Exam 4: Accrual Accounting Concepts

Amos Real Estate signed a four-month note payable in the amount of $16,000 on September 1. The note requires interest at an annual rate of 9%. The amount of interest to be accrued at the end of September is:

Given the following adjusted trial balance: Net income for the year is:

The accounting cycle begins with the journalizing of the transactions.

La More Company had the following transactions during 2013: -Sales of $4,500 on account -Collected $2,000 for services to be performed in 2014 -Paid $1,875 cash in salaries for 2013 -Purchased airline tickets for $250 in December for a trip to take place in 2014 What is La More's 2013 net income using accrual accounting?

Unearned revenue is a prepayment that requires an adjusting entry when services are performed.

An adjusting entry always involves two balance sheet accounts.

The balance sheets of Palle' Company include the following: Instructions: Calculate the following for 2014: 1. Cash received for interest. 2. Cash paid for supplies. 3. Cash paid for salaries and wages. 4. Cash received for service revenue.

At December 31, 2014, before any year-end adjustments, Janus Company's Prepaid Insurance account had a balance of $2,800. It was determined that $1,200 of the Prepaid Insurance had expired. The adjusted balance for Prepaid Insurance for the year would be:

Which of the following accounts will reflect the account's beginning balance on the adjusted trial balance?

Net income is recorded on the worksheet under the:

According to some U.S. companies what gives foreign firms a competitive advantage in the capital market?

The following is selected information from C Corporation for the fiscal year ending October 31, 2014. Based on the accrual basis of accounting, what is C Corporation's net income for the year ending October 31, 2014?

Which account will have a zero balance after closing entries have been journalized and posted?

On January 1, 2013, Leardon Inc. purchased equipment for $60,000. The company is depreciating the equipment at the rate of $800 per month. At January 31, 2014, the balance in Accumulated Depreciation is:

When closing entries are prepared, each income statement account is closed directly to retained earnings.

Employees at Biquell Corporation are paid $9,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salaries and wages expense should be recorded two days later on January 2?

If a company fails to make an adjusting entry to record supplies expense, then:

The balance in the prepaid rent account before adjustment at the end of the year is $15,000 and represents three months rent paid on December 1. The adjusting entry required on December 31 is:

The income statement is an important financial statement used by individuals who are interested in the operations of a business enterprise. Explain how the periodicity assumption and the revenue recognition and expense recognition principles provide guidance to accountants in preparing an income statement.