Exam 3: Accruals and Deferrals: Timing Is Everything in Accounting

The employees of Dew Drop Inn get paid every Friday for a 5-day workweek (Monday through Friday).The total payroll is $5,000 per day of work.If the accounting period ends on Thursday of a given week,what adjustment must be made to the company's accounting records?

Sure Enuf,Inc.paid $4,800 on May 1,2012 for 12 months' insurance coverage starting May 1.How much insurance expense should appear on the company's income statement for the year ended December 31,2012?

Maxine,Inc.bought a machine on January 1,2012 for $48,000.The machine is expected to last for 8 years,after which it will be worthless.What is the book value of the machine on Maxine's balance sheet at December 31,2012?

An accounting clerk compares a bill received from a supplier with the packing slip that accompanied the shipment from the supplier.This control is primarily designed to prevent ________.

A company should never allow copies of its accounting data to be stored outside of the company.

The bookkeeper of Dew Drop Inn forgets to record the adjusting entry for salaries earned but not yet paid.As a result of this mistake ________.

The term accounts receivable is used to describe ________.

Clean Sweep,Inc.started the month of June with $800 worth of cleaning supplies.During the month,Clean Sweep purchased $300 of supplies for cash.At June 30,$200 worth of supplies was unused.How will the company report its unused supplies on June 30?

The following is a partial list of items from Stables & Nobles,Inc.'s December 31,2011 financial statements. Part A: In the worksheet below,record the effect of these five adjustments on the accounting equation for the year ended December 31,2011.Show the correct dollar amounts,and write in the titles of the accounts affected. 1.There are 3 months left of the 12-month,$12,000 insurance policy that began April 1,2011. 2.Interest of $2,500 is owed and will be paid in January 2012. 3.Two-thirds of the revenue received in advance has been earned as of December 31,2011. 4.Rent paid in advance for twelve months starting August 1,2011 was adjusted. 5.Owed $5,000 of salaries for work done in December.The next payday is Jan.3,2012. Part B: Fill in the adjusted balances as of December 31,2012.Some of the accounts that have been adjusted are not included in this table. Part C:

Which of the following accounts typically needs to be adjusted?

Sure Enuf,Inc.paid $4,800 on May 1,2012 for 12 months' insurance coverage starting May 1.How much prepaid insurance should appear on the company's balance sheet at December 31,2012?

Mariner,Inc.bought a lobster boat on November 1,2011 in exchange for a 2-month,6%,$80,000 note.The note plus interest will be repaid on January 1,2012,the maturity date.How much interest expense should the company report on its income statement for the month ended November 30,2011?

Use the following information from Hormel Foods Corporation's income statement to calculate the company's 2012 profit margin on sales ratio.

How is net income calculated and on what financial statement(s)is it reported?

The total payroll is $6,000 per day of work.If the accounting period ends on Tuesday of a given week,what adjustment must be made to the company's accounting records?

Which financial statement shows Salaries expense?

Rent a Wreck,Inc.began operations on July 1,2012.On July 1,the company paid $9,600 cash in advance for a one-year insurance policy beginning on that day.How much insurance expense will appear on the company's income statement for the month ended July 31,2012?

If supplies have been consumed during the period,but not adjusted at the end of the period,expenses will be understated.

Avatar,Inc.bought a machine on January 1,2011 for $96,000.The machine is expected to last for 8 years,after which it will be worthless.What is the book value of the machine on Avatar's balance sheet at December 31,2012?

The Unearned revenue account represents the amount of ________.