Exam 3: The Adjusting Process

Hank's Tax Planning Service started business in January 2013. He rented an office for $900 a month starting 1 January. He prepaid the rentals up to 30 June. He makes accrual adjustments monthly. As of 30 April, Hank's ledger shows a balance in Prepaid Rent of how much?

The financial statements should be prepared in this order: 1)income statement, 2)balance sheet, and 3)statement of changes in equity.

The entry to record depreciation includes a credit to which account?

At 1 January, Smith has a beginning balance in Prepaid insurance expense of $1 200. Smith pays insurance premiums once a year, and his total premium is $4 800. As of the end of February, the balance in prepaid insurance is $2 000.

Unearned revenue is revenue that:

On 1 August 2013, Xcel Auto Repair paid $6 000 in advance for six months' rent. Xcel makes proper adjusting entries at the end of every month. What is the balance of Prepaid rent on 31 December 2013?

Which of the following lists a company's assets, liabilities and equity to report its financial position?

Smith owns manufacturing equipment that originally cost $12 600 and has an estimated useful life of 7 years. Smith records depreciation monthly in the amount of $100.

Classic Artists' Services has hired a maintenance man to maintain a building they use for instruction. He will begin work on 1 February and work through until 31 May. They will pay the maintenance man $2 000 at the end of May. Classic Artists' Services accrue Maintenance expense at the end of every month. What is the balance in the Accounts payable account for amounts owed to the maintenance man at the end of March?

Accrual accounting requires adjusting entries at regular intervals throughout the accounting period.

The accountant for Barnes Architectural Services failed to make an adjusting entry to record $7 000 of depreciation expense. Which of the following is TRUE?

All of a company's accounts and their balances appear on the:

In accounting, depreciation is the:

The Supplies account for Vulcan Cleaning Services had a debit balance of $200 at the beginning of the month. Additional supplies of $1 400 were purchased during the month. A physical count of supplies revealed that $600 of supplies was still on hand at the end of the month. What was total Supplies expense for the month?

Which of the following accounts does cash- basis accounting ignore?

On 1 January 2014, Lexmark Company's Accounts receivable account had a debit balance of $10 000. During January 2014, the company billed customers for services in the amount of $300 000. Also during January, the company collected $240 000 from its customers on credit. What was the balance in the Accounts receivable account at the end of January?

The cash basis of accounting provides opportunities for manipulation of reported profits.

Smith Technical Services is working on a six- month job for a client, starting 1 February. They will collect $48 000 from their customer when the job is finished. On 1 March, their Accounts receivable account has a debit balance of $8 000. At the end of March, after monthly adjusting entries have been made, what will the balance in Accounts receivable be?

The accountant for Jones Auto Repair Company failed to make an adjusting entry to record $5 000 of unpaid salaries for the last 2 weeks of the year. Which of the following is TRUE?

Argyle Designs has a contract to design 20 new dresses for a customer, and will collect a total of $40 000 when the design services are complete. They start on 1 June. As of 30 June, Argyle has finished 4 of the 20 designs. They will make an adjusting entry at the end of June to accrue $10 000 of service revenue.