Question 1

Discuss the importance of periodic reporting and the time period assumption.

Accepted Answer

For information to be valuable to decisi

Question 2

The length of time covered by a set of periodic financial statements is referred to as the:

Accepted Answer

A) Fiscal cycle. 
B) Natural business year. 
C) Accounting period. 
D) Business cycle. 
E) Operating cycle. 
A) Fiscal cycle. 
B) Natural business year. 
C) Accounting period. 
D) Business cycle. 
E) Operating cycle.

Question 3

A company issued financial statements for the year ended December 31,but failed to include the following adjusting entries:
A.Accrued service fees earned of $2,200.
B.Depreciation expense of $8,000.
C.Portion of office supplies (an asset) used $3,100.
D.Accrued salaries of $5,200.
E.Revenues of $7,200, 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 4

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 5

A company purchased $6,000 worth of supplies in August and recorded the purchase in the Supplies account.On August 31,the fiscal year-end,the supplies count equaled $3,200.The adjusting entry would include a $2,800 debit to Supplies.

Accepted Answer

A) True 
 B)False

Question 6

Ned's net income was $780,000; its net assets were $5,200,000; and its net sales were $9,000,000.Calculate its profit margin ratio.

Accepted Answer

Profit Margin Ratio

Question 7

Harrow Co.is a multi-million business.The business results for the year have been seriously impacted by a slowing economy.The company wants to improve its net income.It has incurred $2,500,000 in unpaid salaries at the end of the year and wants to leave those amounts unrecorded at the end of the year.(a)How would this omission affect the financial statements of Harrow?
 (b)Which accrual basis of accounting principles does this omission violate?
 (c)Would this be considered an ethical problem?

Accepted Answer

@#IMG-DLM& Hughes Co.did rebound from the slowing

Question 8

Pfister Co.leases an office to a tenant at the rate of $5,000 per month.The tenant contacted Pfister and arranged to pay the rent for December on January 8 of the following year.Pfister agrees to this arrangement.
a.)Prepare the journal entry that Pfister must make at year ended December 31 to record the accrued rent revenue.
b.)Prepare the journal entry to record the receipt of the rent on January 8 of the following year.

Accepted Answer

The answer of Pfister Co.leases an office to a tenant...

Question 9

Alex Company has 10 employees,who earn a total of $1,800 in salaries each working day.They are paid on Monday for the five-day workweek ending on the previous Friday.Assume that year ended December 31,is a Wednesday and all employees will be paid salaries for five full days on the following Monday.The adjusting entry needed on December 31 is:

Accepted Answer

A) Debit Salaries Expense, $5,400; credit Salaries Payable, $5,400. 
B) Debit Salaries Expense, $3,600; credit Salaries Payable, $3,600. 
C) Debit Salaries Expense, $9,000; credit Salaries Payable, $9,000. 
D) Debit Salaries Payable, $5,400; credit Salaries Expense, $5,400. 
E) Debit Salaries Expense, $5,400; credit Cash, $5,400. 
A) Debit Salaries Expense, $5,400; credit Salaries Payable, $5,400. 
B) Debit Salaries Expense, $3,600; credit Salaries Payable, $3,600. 
C) Debit Salaries Expense, $9,000; credit Salaries Payable, $9,000. 
D) Debit Salaries Payable, $5,400; credit Salaries Expense, $5,400. 
E) Debit Salaries Expense, $5,400; credit Cash, $5,400.

Question 10

Assuming prepaid expenses are originally recorded in balance sheet accounts,the adjusting entry to record use of a prepaid expense is:

Accepted Answer

A) Increase an expense; increase a liability. 
B) Increase an asset; increase revenue. 
C) Decrease a liability; increase revenue. 
D) Increase an expense; decrease an asset. 
E) Increase an expense; decrease a liability. 
A) Increase an expense; increase a liability. 
B) Increase an asset; increase revenue. 
C) Decrease a liability; increase revenue. 
D) Increase an expense; decrease an asset. 
E) Increase an expense; decrease a liability.

Question 11

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account,and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

Accepted Answer

A) Debit Prepaid Insurance, $1,800; credit Cash, $1,800. 
B) Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440. 
C) Debit Prepaid Insurance, $360; credit Insurance Expense, $360. 
D) Debit Insurance Expense, $360; credit Prepaid Insurance, $360. 
E) Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440. 
A) Debit Prepaid Insurance, $1,800; credit Cash, $1,800. 
B) Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440. 
C) Debit Prepaid Insurance, $360; credit Insurance Expense, $360. 
D) Debit Insurance Expense, $360; credit Prepaid Insurance, $360. 
E) Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440.

Question 12

Each adjusting entry can only affect a balance sheet account.

Accepted Answer

A) True 
 B)False

Question 13

Explain how the owner of a company uses the accrual basis of accounting.

Accepted Answer

The owner understood the importance of a

Question 14

The total amount of depreciation recorded against an asset or group of assets during the entire time the asset or assets have been owned:

Accepted Answer

A) Is referred to as depreciation expense. 
B) Is referred to as accumulated depreciation. 
C) Is shown on the income statement of the final period. 
D) Is only recorded when the asset is disposed of. 
E) Is referred to as an accrued asset. 
A) Is referred to as depreciation expense. 
B) Is referred to as accumulated depreciation. 
C) Is shown on the income statement of the final period. 
D) Is only recorded when the asset is disposed of. 
E) Is referred to as an accrued asset.

Question 15

Prior to recording adjusting entries on December 31,a company's Store Supplies account had an $880 debit balance.A physical count of the supplies showed $325 of unused supplies available as of December 31.Prepare the required adjusting entry.

Accepted Answer

(1)$685 = $455 + $65

Question 16

Before an adjusting entry is made to recognize the cost of expired insurance for the period,Prepaid Insurance and Insurance Expense are both overstated.

Accepted Answer

A) True 
 B)False

Question 17

Identify the differences between accrual accounting and cash basis accounting.

Accepted Answer

Accrual accounting records rev

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The accrual basis of accounting recognizes revenues when cash is received from customers.

Accepted Answer

A) True 
 B)False

Question 20

A company purchased a new truck at a cost of $42,000 on July 1.The truck is estimated to have a useful life of 6 years and a salvage value of $3,000.The company uses the straight-line method of depreciation.How much depreciation expense will be recorded for the truck during the first year ended December 31?

Accepted Answer

A) $3,250. 
B) $3,500. 
C) $4,000. 
D) $6,500. 
E) $7,000. 
A) $3,250. 
B) $3,500. 
C) $4,000. 
D) $6,500. 
E) $7,000.

Exam 3: Adjusting Accounts and Preparing Financial Statements

Discuss the importance of periodic reporting and the time period assumption.

The length of time covered by a set of periodic financial statements is referred to as the:

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

A company purchased $6,000 worth of supplies in August and recorded the purchase in the Supplies account.On August 31,the fiscal year-end,the supplies count equaled $3,200.The adjusting entry would include a $2,800 debit to Supplies.

Ned's net income was $780,000; its net assets were $5,200,000; and its net sales were $9,000,000.Calculate its profit margin ratio.

Assuming prepaid expenses are originally recorded in balance sheet accounts,the adjusting entry to record use of a prepaid expense is:

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account,and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

Each adjusting entry can only affect a balance sheet account.

Explain how the owner of a company uses the accrual basis of accounting.

The total amount of depreciation recorded against an asset or group of assets during the entire time the asset or assets have been owned:

Prior to recording adjusting entries on December 31,a company's Store Supplies account had an $880 debit balance.A physical count of the supplies showed $325 of unused supplies available as of December 31.Prepare the required adjusting entry.

Before an adjusting entry is made to recognize the cost of expired insurance for the period,Prepaid Insurance and Insurance Expense are both overstated.

Identify the differences between accrual accounting and cash basis accounting.

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

The accrual basis of accounting recognizes revenues when cash is received from customers.

Accounting in Business

Analyzing and Recording Transactions

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

Filters