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

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Exam 1: Business: Whats It All About226 Questionsadd course
Exam 2: Qualities of Accounting Information180 Questionsadd course
Exam 3: Accruals and Deferrals: Timing Is Everything in Accounting260 Questionsadd course
Exam 4: Payment for Goods and Services: Cash and Accounts Receivable195 Questionsadd course
Exam 5: The Purchase and Sale of Inventory249 Questionsadd course
Exam 6: Acquisition and Use of Long-Term Assets217 Questionsadd course
Exam 7: Accounting for Liabilities308 Questionsadd course
Exam 8: Accounting for Shareholders Equity226 Questionsadd course
Exam 9: Preparing and Analyzing the Statement of Cash Flows277 Questionsadd course
Exam 10: Using Financial Statement Analysis to Evaluate Firm Performance273 Questionsadd course
Exam 11: Quality of Earnings, corporate Governance, and Ifrs159 Questionsadd course
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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,and the proper adjustment is made on Thursday,what will be the effect on the company's accounting system on Friday when the employees are paid for the week?

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Question 161

Part A: Enter the March transactions and adjustments in the accounting equation below. 1. March 1 Collected $6,000 of its accounts receivable from February sales. 2. March 1 Tim’s Tams paid $1,000 for two months’ rent beginning March 1. 3. March 1 Borrowed $16,000 on a 4-month, 6% note payable. 4. March 1 Paid $18,000 cash for a truck that has an estimated useful life of 6 years with no salvage value. 5. March 6 Paid $4,300 of its accounts payable from the caps purchased in February. 6. March 20 Tim’s Tams sold 300 baseball caps @ $10.00 each on account. The caps cost $6 each. 7. March 31 Tim’s Tams declared and paid a $500 cash dividend to its shareholder. 8. March 31 Adjusted for insurance used during the month. Recall that on February 1, Tim’s Tams paid $600 for 3 months of insurance coverage that began February 1. 9. March 31 Adjusted for rent used during the month. Recall that Tim’s Tams paid $1,000 for two months’ rent. 10. March 31 Recorded one month’s depreciation on the $18,000 truck that has a 6-year useful life. 11. March 31 Recorded interest on the $16,000, 4-month, 6% note payable for the month. Part A: Enter the March transactions and adjustments in the accounting equation below. 1. March 1 Collected $6,000 of its accounts receivable from February sales. 2. March 1 Tim’s Tams paid $1,000 for two months’ rent beginning March 1. 3. March 1 Borrowed $16,000 on a 4-month, 6% note payable. 4. March 1 Paid $18,000 cash for a truck that has an estimated useful life of 6 years with no salvage value. 5. March 6 Paid $4,300 of its accounts payable from the caps purchased in February. 6. March 20 Tim’s Tams sold 300 baseball caps @ $10.00 each on account. The caps cost $6 each. 7. March 31 Tim’s Tams declared and paid a $500 cash dividend to its shareholder. 8. March 31 Adjusted for insurance used during the month. Recall that on February 1, Tim’s Tams paid $600 for 3 months of insurance coverage that began February 1. 9. March 31 Adjusted for rent used during the month. Recall that Tim’s Tams paid $1,000 for two months’ rent. 10. March 31 Recorded one month’s depreciation on the $18,000 truck that has a 6-year useful life. 11. March 31 Recorded interest on the $16,000, 4-month, 6% note payable for the month. Part D: Complete the financial statement. Part E: Part F: For each item, write in the amount (even if $0) as of or for the Month ended March 31, 2011 and write in the one financial statement where the line item is found: Part G: Use the transactions and financial statements to answer the following: Part A: Enter the March transactions and adjustments in the accounting equation below. 1. March 1 Collected $6,000 of its accounts receivable from February sales. 2. March 1 Tim’s Tams paid $1,000 for two months’ rent beginning March 1. 3. March 1 Borrowed $16,000 on a 4-month, 6% note payable. 4. March 1 Paid $18,000 cash for a truck that has an estimated useful life of 6 years with no salvage value. 5. March 6 Paid $4,300 of its accounts payable from the caps purchased in February. 6. March 20 Tim’s Tams sold 300 baseball caps @ $10.00 each on account. The caps cost $6 each. 7. March 31 Tim’s Tams declared and paid a $500 cash dividend to its shareholder. 8. March 31 Adjusted for insurance used during the month. Recall that on February 1, Tim’s Tams paid $600 for 3 months of insurance coverage that began February 1. 9. March 31 Adjusted for rent used during the month. Recall that Tim’s Tams paid $1,000 for two months’ rent. 10. March 31 Recorded one month’s depreciation on the $18,000 truck that has a 6-year useful life. 11. March 31 Recorded interest on the $16,000, 4-month, 6% note payable for the month. Part D: Complete the financial statement. Part E: Part F: For each item, write in the amount (even if $0) as of or for the Month ended March 31, 2011 and write in the one financial statement where the line item is found: Part G: Use the transactions and financial statements to answer the following: Part D: Complete the financial statement. Part A: Enter the March transactions and adjustments in the accounting equation below. 1. March 1 Collected $6,000 of its accounts receivable from February sales. 2. March 1 Tim’s Tams paid $1,000 for two months’ rent beginning March 1. 3. March 1 Borrowed $16,000 on a 4-month, 6% note payable. 4. March 1 Paid $18,000 cash for a truck that has an estimated useful life of 6 years with no salvage value. 5. March 6 Paid $4,300 of its accounts payable from the caps purchased in February. 6. March 20 Tim’s Tams sold 300 baseball caps @ $10.00 each on account. The caps cost $6 each. 7. March 31 Tim’s Tams declared and paid a $500 cash dividend to its shareholder. 8. March 31 Adjusted for insurance used during the month. Recall that on February 1, Tim’s Tams paid $600 for 3 months of insurance coverage that began February 1. 9. March 31 Adjusted for rent used during the month. Recall that Tim’s Tams paid $1,000 for two months’ rent. 10. March 31 Recorded one month’s depreciation on the $18,000 truck that has a 6-year useful life. 11. March 31 Recorded interest on the $16,000, 4-month, 6% note payable for the month. Part D: Complete the financial statement. Part E: Part F: For each item, write in the amount (even if $0) as of or for the Month ended March 31, 2011 and write in the one financial statement where the line item is found: Part G: Use the transactions and financial statements to answer the following: Part E: Part A: Enter the March transactions and adjustments in the accounting equation below. 1. March 1 Collected $6,000 of its accounts receivable from February sales. 2. March 1 Tim’s Tams paid $1,000 for two months’ rent beginning March 1. 3. March 1 Borrowed $16,000 on a 4-month, 6% note payable. 4. March 1 Paid $18,000 cash for a truck that has an estimated useful life of 6 years with no salvage value. 5. March 6 Paid $4,300 of its accounts payable from the caps purchased in February. 6. March 20 Tim’s Tams sold 300 baseball caps @ $10.00 each on account. The caps cost $6 each. 7. March 31 Tim’s Tams declared and paid a $500 cash dividend to its shareholder. 8. March 31 Adjusted for insurance used during the month. Recall that on February 1, Tim’s Tams paid $600 for 3 months of insurance coverage that began February 1. 9. March 31 Adjusted for rent used during the month. Recall that Tim’s Tams paid $1,000 for two months’ rent. 10. March 31 Recorded one month’s depreciation on the $18,000 truck that has a 6-year useful life. 11. March 31 Recorded interest on the $16,000, 4-month, 6% note payable for the month. Part D: Complete the financial statement. Part E: Part F: For each item, write in the amount (even if $0) as of or for the Month ended March 31, 2011 and write in the one financial statement where the line item is found: Part G: Use the transactions and financial statements to answer the following: Part F: For each item, write in the amount (even if $0) as of or for the Month ended March 31, 2011 and write in the one financial statement where the line item is found:Part A: Enter the March transactions and adjustments in the accounting equation below. 1. March 1 Collected $6,000 of its accounts receivable from February sales. 2. March 1 Tim’s Tams paid $1,000 for two months’ rent beginning March 1. 3. March 1 Borrowed $16,000 on a 4-month, 6% note payable. 4. March 1 Paid $18,000 cash for a truck that has an estimated useful life of 6 years with no salvage value. 5. March 6 Paid $4,300 of its accounts payable from the caps purchased in February. 6. March 20 Tim’s Tams sold 300 baseball caps @ $10.00 each on account. The caps cost $6 each. 7. March 31 Tim’s Tams declared and paid a $500 cash dividend to its shareholder. 8. March 31 Adjusted for insurance used during the month. Recall that on February 1, Tim’s Tams paid $600 for 3 months of insurance coverage that began February 1. 9. March 31 Adjusted for rent used during the month. Recall that Tim’s Tams paid $1,000 for two months’ rent. 10. March 31 Recorded one month’s depreciation on the $18,000 truck that has a 6-year useful life. 11. March 31 Recorded interest on the $16,000, 4-month, 6% note payable for the month. Part D: Complete the financial statement. Part E: Part F: For each item, write in the amount (even if $0) as of or for the Month ended March 31, 2011 and write in the one financial statement where the line item is found: Part G: Use the transactions and financial statements to answer the following: Part G: Use the transactions and financial statements to answer the following: Part A: Enter the March transactions and adjustments in the accounting equation below. 1. March 1 Collected $6,000 of its accounts receivable from February sales. 2. March 1 Tim’s Tams paid $1,000 for two months’ rent beginning March 1. 3. March 1 Borrowed $16,000 on a 4-month, 6% note payable. 4. March 1 Paid $18,000 cash for a truck that has an estimated useful life of 6 years with no salvage value. 5. March 6 Paid $4,300 of its accounts payable from the caps purchased in February. 6. March 20 Tim’s Tams sold 300 baseball caps @ $10.00 each on account. The caps cost $6 each. 7. March 31 Tim’s Tams declared and paid a $500 cash dividend to its shareholder. 8. March 31 Adjusted for insurance used during the month. Recall that on February 1, Tim’s Tams paid $600 for 3 months of insurance coverage that began February 1. 9. March 31 Adjusted for rent used during the month. Recall that Tim’s Tams paid $1,000 for two months’ rent. 10. March 31 Recorded one month’s depreciation on the $18,000 truck that has a 6-year useful life. 11. March 31 Recorded interest on the $16,000, 4-month, 6% note payable for the month. Part D: Complete the financial statement. Part E: Part F: For each item, write in the amount (even if $0) as of or for the Month ended March 31, 2011 and write in the one financial statement where the line item is found: Part G: Use the transactions and financial statements to answer the following:

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Question 162

Use the following code to classify the accounts listed below by the appropriate category: a.Revenue b.Expense c.Neither a revenue nor an expense ______ 1.Retained earnings ______ 2.Prepaid insurance ______ 3.Interest expense ______ 4.Accumulated depreciation ______ 5.Salaries expense ______ 6.Sales ______ 7.Unearned revenue

(Short Answer)
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Question 163

On January 1,2011,We Haul,Inc.bought a $48,000 truck,which has no residual value and an expected life of 6 years.How much accumulated depreciation should the company report at December 31,2012?

(Multiple Choice)
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Question 164

On June 1,Stackable,Inc.has a balance of $6,000 in Supplies.During June,the company buys another $2,000 of supplies.On June 30,the company counts the supplies and finds that $800 are left unused.What is the proper adjustment at June 30?

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Question 165

_____2.Interest income _____3.Rent expense _____4.Prepaid rent (eight months remaining) _____5.Salaries expense _____6.Salaries payable (due within 1 week) _____7.Depreciation expense _____8.Accumulated depreciation

(Short Answer)
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Question 166

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,and the proper adjustment is made on Thursday,what will be the effect of the adjustment on the company's financial statements?

(Multiple Choice)
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Question 167

Fair Play,Inc.paid $3,600 on September 1,2011 for an 18-month insurance policy beginning on that day.The company recorded the entire amount as prepaid insurance.How much insurance expense should the company show on its income statement for the year ended December 31,2012?

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Question 168

On January 1,2011,We Haul,Inc.bought a $48,000 truck,which has no residual value and an expected life of 6 years.How much depreciation expense should the company report for the year ended December 31,2011?

(Multiple Choice)
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Question 169

On January 1,2011,Beyers Company pays $205,000 cash for factory equipment that has an estimated useful life of 10 years and an expected residual value of $5,000.What will the company report on its statement of cash flows for the year ended December 31,2011?

(Multiple Choice)
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Question 170

Data from the accounting system of On-a-Roll,Inc.are provided below.All amounts are before the current year's adjustments are recorded.All adjustments are recorded at yearend. Data from the accounting system of On-a-Roll,Inc.are provided below.All amounts are before the current year's adjustments are recorded.All adjustments are recorded at yearend. Prepare the balance sheet after year-end adjustments using the following additional information. a.A count of supplies reveals $20 on hand at the end of the year. b.One-third of the prepaid rent was used up during the year. c.One-fourth of the equipment is depreciated each year. d.$350 of work for customers has been completed but not yet billed or collected. e.Salaries of $150 have been earned by employees but not paid. f.On January 1 of the current year,the company borrowed $3,000 on a three-year note payable.Interest accrues on the note at the rate of 6% per year. Prepare the balance sheet after year-end adjustments using the following additional information. a.A count of supplies reveals $20 on hand at the end of the year. b.One-third of the prepaid rent was used up during the year. c.One-fourth of the equipment is depreciated each year. d.$350 of work for customers has been completed but not yet billed or collected. e.Salaries of $150 have been earned by employees but not paid. f.On January 1 of the current year,the company borrowed $3,000 on a three-year note payable.Interest accrues on the note at the rate of 6% per year.

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Question 171

An inexperienced accountant made the following adjustments to the accounting system of Airata,Inc.The adjustments were made based on the information below the accounting equation worksheet. An inexperienced accountant made the following adjustments to the accounting system of Airata,Inc.The adjustments were made based on the information below the accounting equation worksheet. a.Unearned revenue has a December 31 balance of $10,000 before adjustment.Forty percent of the unearned revenue has been earned by the end of the year. b.Before adjustment,the supplies account equals $800.Only $100 of the supplies remain as of the end of the year. c.The equipment is depreciated by $10,000 per year. d.Interest accrues on an $80,000,12%,6-month note payable that has been outstanding for the past three months. e.Salaries earned by employees but not yet paid are $10,000. Required: Cross out any incorrect account titles or dollar amounts in the worksheet shown above.Write in the correct account titles and dollar amounts where needed. a.Unearned revenue has a December 31 balance of $10,000 before adjustment.Forty percent of the unearned revenue has been earned by the end of the year. b.Before adjustment,the supplies account equals $800.Only $100 of the supplies remain as of the end of the year. c.The equipment is depreciated by $10,000 per year. d.Interest accrues on an $80,000,12%,6-month note payable that has been outstanding for the past three months. e.Salaries earned by employees but not yet paid are $10,000. Required: Cross out any incorrect account titles or dollar amounts in the worksheet shown above.Write in the correct account titles and dollar amounts where needed.

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Question 172

Which of the following must be true?

(Multiple Choice)
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Question 173

The total payroll is $3,000 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?

(Multiple Choice)
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Question 174
Match the following terms with the appropriate definitions below.Definitions have not been provided for all of these terms.
Premises:
Responses:
The estimated amount a long-term asset will be worth at the end of its estimated useful life
Residual value
The amount sacrificed in order to purchase an asset
Long-term asset
The estimated length of time that a long-term asset is expected to benefit the company that owns it
Cost
Correct Answer:
Verified
Premises:
Responses:
The estimated amount a long-term asset will be worth at the end of its estimated useful life
Residual value
The amount sacrificed in order to purchase an asset
Long-term asset
The estimated length of time that a long-term asset is expected to benefit the company that owns it
Cost
An asset that is expected to be useful or beneficial for more than one accounting period
Accrued expense
An allocation of a long-term asset's cost to an expense account over the periods of time when the asset is used
Accrued revenue
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Question 175

Sure Safe,Inc.had prepaid insurance of $1,600 on January 1,2011 from a 12-month insurance policy purchased on March 1,2010 for $9,600.On March 1,2011,the company bought more insurance coverage by paying $10,800 for a new one-year policy.The company's year ends on December 31,2011 and all adjustments for the whole year are made on that date.What amount should appear on the December 31,2011 balance sheet as prepaid insurance? What amount of insurance expense should be reported on the income statement for the year ended December 31,2011?

(Essay)
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Question 176

Avatar,Inc.began operations on July 1,2011.On August 1,it received $24,000 in advance for services to be performed evenly over the next 12 months.How much of this revenue should the company report on its income statement for the year ended December 31,2012?

(Multiple Choice)
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Question 177

On January 1,2010,We Haul,Inc.bought a $48,000 truck,which has no residual value and an expected life of 6 years.What is the book value of the truck at December 31,2010?

(Multiple Choice)
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Question 178

Using the following income statement,calculate the profit margin on sales ratio. Using the following income statement,calculate the profit margin on sales ratio.

(Multiple Choice)
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Question 179

Fair Play,Inc.paid $3,600 on September 1,2011 for an 18-month insurance policy beginning on that day.The company recorded the entire amount as prepaid insurance.How much prepaid insurance should the company show on its balance sheet at December 31,2011?

(Multiple Choice)
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Question 180
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