Adjusting Entries MCQs 2

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on July 22, 2022

This is the second multiple choice question (MCQ) test on adjusting entries. These MCQs are suited for exam preparation, interview training, and revising for other assessments.

The first MCQ test covered Questions 1 to 14. This MCQ test includes Questions 15 to 25. If you find it difficult to answer these MCQs, we advise that you read more about adjusting entries before completing the test.

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Frequently Asked Questions

How is an adjusting entry made?

An adjusting entry is made to reflect the true financial position of a company by bringing all accounts to their correct balance. This is done by recording journal entries that match the company’s business transactions.

What is an outstanding expense?

A prepaid expense is an asset on a company’s balance sheet that represents money that has been paid in advance for goods or services that have not yet been received.

What is an outstanding expense?

What is an outstanding expense?

What is an adjusting entry example?

One common adjusting entry example is when a company has to accrue interest on a loan. For instance, if a business borrowed money from a bank at an annual interest rate of 10%, it would need to make an adjusting entry each month to record the amount of interest that accrued over that month. The adjusting entry would debit the interest expense account and credit the interest payable account. This would ensure that the company’s Financial Statements accurately reflect its true financial position.

What are the five types of Adjusting Entries?

The five most common types of Adjusting Entries are Depreciation, accrued interest, accrued salaries, inventory adjustments, and prepaid expenses. These entries are necessary to ensure that its Financial Statements accurately reflect its actual financial position.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

7 thoughts on "Adjusting Entries MCQs 2"

    1. Hi Marie,
      Sorry for the inconvenience. The issue has been resolved you can check it now. Thanks for highlighting the issue.
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      Admin

  1. Could you please explain more about question 5 because I don’t understand why it’s option (d).

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