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

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 31,2011?

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.How much depreciation expense will Maxine show on its income statement for the year ended December 31,2012?

The employees of Dew Drop Inn get paid every Friday for a 5-day work week (Monday through Friday).The total payroll is $5,000 per day of work.If the accounting period ends on Wednesday of a given week,and the proper adjustment is made on Wednesday,what will be the effect of the adjustment on the company's financial statements?

The total payroll is $4,000 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?

A computerized accounting system stores duplicate accounting data in a secure,remote location.This control is primarily designed to prevent ________.

Sales revenue is usually considered earned when ________.

Put an X in the appropriate box to indicate the financial statement(s)where the following line items would appear. $\bold{\text{Some items may appear on more than one statement.}}$

Indicate which financial statement would report the following items of information.Some items may appear on more than one statement.You should include all of them in your answer.If an item does not appear on any financial statement,write NONE. Your choices are as follows: IS = Income statement OE = Statement of changes in shareholders' equity BS = Balance sheet CF = Statement of cash flows NONE = Item does not appear on any of the financial statements

The dollar amount shown on the balance sheet for Supplies represents ________.

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.How much accumulated depreciation will Avatar report at December 31,2012?

Clean Sweep,Inc.paid $7,200 on May 1,2011 for 12 months' insurance coverage starting May 1.How much prepaid insurance should appear on the company's balance sheet at December 31,2011?

The income statement is sometimes called the statement of earnings.

Explain the difference between accruals and deferrals.

Which financial statement shows Salaries payable?

On May 1,2012,Mink,Inc.borrowed $10,000 by issuing a 12%,3-month note and another $10,000 by issuing a 12%,6-month note.Interest expense for the month ended May 31,2012 equals ________.

At December 31,2010,McToil,Inc.owes its employees $20,000 for work performed in 2010.Payday is not until the first week in January 2011.What is the effect of the December 31,2010 adjusting entry on the company's total liabilities?

Mac,Inc.purchased a truck on October 1,2011 in exchange for a 12-month,9%,$100,000 note.What effect does the October 31,2011 adjusting entry for interest have on the company's total shareholders' equity?

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 payable should the company report on its balance sheet at November 30,2011?

Accrual accounting requires that revenue be recorded when it is earned even if the cash from a sale to a customer has not been collected yet.

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