Question 1

Describe the types of entries required in later periods that result from accruals.

Accepted Answer

Accrued revenues recorded in one period ...

Question 2

What is the purpose of a post-closing trial balance?

Accepted Answer

A post-closing trial balance is a list o...

Question 3

The cash basis of accounting recognizes revenues when cash payments from customers are received.

Accepted Answer

A) True 
 B)False

Question 4

________ basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid.________ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Accepted Answer

Cash; Accr...

Question 5

On a work sheet,if the Debit total exceeds the Credit total of the Income Statement columns,a net loss is indicated.

Accepted Answer

A) True 
 B)False

Question 6

What is the proper adjusting entry at December 31,the end of the accounting period,if the balance in the prepaid insurance account is $7,750 before adjustment,and the unexpired amount per analysis of policies is $3,250?

Accepted Answer

A)  Debit Insurance Expense,$3,250; credit Prepaid Insurance,$3,250.
B)  Debit Insurance Expense,$4,500; credit Prepaid Insurance,$4,500.
C)  Debit Prepaid Insurance,$4,500; credit Insurance Expense,$4,500.
D)  Debit Insurance Expense,$7,750; credit Prepaid Insurance,$7,750.
E)  Debit Cash,$7,750; Credit Prepaid Insurance,$7,750.F) B) and C)
G) A) and E)

Question 7

Describe the adjusting entries,including the accounts used,for 1)prepaid expenses,2)depreciation and 3)unearned revenues.

Accepted Answer

1)Prepaid expenses are deferrals,or expe...

Question 8

On April 1,Otisco,Inc.paid Garcia Publishing Company $1,548 for 36-month subscriptions to several different magazines.Otisco debited the prepayment to a Prepaid Subscriptions account,and the subscriptions started immediately.
-What is the amount of revenue that should be recorded by Garcia Publishing Company for the second year of the subscription assuming the company uses a calendar-year reporting period?

Accepted Answer

A)  $0
B)  $516.
C)  $387.
D)  $129.
E)  $430.F) A) and B)
G) C) and D)

Question 9

Adjusting entries always affect the cash account.

Accepted Answer

A) True 
 B)False

Question 10

How is profit margin calculated? Discuss its use in analyzing a company's performance.

Accepted Answer

Profit margin is calculated by dividing ...

Question 11

High Step Shoes,had annual revenues of $185,000,expenses of $103,700,and paid dividends of $18,000 during the current year.The retained earnings account before closing had a balance of $297,000.
-The ending retained earnings balance after closing is:

Accepted Answer

A)  $185,000
B)  $63,300
C)  $81,300
D)  $360,300
E)  $378,300F) A) and D)
G) B) and C)

Question 12

On September 1,Kennedy Company loaned $100,000,at 12% annual interest,to a customer.Interest and principal will be collected when the loan matures one year from the issue date.Assuming adjustments are only made at year-end,what is the adjusting entry for accruing interest that Kennedy would need to make on December 31,the calendar year-end?

Accepted Answer

A)  Debit Interest Expense,$12,000; credit Interest Payable,$12,000.
B)  Debit Interest Expense,$4,000; credit Interest Payable,$4,000.
C)  Debit Interest Receivable,$12,000; credit Cash,$12,000.
D)  Debit Interest Receivable,$4,000; credit Interest Revenue,$4,000.
E)  Debit Cash,$4,000; credit Interest Revenue,$4,000.F) A) and D)
G) D) and E)

Question 13

Discuss the importance of periodic reporting and the time period assumption.

Accepted Answer

For information to be valuable to decisi...

Question 14

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________ year.

Accepted Answer

The answer of Companies experiencing seasonal variations in sales often...

Question 15

Reversing entries:

Accepted Answer

A)  Are necessary when journal entries have been incorrectly recorded.
B)  Are a required step in the accounting cycle.
C)  Will often result temporarily in abnormal account balances in some accounts.
D)  Are required only if the company uses accounting software to record journal entries.
E)  Must be made before preparing the post-closing trial balance.F) A) and E)
G) B) and D)

Question 16

On December 31,Carmack Company received a $215 utility bill for December that it will not pay until January 15.The adjusting entry needed on December 31 to accrue this expense is:

Accepted Answer

A)  Debit Utilities Expense $215; credit Accounts Payable $215.
B)  Debit Accounts Payable $215; credit Utilities Expense $215.
C)  Debit Prepaid Utilities $215; credit Cash $215.
D)  Debit Utilities Expense $215; credit Prepaid Utilities $215.
E)  Debit Prepaid Utilities $215; credit Accounts Payable $215.F) B) and D)
G) D) and E)

Question 17

On December 31,Jacoby Company's Prepaid Rent account had a balance before adjustment of $6,000.Three months' rent was paid in advance on December 1,the first day of the lease term.The adjusting entry needed on December 31 is:

Accepted Answer

A)  Debit Prepaid Rent $6,000; credit Cash $6,000.
B)  Debit Rent Expense $2,000; credit Accounts Payable $2,000.
C)  Debit Rent Expense $2,000; credit Prepaid Rent $2,000.
D)  Debit Cash $2,000; credit Prepaid Rent $2,000.
E)  Debit Rent Expense $6,000; credit Accounts Payable $6,000.F) None of the above
G) B) and C)

Question 18

The current ratio is computed by dividing current liabilities by current assets.

Accepted Answer

A) True 
 B)False

Question 19

Recording expenses early overstates current-period income; recording expenses late understates current period income.

Accepted Answer

A) True 
 B)False

Question 20

Two accounting principles central to accrual accounting basis that are relied on in the adjusting process are:

Accepted Answer

A)  Revenue recognition and monetary unit.
B)  Revenue recognition and going-concern.
C)  Expense recognition (matching) and cost.
D)  Expense recognition (matching) and business entity.
E)  Revenue recognition and Expense recognition (matching) .F) A) and C)
G) C) and E)

Exam 3: Adjusting Accounts for Financial Statements

High Step Shoes,had annual revenues of $185,000,expenses of $103,700,and paid dividends of $18,000 during the current year.The retained earnings account before closing had a balance of $297,000. -The ending retained earnings balance after closing is:

Correct Answer
verified

Correct Answer
verified

What is the purpose of a post-closing trial balance?

Correct Answer
verified
A post-closing trial balance is a list o...
View Answer

On December 31,Carmack Company received a $215 utility bill for December that it will not pay until January 15.The adjusting entry needed on December 31 to accrue this expense is:

Correct Answer
verified

basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Correct Answer
verified
Cash; Accr...
View Answer

Recording expenses early overstates current-period income; recording expenses late understates current period income.

Correct Answer
verified

Reversing entries:

Correct Answer
verified

Describe the types of entries required in later periods that result from accruals.

Correct Answer
verified
Accrued revenues recorded in one period ...
View Answer

Discuss the importance of periodic reporting and the time period assumption.

Correct Answer
verified
For information to be valuable to decisi...
View Answer

On a work sheet,if the Debit total exceeds the Credit total of the Income Statement columns,a net loss is indicated.

Correct Answer
verified

On December 31,Jacoby Company's Prepaid Rent account had a balance before adjustment of $6,000.Three months' rent was paid in advance on December 1,the first day of the lease term.The adjusting entry needed on December 31 is:

Correct Answer
verified

Describe the adjusting entries,including the accounts used,for 1)prepaid expenses,2)depreciation and 3)unearned revenues.

Correct Answer
verified
1)Prepaid expenses are deferrals,or expe...
View Answer

The cash basis of accounting recognizes revenues when cash payments from customers are received.

Correct Answer
verified

What is the proper adjusting entry at December 31,the end of the accounting period,if the balance in the prepaid insurance account is $7,750 before adjustment,and the unexpired amount per analysis of policies is $3,250?

Correct Answer
verified

Adjusting entries always affect the cash account.

Correct Answer
verified

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________ year.

Correct Answer
verified

Two accounting principles central to accrual accounting basis that are relied on in the adjusting process are:

Correct Answer
verified

The current ratio is computed by dividing current liabilities by current assets.

Correct Answer
verified

Correct Answer
verified

How is profit margin calculated? Discuss its use in analyzing a company's performance.

Correct Answer
verified
Profit margin is calculated by dividing ...
View Answer

Exam 3: Adjusting Accounts for Financial Statements

High Step Shoes,had annual revenues of $185,000,expenses of $103,700,and paid dividends of $18,000 during the current year.The retained earnings account before closing had a balance of $297,000. -The ending retained earnings balance after closing is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is the purpose of a post-closing trial balance?

Correct AnswerverifiedA post-closing trial balance is a list o...View AnswerShow Answer

On December 31,Carmack Company received a $215 utility bill for December that it will not pay until January 15.The adjusting entry needed on December 31 to accrue this expense is:

Correct AnswerverifiedShow Answer

________ basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid.________ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Correct AnswerverifiedCash; Accr...View AnswerShow Answer

Recording expenses early overstates current-period income; recording expenses late understates current period income.

Correct AnswerverifiedShow Answer

Reversing entries:

Correct AnswerverifiedShow Answer

Describe the types of entries required in later periods that result from accruals.

Correct AnswerverifiedAccrued revenues recorded in one period ...View AnswerShow Answer

Discuss the importance of periodic reporting and the time period assumption.

Correct AnswerverifiedFor information to be valuable to decisi...View AnswerShow Answer

On a work sheet,if the Debit total exceeds the Credit total of the Income Statement columns,a net loss is indicated.

Correct AnswerverifiedShow Answer

On December 31,Jacoby Company's Prepaid Rent account had a balance before adjustment of $6,000.Three months' rent was paid in advance on December 1,the first day of the lease term.The adjusting entry needed on December 31 is:

Correct AnswerverifiedShow Answer

Describe the adjusting entries,including the accounts used,for 1)prepaid expenses,2)depreciation and 3)unearned revenues.

Correct Answerverified1)Prepaid expenses are deferrals,or expe...View AnswerShow Answer

The cash basis of accounting recognizes revenues when cash payments from customers are received.

Correct AnswerverifiedShow Answer

What is the proper adjusting entry at December 31,the end of the accounting period,if the balance in the prepaid insurance account is $7,750 before adjustment,and the unexpired amount per analysis of policies is $3,250?

Correct AnswerverifiedShow Answer

Adjusting entries always affect the cash account.

Correct AnswerverifiedShow Answer

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________ year.

Correct AnswerverifiedShow Answer

Two accounting principles central to accrual accounting basis that are relied on in the adjusting process are:

Correct AnswerverifiedShow Answer

The current ratio is computed by dividing current liabilities by current assets.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

How is profit margin calculated? Discuss its use in analyzing a company's performance.

Correct AnswerverifiedProfit margin is calculated by dividing ...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A post-closing trial balance is a list o...
View Answer

Correct Answer
verified

basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Correct Answer
verified
Cash; Accr...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Accrued revenues recorded in one period ...
View Answer

Correct Answer
verified
For information to be valuable to decisi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
1)Prepaid expenses are deferrals,or expe...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Profit margin is calculated by dividing ...
View Answer