Question 1

A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period?

Accepted Answer

A) $3,305. 
B) $4,180. 
C) $2,350. 
D) $2,540. 
E) $3,225. 
A) $3,305. 
B) $4,180. 
C) $2,350. 
D) $2,540. 
E) $3,225.

Question 2

The Retained earnings account has a credit balance of $37,000 before closing entries are made.If total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000.
-What is the ending balance in the Retained earnings account after all closing entries are made?

Accepted Answer

A) $37,000. 
B) $35,400. 
C) $43,400. 
D) $28,000. 
E) $52,400. 
A) $37,000. 
B) $35,400. 
C) $43,400. 
D) $28,000. 
E) $52,400.

Question 3

Current liabilities include accounts receivable,unearned revenues,and salaries payable.

Accepted Answer

A) True 
 B)False

Question 4

Flo's Flowers' current ratio is 1.3.The industry average for the current ratio is 1.2.This indicates that Flo's can cover its short term liabilities with its short term assets.

Accepted Answer

A) True 
 B)False

Question 5

The closing process is necessary in order to:

Accepted Answer

A) Calculate net income or net loss for an accounting period. 
B) Ensure that all permanent accounts are closed to zero at the end of each accounting period. 
C) Ensure that the company complies with state laws. 
D) Ensure that net income or net loss and dividends for the period are closed into the retained earnings account. 
E) Ensure that management is aware of how well the company is operating. 
A) Calculate net income or net loss for an accounting period. 
B) Ensure that all permanent accounts are closed to zero at the end of each accounting period. 
C) Ensure that the company complies with state laws. 
D) Ensure that net income or net loss and dividends for the period are closed into the retained earnings account. 
E) Ensure that management is aware of how well the company is operating.

Question 6

On December 14,Branch Company received $3,000 cash for 30 days of consulting services that will be completed on January 13.Branch records all such prepayments by customers in a liability account.Prepare the December 31 adjusting entry.

Accepted Answer

The answer of On December 14,Branch Company received $3,000 cash...

Question 7

Cash and office supplies are both classified as current assets.

Accepted Answer

A) True 
 B)False

Question 8

Explain why temporary accounts are closed each period.

Accepted Answer

Temporary accounts accumulate data relat

Question 9

A company issued financial statements for the year ended December 31,but failed to include the following adjusting entries:
A.Accrued interest revenue earned of $1,200.
B.Depreciation expense of $4,000.
C.Portion of prepaid insurance expired (an asset)used $1,100.
D.Accrued taxes of $3,200.
E.Revenues of $5,200,originally recorded as unearned,have been earned by the end of the year.
Determine the correct amounts for the December 31 financial statements by completing the following table:

Accepted Answer

The answer of A company issued financial statements for the...

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

If accrued salaries were recorded on December 31 with a debit to Salaries Expense and a credit to Salaries Payable,and no reversing entries were made on January 1,the entry to record payment of these wages on the following January 5 would include:

Accepted Answer

A) A debit to Cash and a credit to Salaries Payable. 
B) A debit to Cash and a credit to Prepaid Salaries. 
C) A debit to Salaries Payable and a credit to Cash. 
D) A debit to Salaries Payable and a credit to Salaries Expense. 
E) No entry would be necessary on January 5. 
A) A debit to Cash and a credit to Salaries Payable. 
B) A debit to Cash and a credit to Prepaid Salaries. 
C) A debit to Salaries Payable and a credit to Cash. 
D) A debit to Salaries Payable and a credit to Salaries Expense. 
E) No entry would be necessary on January 5.

Question 12

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation.How much depreciation expense will be recorded for the furniture for the first year ended December 31?

Accepted Answer

A) $437.50 
B) $375.00 
C) $1,500.00 
D) $500 
E) $1,750 
A) $437.50 
B) $375.00 
C) $1,500.00 
D) $500 
E) $1,750

Question 13

In accrual accounting,accrued revenues are recorded as liabilities.

Accepted Answer

A) True 
 B)False

Question 14

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

Accepted Answer

A) True 
 B)False

Question 15

A company had no office supplies available at the beginning of the year.During the year,the company purchased $250 worth of office supplies.On December 31,$75 worth of office supplies remained.How much should the company report as office supplies expense for the year?

Accepted Answer

A) $75. 
B) $125. 
C) $175. 
D) $250. 
E) $325. 
A) $75. 
B) $125. 
C) $175. 
D) $250. 
E) $325.

Question 16

Prepare adjusting entries for the year ended December 31,for each of these separate situations.Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance are initially recorded as liabilities.
a.The Prepaid Rent account has a debit balance of $8,000 before adjustment,representing a prepayment for four months' rent made on December 1 of the current year.
b.One-third of the work related to $18,000 of cash received in advance was performed during this period.
c.Unpaid accrued salaries at December 31 amounts to $15,000
d.Work was completed for a client on December 31 in the amount of $21,000,but was not previously billed or recorded.
e.Estimated depreciation on office equipment is $27,000.

Accepted Answer

The answer of Prepare adjusting entries for the year ended...

Question 17

On December 1,Milton Company borrowed $300,000,at 8% annual interest,from the Tennessee National Bank.Interest is paid when the loan matures one year from the issue date.What is the adjusting entry for accruing interest that Milton would need to make on December 31,the calendar year-end?

Accepted Answer

A) debit Interest Payable,$2,000; credit Interest Expense,$2,000. 
B) debit Interest Expense,$2,000; credit Interest Payable,$2,000. 
C) debit Interest Expense,$2,000; credit Cash,$2,000. 
D) debit Interest Expense,$4,000; credit Interest Payable,$4,000. 
E) debit Interest Expense,$24,000; credit Interest Payable,$24,000. 
A) debit Interest Payable,$2,000; credit Interest Expense,$2,000. 
B) debit Interest Expense,$2,000; credit Interest Payable,$2,000. 
C) debit Interest Expense,$2,000; credit Cash,$2,000. 
D) debit Interest Expense,$4,000; credit Interest Payable,$4,000. 
E) debit Interest Expense,$24,000; credit Interest Payable,$24,000.

Question 18

Using the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" for overstatements,a "-" for understatements,and a "0" for no effect.The first one is provided as an example.

Accepted Answer

The answer of Using the table below,indicate the impact of...

Question 19

Profit margin is calculated by dividing net sales by net income.

Accepted Answer

A) True 
 B)False

Question 20

Explain the purpose of reversing entries.

Accepted Answer

Reversing entries are an optional step i

Exam 3: Adjusting Accounts for Financial Statements

A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period?

The Retained earnings account has a credit balance of $37,000 before closing entries are made.If total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000. -What is the ending balance in the Retained earnings account after all closing entries are made?

Current liabilities include accounts receivable,unearned revenues,and salaries payable.

Flo's Flowers' current ratio is 1.3.The industry average for the current ratio is 1.2.This indicates that Flo's can cover its short term liabilities with its short term assets.

The closing process is necessary in order to:

On December 14,Branch Company received $3,000 cash for 30 days of consulting services that will be completed on January 13.Branch records all such prepayments by customers in a liability account.Prepare the December 31 adjusting entry.

Cash and office supplies are both classified as current assets.

Explain why temporary accounts are closed each period.

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

If accrued salaries were recorded on December 31 with a debit to Salaries Expense and a credit to Salaries Payable,and no reversing entries were made on January 1,the entry to record payment of these wages on the following January 5 would include:

In accrual accounting,accrued revenues are recorded as liabilities.

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

A company had no office supplies available at the beginning of the year.During the year,the company purchased $250 worth of office supplies.On December 31,$75 worth of office supplies remained.How much should the company report as office supplies expense for the year?

On December 1,Milton Company borrowed $300,000,at 8% annual interest,from the Tennessee National Bank.Interest is paid when the loan matures one year from the issue date.What is the adjusting entry for accruing interest that Milton would need to make on December 31,the calendar year-end?

Using the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" for overstatements,a "-" for understatements,and a "0" for no effect.The first one is provided as an example.

Profit margin is calculated by dividing net sales by net income.

Explain the purpose of reversing entries.

Accounting in Business

Accounting for Business Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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