Exam 3: Adjusting the Accounts

The following is selected information from Motley Corporation for the fiscal year ending October 31, 2015. Cash received from customers \ 300,000 Revenue recognized 375,000 Cash paid for expenses 180,000 Cash paid for computers on November 1, 2014 that will be used for 3 years (annual depreciation is \ 16,000 ) 48,000 Expenses incurred, including interest, but excluding any depreciation 220,000 Proceeds from a bank loan, part of which was used to pay for the computers 100,000 Based on the accrual basis of accounting, what is Motley Corporation's net income for the year ending October 31, 2015?

Lake of Fire Company purchased supplies costing $7,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $1,900 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

In a service-type business, revenue is considered recognized

If an adjusting entry is not made for an accrued expense,

An asset-expense relationship exists with

Adjusting entries are not necessary if the trial balance debit and credit column balances are equal.

In general, adjusting entries are required each time financial statements are prepared.

The preparation of adjusting entries is

Adjusting entries are required

A contra asset account is subtracted from a related account in the balance sheet.

Fugazi City College sold season tickets for the 2015 football season for $240,000. A total of 8 games will be played during September, October and November. Assuming all the games are played, the Unearned Ticket Revenue balance that will be reported on the December 31 balance sheet will be

If prepaid expenses are initially recorded in expense accounts and have not all been used at the end of the accounting period, the failure to make an adjusting entry will cause

REM Real Estate received a check for $27,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $27,000. Financial statements will be prepared on July 31. REM Real Estate should make the following adjusting entry on July 31:

The revenue recognition principle dictates that revenue should be recognized in the accounting records

Adjusting entries can be classified as

Book value is also referred to as

The Accumulated Depreciation account is a contra asset account that is reported on the balance sheet.

Under accrual-basis accounting

Which statement is correct?

A company shows a balance in Salaries and Wages Payable of $38,000 at the end of the month. The next payroll amounting to $48,000 is to be paid in the following month. What will be the journal entry to record the payment of salaries? a. Salaries and Wages Expense $\quad$$\quad$ 48,000 $\quad$ Salaries and Wages Payable $\quad$$\quad$ 48,000 b. Salaries and Wages Expense $\quad$$\quad$ 48,000 $\quad$ Cash $\quad$$\quad$ 48,000 c. Salaries and Wages/Expense $\quad$ Cash $\quad$$\quad$ 10,000 d. Salaries and Wages Expense $\quad$$\quad$ 10,000 $\quad$ Salaries and Wages Payable $\quad$$\quad$ 38,000 $\quad$ Cash $\quad$$\quad$ 48,000