expense $3,600 (correct answer)
  2. Debit Advertising Expense $1,200; Credit Prepaid Advertising $1,200
  3. Debit Prepaid Advertising $1,200; Credit Advertising Expense $1,200
  4. Debit Advertising Expense $3,600; Credit Prepaid Advertising $3,600
Explanation: First, determine the correct account balances. Monthly advertising is $4,800 / 12 = $400. For the 3 months from Oct 1 to Dec 31, the expense should be 3 * $400 = $1,200. The remaining prepaid amount should be 9 * $400 = $3,600. Currently, the books show Advertising Expense of $4,800 and Prepaid Advertising of $0. To correct this, we need to decrease Advertising Expense from $4,800 to $1,200 (a credit of $3,600) and increase Prepaid Advertising from $0 to $3,600 (a debit of $3,600). The required entry is Debit Prepaid Advertising $3,600 and Credit Advertising Expense $3,600.

Question 7

Coastal Services has the following account balances in its unadjusted trial balance at June 30, 2024: Equipment $48,000, Accumulated Depreciation—Equipment $12,000, Wages Expense $28,000, Wages Payable $0, Rent Expense $18,000, and Prepaid Rent $3,000. The following adjustments are needed: (1) Depreciation on equipment is $4,000 for the period, (2) Accrued wages total $1,800, and (3) Prepaid rent of $1,200 has expired.

In the adjusted trial balance, what will be the combined total of all expense account balances?

  1. $51,000 total for all expense accounts
  2. $52,200 total for all expense accounts
  3. $53,000 total for all expense accounts (correct answer)
  4. $54,800 total for all expense accounts
Explanation: Starting expense balances: Wages Expense $28,000 + Rent Expense $18,000 = $46,000. Adjustments add: Depreciation Expense $4,000, additional Wages Expense $1,800, and additional Rent Expense $1,200. Total adjusted expenses: $46,000 + $4,000 + $1,800 + $1,200 = $53,000. Choice A omits the rent adjustment. Choice B omits the depreciation expense. Choice D incorrectly includes the full prepaid rent balance rather than just the expired portion.

Question 8

An accountant correctly calculated annual depreciation expense as $5,000. However, the adjusting entry was erroneously recorded as a debit to Depreciation Expense for $5,000 and a credit to Cash for $5,000. What is the impact of this error on the adjusted trial balance and financial statements?

  1. The adjusted trial balance totals will not be equal.
  2. Net income will be correct, but total assets will be understated. (correct answer)
  3. Total expenses will be correct, but total liabilities will be understated.
  4. Net income will be overstated, and total assets will be overstated.
Explanation: The correct entry is Debit Depreciation Expense $5,000, Credit Accumulated Depreciation $5,000. The incorrect entry was Debit Depreciation Expense $5,000, Credit Cash $5,000. Since a debit and credit of equal amounts were recorded, the adjusted trial balance will still balance. Depreciation Expense is debited for the correct amount ($5,000), so net income is calculated correctly. However, the credit was to Cash instead of Accumulated Depreciation. This understates the Cash account by $5,000. Accumulated Depreciation is also understated, which means the book value of fixed assets is overstated. The net effect on total assets is that they are understated because cash was incorrectly reduced.

Question 9

A company's records for the year show a beginning Retained Earnings balance of $90,000, revenues of $200,000, expenses of $140,000, and dividends paid of $15,000. What is the balance of the Retained Earnings account that will be presented on the company's adjusted trial balance?

  1. $75,000
  2. $90,000 (correct answer)
  3. $135,000
  4. $150,000
Explanation: The adjusted trial balance is prepared before closing entries. Therefore, the Retained Earnings account on the adjusted trial balance still reflects its beginning-of-period balance. Revenues, expenses, and dividends are recorded in their own temporary accounts. The process of closing these temporary accounts into Retained Earnings happens after the adjusted trial balance is prepared. The correct balance is the beginning balance of $90,000.

Question 10

On October 1, a company borrowed $40,000 on a one-year, 6% note payable. Interest is payable at maturity. For the adjusted trial balance prepared on December 31, what amount of Interest Payable should be reported?

  1. $200
  2. $2,400
  3. $1,800
  4. $600 (correct answer)
Explanation: Interest must be accrued for the period the loan was outstanding during the year. The period is from October 1 to December 31, which is 3 months. The formula for interest is Principal x Rate x Time. The accrued interest is $40,000 x 6% x (3/12) = $40,000 x 0.06 x 0.25 = $600. The adjusting entry would be Debit Interest Expense $600, Credit Interest Payable $600. Thus, Interest Payable on the adjusted trial balance is $600.

Question 11

On April 1, a company received $24,000 for selling 1-year subscriptions to its monthly magazine, crediting Unearned Subscription Revenue. The company prepares an adjusted trial balance on December 31. What amount should be reported as Subscription Revenue on this adjusted trial balance?

  1. $6,000
  2. $18,000 (correct answer)
  3. $20,000
  4. $24,000
Explanation: The $24,000 covers a 12-month period, so the monthly revenue is $24,000 / 12 = $2,000. From April 1 to December 31, nine months have passed (April, May, June, July, Aug, Sept, Oct, Nov, Dec). The amount of revenue earned is 9 months * $2,000/month = $18,000. This is the amount that should be reported as Subscription Revenue on the adjusted trial balance.

Question 12

The following adjusted balances are provided for a company at year-end: Cash $15,000; Accounts Payable $12,000; Service Revenue $95,000; Dividends $5,000; Salaries Expense $50,000; Equipment $80,000; Accumulated Depreciation $25,000; Retained Earnings (beginning) $18,000. Assuming these are the only accounts, what is the total of the debit column on the adjusted trial balance?

  1. $132,000
  2. $145,000
  3. $168,000
  4. $150,000 (correct answer)
Explanation: To find the total of the debit column, sum the balances of all accounts that normally have a debit balance. These are assets, expenses, and dividends. From the list: Cash ($15,000) + Dividends ($5,000) + Salaries Expense ($50,000) + Equipment ($80,000) = $150,000. The credit accounts (Accounts Payable, Service Revenue, Accumulated Depreciation, Retained Earnings) would also sum to $150,000.

Question 13

A company's unadjusted trial balance includes Prepaid Insurance of $12,000 and Supplies of $4,000. At year-end, it is determined that $8,000 of insurance has expired and $2,500 of supplies have been used. What is the net effect of these two adjusting entries on total assets?

  1. A decrease of $5,500
  2. No net effect on total assets
  3. A decrease of $2,500
  4. A decrease of $10,500 (correct answer)
Explanation: The adjusting entry for insurance is Debit Insurance Expense $8,000, Credit Prepaid Insurance $8,000. This decreases the asset Prepaid Insurance by $8,000. The adjusting entry for supplies is Debit Supplies Expense $2,500, Credit Supplies $2,500. This decreases the asset Supplies by $2,500. The total decrease in assets is the sum of the two credits to asset accounts: $8,000 + $2,500 = $10,500.

Question 14

A company's adjusted trial balance shows Salaries Expense of $155,000 and Salaries Payable of $8,000. During the year, cash payments for salaries totaled $160,000. What was the beginning balance of Salaries Payable at the start of the year?

  1. $13,000 (correct answer)
  2. $5,000
  3. $3,000
  4. $8,000
Explanation: We can reconcile the cash paid with the expense and the change in the payable account. The formula is: Cash Paid = Salaries Expense - Increase in Salaries Payable OR Cash Paid = Salaries Expense + Decrease in Salaries Payable. A more universal formula is: Beginning Payable + Salaries Expense - Ending Payable = Cash Paid. Let X be the beginning balance. X + $155,000 - $8,000 = $160,000. X + $147,000 = $160,000. X = $160,000 - $147,000 = $13,000.

Question 15

On May 1, a company paid $18,000 for 12 months of rent in advance, debiting Prepaid Rent. What are the balances of Prepaid Rent and Rent Expense, respectively, on the company's December 31 adjusted trial balance?

  1. Prepaid Rent $6,000; Rent Expense $12,000 (correct answer)
  2. Prepaid Rent $12,000; Rent Expense $6,000
  3. Prepaid Rent $7,500; Rent Expense $10,500
  4. Prepaid Rent $18,000; Rent Expense $0
Explanation: The monthly rent is $18,000 / 12 = $1,500. The period from May 1 to December 31 is 8 months. The amount of rent expired (Rent Expense) is 8 months * $1,500/month = $12,000. The amount of rent remaining (Prepaid Rent) is the initial payment minus the expired portion: $18,000 - $12,000 = $6,000. Alternatively, 4 months of rent remain prepaid (Jan, Feb, Mar, Apr), so the balance is 4 * $1,500 = $6,000.

Question 16

Harbor Industries' adjusted trial balance shows Accounts Receivable of $18,000 and Allowance for Doubtful Accounts of $1,200. During the adjustment process, bad debt expense was recorded at 3% of net credit sales of $80,000. If the unadjusted balance in Allowance for Doubtful Accounts was a $300 debit balance, what was the unadjusted balance in Accounts Receivable?

  1. $16,500 debit balance in Accounts Receivable
  2. $18,000 debit balance in Accounts Receivable (correct answer)
  3. $19,500 debit balance in Accounts Receivable
  4. $18,900 debit balance in Accounts Receivable
Explanation: The bad debt expense is $80,000 × 3% = $2,400. This increases the Allowance for Doubtful Accounts from a $300 debit to a $1,200 credit, requiring an adjustment of $2,400 + $300 = $2,700. However, Accounts Receivable is not affected by the bad debt expense adjustment—only by actual write-offs or recoveries, which aren't mentioned. Therefore, the unadjusted Accounts Receivable equals the adjusted balance of $18,000. Choice A incorrectly subtracts the allowance. Choice C incorrectly adds the adjustment amount. Choice D incorrectly adds the bad debt expense.

Question 17

Phoenix Corporation's bookkeeper prepared adjusting entries but made several errors. The correct adjusting entry for accrued interest expense should have been a debit to Interest Expense for $900 and a credit to Interest Payable for $900. Instead, the bookkeeper debited Interest Expense for $900 and credited Prepaid Interest for $900. Additionally, the correct entry for depreciation should have been a debit to Depreciation Expense for $2,500 and a credit to Accumulated Depreciation for $2,500, but the bookkeeper debited Accumulated Depreciation for $2,500 and credited Depreciation Expense for $2,500.

What correcting entries are needed to fix these errors for the adjusted trial balance?

  1. Debit Interest Expense $1,800, Credit Interest Payable $900, Credit Prepaid Interest $900; Debit Depreciation Expense $5,000, Credit Accumulated Depreciation $5,000
  2. Debit Interest Payable $900, Credit Prepaid Interest $900; Debit Depreciation Expense $2,500, Credit Accumulated Depreciation $2,500
  3. Debit Prepaid Interest $900, Credit Interest Payable $900; Debit Depreciation Expense $2,500, Credit Accumulated Depreciation $2,500
  4. Debit Prepaid Interest $900, Credit Interest Payable $900; Debit Depreciation Expense $5,000, Credit Accumulated Depreciation $5,000 (correct answer)
Explanation: When you encounter accounting error correction problems, you need to think about what entries were made versus what should have been made, then determine what's required to fix the differences. For the interest error, the correct entry should have been: Debit Interest Expense $900, Credit Interest Payable $900. Instead, the bookkeeper debited Interest Expense $900 and credited Prepaid Interest $900. This means Interest Expense is correct, but the credit side is wrong - Prepaid Interest was increased when it shouldn't have been, and Interest Payable wasn't recorded at all. To fix this, you need to reverse the incorrect Prepaid Interest credit (debit it 900)andmakethecorrectInterestPayablecredit(900) and make the correct Interest Payable credit (900). For depreciation, the correct entry should have been: Debit Depreciation Expense $2,500, Credit Accumulated Depreciation $2,500. The bookkeeper did the complete opposite - debiting Accumulated Depreciation $2,500 and crediting Depreciation Expense $2,500. To correct this reversed entry, you need to make the correct entry with double the amounts: Debit Depreciation Expense $5,000, Credit Accumulated Depreciation $5,000 (this undoes the incorrect $2,500 and adds the correct $2,500). Answer A incorrectly includes Interest Expense, which was already correct. Answer B uses only $2,500 for depreciation, which only undoes the error without recording the correct amount. Answer C also uses only $2,500 for depreciation, missing the fact that you need to both reverse the error and record the correct entry. Remember: when an entry is completely reversed, your correction must be double the original amount to both undo the error and record what should have been there.

Question 18

Sunset Company's unadjusted trial balance shows total debits and credits of $145,000 each. After recording adjusting entries for $3,200 in depreciation expense, $1,800 in accrued salaries, $2,100 in earned revenue previously recorded as unearned, and $950 in expired insurance, what will be the total debits and credits in the adjusted trial balance?

  1. Total debits and credits of $148,050 each in the adjusted trial balance
  2. Total debits and credits of $153,050 each in the adjusted trial balance (correct answer)
  3. Total debits and credits of $150,950 each in the adjusted trial balance
  4. Total debits and credits of $147,100 each in the adjusted trial balance
Explanation: Each adjusting entry adds equal debits and credits to the trial balance totals. Adjusting entries: (1) Debit Depreciation Expense $3,200, Credit Accumulated Depreciation $3,200. (2) Debit Salaries Expense $1,800, Credit Salaries Payable $1,800. (3) Debit Unearned Revenue $2,100, Credit Service Revenue $2,100. (4) Debit Insurance Expense $950, Credit Prepaid Insurance $950. Total additional debits and credits: $3,200 + $1,800 + $2,100 + $950 = $8,050. New totals: $145,000 + $8,050 = $153,050. Choice A omits one adjustment. Choice C omits the depreciation adjustment. Choice D incorrectly subtracts instead of adds some adjustments.

Question 19

Northern Tech's fiscal year ends December 31. On October 1, 2024, the company received $12,000 for a 12-month service contract and recorded it as Unearned Service Revenue. The unadjusted trial balance at December 31, 2024, shows Unearned Service Revenue of $15,000 (which includes the October transaction) and Service Revenue of $78,000. The company has determined that $4,500 of the total unearned revenue balance should remain unearned at year-end.

After the year-end adjusting entry, what will be the adjusted balances for Unearned Service Revenue and Service Revenue?

  1. Unearned Service Revenue $4,500; Service Revenue $88,500 (correct answer)
  2. Unearned Service Revenue $4,500; Service Revenue $81,000
  3. Unearned Service Revenue $12,000; Service Revenue $81,000
  4. Unearned Service Revenue $1,500; Service Revenue $91,500
Explanation: The adjusting entry must reduce Unearned Service Revenue from $15,000 to $4,500, requiring a $10,500 decrease (debit to Unearned Service Revenue, credit to Service Revenue). This increases Service Revenue from $78,000 to $88,500. The October contract information is a distractor—what matters is the total adjustment needed based on the desired ending balance. Choice B incorrectly calculates the revenue increase as only $3,000. Choice C doesn't make the full adjustment needed. Choice D incorrectly assumes almost all unearned revenue should be recognized.

Question 20

Which of the following statements correctly describes a purpose of the adjusted trial balance?

  1. It confirms that all transactions during the period have been recorded.
  2. It provides the final, end-of-period balance for Retained Earnings.
  3. It is an internal document that proves the equality of debits and credits after adjusting entries are posted. (correct answer)
  4. It is the primary financial statement distributed to external stakeholders for decision-making.
Explanation: The adjusted trial balance is an internal worksheet, not a formal financial statement. Its primary purpose is to verify that the total of all debit balances equals the total of all credit balances in the general ledger after adjusting entries have been made. It does not guarantee that all transactions were recorded or that they were recorded correctly (A is incorrect). It shows the pre-closing balance for Retained Earnings (B is incorrect). It is used to prepare the financial statements, but is not itself distributed to external stakeholders (D is incorrect).