Exam 4: Adjusting the Accounts and Preparing Financial Statements

Purple Co's employees carry out work to the value of $7500.They are paid $4500 immediately with the balance to be settled in the next accounting period.Under the accrual approach to profit measurement the amount of wages expense that will be recorded in the current period is:

The prepaid insurance account of Megaton Ltd shows a balance of $1800 (net of GST)representing a payment on 1 July 2014 of a three-year insurance premium.Which of the following is the correct adjusting entry on 31 December 2014,the close of the annual accounting period? $ $

When using a worksheet to prepare accounting reports in a manual accounting system,what is the correct set of column headings?

What type of account is prepaid insurance?

The prepaid insurance account of Tan Traders shows a balance of $600,representing a payment on 1 July 2014 of a two-year insurance premium.After adjustment at 31 December 2014,the close of the annual accounting period:

Michael purchased two vehicles for his business on 1 January 2014.These vehicles cost $70 000 each and have a useful life of 5 years with an expected residual of $20 000 each.The adjusting entry for depreciation on 31 December 2014,using the straight-line method,is which of the following?

On the first day of the year Tan Traders purchased a forklift truck for $12 000 which is to be depreciated by 25% a year.At the end of the first year the adjusting entry to record depreciation is which of the following?

Rather than using the cash method accountants prefer to calculate profitability using the:

On 1 July 2014 Tan Traders paid $600,representing a two-year insurance premium.The $600 was initially recorded in the Insurance expense account.After adjustment at 31 December 2015,the close of the annual accounting period:

What is the correct order in which the steps in the manual recording process occur? I Record transactions in the journal Ii Record adjusting entries Iii Prepare financial statements Iv Post transactions to the ledger

The primary basis for the classification of assets and liabilities in the balance sheet is:

Deferral type adjustments occur when cash for expenses is paid in advance or cash from incomes is pre-collected.How many of the following will require a deferral type adjustment? -Rent paid for in advance -Buildings to be depreciated -Rent collected in advance from tenants -Interest is owed to the bank

Which statement concerning accrual accounting is true?

Adjustments where income is earned or expenses incurred before the cash is received or paid are called:

The period of time over which a non-current asset,such as a motor vehicle,is expected to be used by the entity is known as its:

On July 1 2014 the Indigo Ltd rented out part of its property and collected $9000 in advance for a nine-month period.The receipt was credited to a liability account.At 31 December 2014,Indigo Ltd's year-end,which of the following adjusting journal entries should be made?

Indicate the order that the following current assets should be listed in the balance sheet. I Accounts receivable II Bank III Stock of stationery IV Prepaid expenses

Tan Traders is owed $350 interest on an investment which has not been received by 3l December 2014,the last day of the accounting year.The adjusting entry is which of the following?

Obligations of the entity that do not require payment within one year of the balance sheet date are classified as:

Which of these is not an intangible asset?