Exam 3: Adjusting Accounts for Financial Statements

On May 1, 2015. Bee Advertising Company received $2,500 from Julie Cee for advertising services to be completed by April 30, 2016. Assume the receipt wasrecorded as unearned revenue and that at December 31, 2015, $1,000 of the fees had been earned. The adjusting entry prepared by Bee on December 31, 2015, shouldinclude:

If you fail to record accrued salaries at the end of the month, profit for the month will beoverstated.

How much did Grow pay for insurance before December 31, 2018 for insurancecoverage in 2019?

The book value of an asset is equivalent to the market value of that asset

Laurey's Pet Emporium purchased equipment on January 1 for $35,000. The equipmentwill be used for five years, after which the estimated residual value will be $2,000. Using straight-line depreciation, what is the depreciation expense for the first year of the asset's life?

In accrual basis accounting, accrued revenues are recorded as liabilities

Under the cash basis of accounting, no adjustments are made for prepaid, unearned, and accrued items.

The premium on a three-year insurance policy purchased on June 30, 2015, was$36,000. What is the amount of insurance expense that should be presented on the company's income statement for the year ended December 31, 2015?

Describe the types of entries required in later periods that result from accruals

The adjusted trial balance must be prepared before the adjusting entries are made

Under the alternative method for accounting for prepaid expenses, which of thefollowing pairs of journal entry formats is correct?

Lang leased a portion of its store to Pang for 12 months beginning on November 1, at a monthly rate of $400. Pang paid the entire $4,800 on November 1, which Langrecorded as unearned revenue. The journal entry made by Lang at year-end, December31, would include:

The report format is considered to be the only correct format for the balance sheet

If the accountant failed to make an adjusting entry at the end of the period to record depreciation for the period, the omission will cause:

A Company received a $10,000 deposit from a customer for goods to be delivered the following month. Under the accrual and cash basis of accounting respectively thedeposit would be recorded as:

On July 1, 2015, Nuby Trucking Company purchased a new truck for $52,000. Thetruck is estimated to have a useful life of six years and a residual value of $10,000. How much depreciation expense will be recorded for the truck during the year endedDecember 31, 2015?

Throughout an accounting period, the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Service Revenue. If the accountantfails to make the end-of-period adjusting entry to record the portion of these fees that has been earned, one effect will be:

If the accountant failed to make the end-of-period adjustment to reduce the Unearned Management Revenue account by the amount of management revenue earned, the omission would cause:

On April 1, Gallery Corp. entered into a two-month contract for $50,000. Gallery Corp. earned $25,000 of the contract in April and billed the customer. Gallery Corp. shouldrecognize the revenue when it receives the customer's cheque.

Interim financial reports cover a firm's business activity for one year