Exam 3: The Mechanics of Double-Entry Bookkeeping

The key premise underlying double-entry bookkeeping is that financial transactions must be recorded as if they have opposite and equal effects.

Dividends cause

On November 15, 2010, Horse & Hound received $14,000 for subscriptions for the 2011 year. The entry to record these subscriptions would include a

A company records interest that it owes, but has not yet paid, at the end of the fiscal year. This recognition of interest generates a(an)

Entries prepared to ensure that revenues and expenses have been appropriately recorded in the accounting period to which they relate are called

On October 1, 2010, Pilcher's Inc. paid $60,000 to the Chicago Informer for newspaper advertisements that will run from November 1, 2010 through December 24, 2010. Which of the following journal entries should Pilcher's recognize on October 1, 2010?

Georgia Company's total liabilities on August 31, 2010, were $200,000. During September, the company incurred an additional $150,000 of liabilities. Georgia Co. paid $50,000 of outstanding liabilities in September. What were the company's total liabilities at September 30, 2010?

A post-closing trial balance includes all the accounts that are listed in a company's chart of accounts.

Real Sports Unlimited received $240,000 for multiple annual subscriptions beginning October 1, 2010. That amount was properly recorded on that date. What adjusting entry should Real Sports Unlimited make on December 31, 2010, related to these subscriptions?

On April 15, the Gold Coast Pizza Stand sold 100 slices of pizza at $2.50 per slice to cash customers. Which of the following journal entries should Gold Coast Pizza recognize on April 15?

An internet service provider requires customers to prepay for six months of service. On August 1, 2010, Ricky Roberts paid $480 for internet service for the next six-month period. For the year ended December 31, 2010, how much revenue will the internet service have earned from Roberts?

Any supporting item that identifies the key features of business transactions is a

The following account balances have been taken from the pre-closing December 31, 2010 accounts of Burke Co.: Required: A) Prepare the appropriate December 31 closing entries for Burke Co. B) What was the company's net income for 2010? C) What is the year-end balance of Retained Earnings for Burke Co.? D) Where would each of the accounts be shown in the year-end financial statements?

The following transactions were incurred by Wood Inc. during October. Oct. 1 Paid $486 electricity bill for September. The bill had been received and recorded on September 21 and was due by October 3. Oct. 1 Bought a car costing $18,500, paying $3,000 down and signing a note for the remainder. Oct. 5 Purchased stationery for the business on credit for $300. Oct. 15 Paid employee salaries for first half of October, $2,340. Oct. 16 Received $500 from a customer in payment of services performed on September 29. Oct. 18 Paid $85 for an advertisement running in the October 18 newspaper. Oct. 21 Performed services for a customer who paid the company $268. Oct. 23 Paid November insurance policy, $200. Oct. 25 Sold 1,000 shares of $10 par value common stock for $14 per share. Oct. 29 Received a $2,500 advance payment from a customer for services to be performed in November. Oct. 31 Employees earned $2,360 of salaries for the last half of October. These salaries will be paid on November 1. Required: A) Prepare general journal entries for these transactions. Next to each account title, indicate whether that account will increase (+) or decrease (-) as a result of the transaction. B) Put a star (*) beside the date of each transaction that will require any type of adjusting entry to be made at the end of October.

Which of the following accounts are included in the post-closing trial balance?

In a contra-asset account, debits would cause the account balance to ___ and credits would cause the account balance to ___.

The posting reference column of a general ledger account should include the account number from the chart of accounts.

Companies should not accrue liabilities for estimated income taxes each quarter because income taxes cannot be calculated with absolute certainty until year-end.

The following selected transactions occurred during May for Guido's Accounting Services. May 1 The firm received and recorded a $450 receipt from a customer for accounting services to be rendered evenly in May, June and July. May 1 The firm paid $900 for a four-month insurance policy. Coverage begins on May 1. May 4 The firm paid $800 to a data processing firm for work that will be performed evenly in May and June. May 31 The firm's employees earn $250 of wages daily, based on a five-day work week. Employees are paid each Friday for the week just worked. May 31 falls on a Wednesday. May 31 The firm recorded its $170 estimated utility bill for May. May 31 The firm's computer cost $5,180 when it was purchased last year. At that time, the computer's life was expected to be three years, with an expected salvage value of $500. The firm recorded one month's depreciation on the computer. May 31 On May 1, the office supplies account showed a balance of $120 of office supplies on hand. During May, the firm bought $250 of office supplies. On this date, $280 of office supplies were counted in the supply cabinet. The firm recorded the supplies used for the month. Required: A) Prepare the entries on May 1 and May 4. Next to each account title, indicate whether that account will increase (+) or decrease (-) as a result of the transaction. B) Prepare all necessary adjusting journal entries for Guido's Accounting Services on May 31. Next to each account title, indicate whether that account will increase (+) or decrease (-) as a result of the transaction. C) Assume that Guido's Accounting Services uses the cash basis of accounting instead of the accrual basis. For each transaction, indicate how the firm's revenues and expenses for May would have been affected.

Which of the following does (do) not take place in a normal accounting cycle?