Exam 4: Accrual Accounting and Adjusting Entries

Under accrual accounting, revenue is recognized:

Failure to record accrued interest expense would result in which of the following?

Youngblood Company borrowed $100,000 on a one-year, 10% note on October 1, 2012, with interest and principal to be paid at maturity. How much interest should Stone Company report on its income statement for the year ending December 31, 2013?

The following data were taken from the Adjusted Trial Balance for April 30, 2012 for Mackenzie Company: Prepare a classified balance sheet.

Match Incorporated recorded salary expense of $120,000 in 2012. However, additional salaries of $9,000 had been earned, but not paid or recorded at December 31, 2012. After the adjustments are recorded and posted at December 31, 2012, the balances in the Salaries Expense and Salaries Payable accounts will be

Which of the following does not occur during the closing process?

Federer Corporation had $12,400 of supplies on hand at January 1. During the year, supplies with a cost of $24,000 were purchased. At December 31, the actual supplies on hand amount to $8,000. After the adjustments are recorded and posted at December 31, determine the balances in the Supplies and Supplies Expense accounts.

What happens to the accounting equation when the adjustment is recorded to recognize earned revenue previously recorded as unearned revenue?

Accrued expenses originate from:

Pine Corporation makes adjusting entries monthly. Property, Plant, and Equipment depreciates at a rate of $9,000 per month. No entry for depreciation has been recorded in the month of March. What adjusting entry is necessary at March 31?

Zybo Incorporated operates a window washing business. The following amounts were taken from the company's unadjusted trial balance at December 31, 2012: Prepare any adjusting entries necessary at December 31, 2012, for each of the transactions that follow.

Buster Corporation purchased supplies at a cost of $20,000 during 2012. At January 1, 2012, the beginning balance in the supplies account was $1,300. For 2012, supplies expense was $11,200. How much "Supplies" are on hand as of December 31, 2012?

Money Corporation employs 20 workers in its retail service center. Each employee is paid wages of $15 per hour and works an 8-hour workday, Monday through Friday. Employee wages are paid every Friday for the workweek just ending. The last payday was Friday, December 26, on which day the employees were paid through that date.

Failure to record depreciation expense for the period results in which of the following?

Republic Corporation purchased supplies at a cost of $12,215 during 2012. At January 1, 2012, supplies on hand were $10,312. During the year, the company used $14,000 of supplies. Republic accounting year ends on December 31.

Using the accrual basis of accounting, when is revenue from the sale of merchandise normally recognized?

____________________ is the allocation of the cost of a tangible, long-term asset over its useful life to expense.

On October 1, 2012, Glover Company borrowed $200,000 on a two-year, 12% note, with interest and principal to be paid at maturity. How much interest expense will Glover report on its income statement for the year ending December 31, 2012?

What is the matching principle? How does it relate to the revenue recognition process?

The asset account, Supplies, has a balance of $10,000 on January 1. During January, $22,000 of supplies were purchased on account and the liability was appropriately recorded. A count of supplies at the end of January indicates a balance of $2,000. What adjusting entry is necessary at January 31?