Exam 2: A Review of the Accounting Cycle

What is the correct order of the following events in the accounting process? I. Financial statements are prepared. II. Adjusting entries are recorded. III. Nominal accounts are closed.

The information listed below was obtained from the accounting records of Cahill Company as of June 30, 2011, the end of the company's fiscal year. Prepare journal entries to adjust the books of Cahill Company at June 30, 2011.

A common business transaction that would not affect the amount of owners' equity is

Which of the following would typically be considered a source document?

Sky Corporation's salaries expense for 201 was $136,000. Accrued salaries payable on December 31, 2011, was $17,800 and $8,400 on December 31, 2010. The cash paid for salaries during 2011 was

For a given year, beginning and ending total liabilities were $8,400 and $10,000, respectively. At year-end, owners' equity was $26,000 and total assets were $2,000 larger than at the beginning of the year. If new capital stock issued exceeded dividends by $2,400, net income (loss) for the year was apparently

If an expense has been incurred but not yet recorded, then the end-of-period adjusting entry would involve

Moon Company purchased equipment on November 1, 2011, by giving its supplier a 12-month, 9 percent note with a face value of $48,000. The December 31, 2011, adjusting entry is

Accumulated Depreciation is an example of a(n)

Which of the following is presented in a balance sheet?

At the end of the current fiscal year, an analysis of the payroll records of Bev Company showed accrued salaries of $22,200. The Accrued Salaries Payable account had a balance of $32,000 at the end of the current fiscal year, which was unchanged from its balance at the end of the prior fiscal year. The books of the company have not yet been closed. The entry needed in this situation would include a

In an accrual accounting system,

The following ten items are independent of each other. For each item, indicate the amount of any cash flow that occurs or state that no cash flow resulted from the item.

Caribou Corporation shows the following balances: Caribou paid suppliers $100,000 during the year. What is Caribou's cost of goods sold for the year?

Which of the following is correct?

Failure to record the expired amount of prepaid rent expense would not

Iowa Cattle Company uses a periodic inventory system. Iowa purchased cattle from Big D Ranch at a cost of $27,000 on credit. The entry to record the receipt of the cattle would be

L. Lane received $12,000 from a tenant on December 1 for four months' rent of an office. This rent was for December, January, February, and March. If Lane debited Cash and credited Unearned Rental Income for $12,000 on December 1, what necessary adjustment would be made on December 31?

Sky Company collected $12,350 in interest during 2011. Sky showed $1,850 in interest receivable on its December 31, 2011, balance sheet and $5,300 on December 31, 2010. The interest revenue on the income statement for 2011 was

Statement of Financial Accounting Concepts No. 1 states that one of the objectives of financial reporting is to help "current and potential investors and creditors (and other users) in assessing the amounts, timing, and uncertainty of future cash flows such as dividends or interest payments." Generally Accepted Accounting Principles (GAAP) require the use of the accrual basis of accounting. Explain the difference between the accrual basis and the cash basis of accounting and why GAAP requires the accrual basis.