Exam 3: Adjusting Accounts for Financial Statements

The Unadjusted Trial Balance columns of a work sheet total $84,000. The Adjustments columns contain entries for the following: 1. Office supplies used during the period, $1,200. 2) Expiration of prepaid rent, $700. 3) Accrued salaries expense, $500. 4) Depreciation expense, $800. 5) Accrued service fees receivable, $400. The Adjusted Trial Balance columns total is:

______________________ are required at the end of the accounting period because certain internal transactions and events remain unrecorded.

A company's fiscal year must correspond with the calendar year.

Adjusting entries are usually entered in the work sheet before they are entered in the general journal.

Prepare general journal entries on December 31 to record the following unrelated year-end adjustments. a. Estimated depreciation on equipment for the year, $4,500. b. The Prepaid Insurance account has a $3,680 debit balance before adjustment. An examination of insurance policies shows $600 of insurance expired. c. The Prepaid Insurance account has a $2,400 debit balance before adjustment. An examination of insurance policies shows $950 of unexpired insurance. d. The company has three office employees who each earn $100 per day for a five-day workweek that ends on Friday. The employees were paid on Friday, December 26, and have worked full days on Monday, Tuesday, and Wednesday, December 29, 30, and 31. e. On November 1, the company received 6 months' rent in advance from a tenant whose rent is $700 per month. The $4,200 was credited to the Unearned Rent account. f. The company collects rent monthly from its tenants. One tenant whose rent is $1,000 per month has not paid his rent for December.

Prior to recording adjusting entries at the end of an accounting period, some accounts may not show correct balances even though all transactions were properly recorded.

Adjusting entries are made after the preparation of financial statements.

On April 1, Santa Fe, Inc. paid Griffith Publishing Company $1,548 for 36-month subscriptions to several different magazines. Santa Fe debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What adjusting entry should be made by Santa Fe, Inc. for the adjustment on December 31 of the first year assuming the company is using a calendar reporting period and no previous adjustments had been made?

The company paid $35,000 cash in dividends to the owner, Jen Rogers. The entry needed to close the dividends account is:

Revenue accounts are temporary accounts that should begin each accounting period with zero balances.

Which of the following statements related to U.S. GAAP and IFRS is incorrect:

Each adjusting entry affects one or more income statements account, one or more balance sheet account, and never cash.

The difference between the cost of an asset and the accumulated depreciation for that asset is called

A company pays its employees $4,000 each Friday, which amounts to $800 per day for the five-day workweek that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is:

List the steps in the accounting cycle.

The length of time covered by a set of periodic financial statements, primarily a year for most companies, is referred to as the:

Reversing entries are optional.

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

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

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.