Question 1

If a company failed to make the end-of-period adjustment to remove the amount earned from the Unearned Management Fees account,there would be an:

Accepted Answer

A) Overstatement of net income. 
B) Overstatement of assets. 
C) Overstatement of liabilities. 
D) Overstatement of equity. 
E) Understatement of liabilities. 
A) Overstatement of net income. 
B) Overstatement of assets. 
C) Overstatement of liabilities. 
D) Overstatement of equity. 
E) Understatement of liabilities.

Question 2

Discuss how accrual accounting enhances the usefulness of financial statements.

Accepted Answer

The accrual accounting method recognizes

Question 3

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 4

Under the cash basis of accounting,no adjustments are made for prepaid,unearned,and accrued items.

Accepted Answer

A) True 
 B)False

Question 5

The following information is available for the Wooden Company:
   From the information provided,calculate Wooden's profit margin ratio for each of the three years.Comment on the results,assuming that the industry average for the profit margin ratio is 6% for each of the three years.

Accepted Answer

@#IMG-DLM&_TB6947_00_TB6947_00_TB6947_00 Analysis

Question 6

Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

Accepted Answer

A) True 
 B)False

Question 7

Manning,Co.collected six months' rent in advance from a tenant on November 1 of the current year.When cash was collected,the following entry was made:
   Prepare the required adjusting entry at December 31 of the current year.

Accepted Answer

@#IMG-DLM&_TB6947_00

Question 8

The accrual basis of accounting:

Accepted Answer

A) Is generally accepted for external reporting since it is more useful for most business decisions. 
B) Is flawed because it gives complete information about cash flows. 
C) Recognizes revenues when received in cash. 
D) Recognizes expenses when paid in cash. 
E) Eliminates the need for adjusting entries at the end of each period. 
A) Is generally accepted for external reporting since it is more useful for most business decisions. 
B) Is flawed because it gives complete information about cash flows. 
C) Recognizes revenues when received in cash. 
D) Recognizes expenses when paid in cash. 
E) Eliminates the need for adjusting entries at the end of each period.

Question 9

The Supplies account had an adjusted balance of $2,000 on December 31,2013.During 2014,the company purchased $5,000 of supplies.A physical count of supplies at December 31,2014,shows $3,000 of supplies available.(Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance of work are initially recorded as liabilities.) How would the company record the related adjusting entry at December 31,2014?

Accepted Answer

A) Debit Supplies Expense for $4,000 and credit Supplies for $4,000. 
B) Debit Supplies Expense for $3,000 and credit Supplies for $3,000. 
C) Debit Supplies for $3,000 and credit Supplies Expense for $3,000. 
D) Debit Supplies for $7,000 and credit Cash for $7,000. 
E) Debit Supplies for $3,000 and credit Cash for $3,000. 
A) Debit Supplies Expense for $4,000 and credit Supplies for $4,000. 
B) Debit Supplies Expense for $3,000 and credit Supplies for $3,000. 
C) Debit Supplies for $3,000 and credit Supplies Expense for $3,000. 
D) Debit Supplies for $7,000 and credit Cash for $7,000. 
E) Debit Supplies for $3,000 and credit Cash for $3,000.

Question 10

Western Company had $500 of store supplies available at the beginning of the current year.During the year Western Company purchased $2,750 worth of store supplies.On December 31 of this year,$375 worth of store supplies remained.
a.Calculate the amount of Western Company's store supplies expense for the current year.(Show your calculations.)
b.Prepare the journal entry to adjust the supplies account.

Accepted Answer

a. @#IMG-DLM&_TB6947_00_TB6947

Question 11

A 10-column spreadsheet used to draft a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements and which is an optional tool in the accounting process is a(n):

Accepted Answer

A) Adjusted trial balance 
B) Work sheet 
C) Post-closing trial balance 
D) Unadjusted trial balance 
E) General ledger 
A) Adjusted trial balance 
B) Work sheet 
C) Post-closing trial balance 
D) Unadjusted trial balance 
E) General ledger

Question 12

From the adjusted trial balance,prepare an income statement for Martin Sky Taxi Services.

Accepted Answer

@#IMG-DLM&_TB6947_00

Question 13

The adjusted trial balance of Thomas Company follows:
   Prepare the closing entries for Thomas Company.

Accepted Answer

@#IMG-DLM&_TB6947_00

Question 14

On December 31,Connelly Company had performed $5,000 of management services for clients that had not yet been billed.Prepare Connelly's adjusting entry to record these fees earned.

Accepted Answer

@#IMG-DLM&_TB6947_00

Question 15

An unadjusted trial balance is a listing of accounts and their balances prepared before adjustments are recorded.

Accepted Answer

A) True 
 B)False

Question 16

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

Accepted Answer

A) $16,780 debit 
B) $7,180 credit 
C) $16,780 credit 
D) $18,280 credit 
E) $23,780 credit 
A) $16,780 debit 
B) $7,180 credit 
C) $16,780 credit 
D) $18,280 credit 
E) $23,780 credit

Question 17

Describe a work sheet and explain why it is useful.

Accepted Answer

A work sheet is a useful tool for organi

Question 18

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

Accepted Answer

A) Cash basis accounting 
B) The matching principle 
C) The time period principle 
D) Accrual basis accounting 
E) Revenue basis accounting 
A) Cash basis accounting 
B) The matching principle 
C) The time period principle 
D) Accrual basis accounting 
E) Revenue basis accounting

Question 19

How is the profit margin calculated? Discuss its use in analyzing a company's performance.

Accepted Answer

Profit margin is calculated by dividing

Question 20

The Income Summary account is used to close the permanent accounts at the end of an accounting period.

Accepted Answer

A) True 
 B)False

If a company failed to make the end-of-period adjustment to remove the amount earned from the Unearned Management Fees account,there would be an:

Discuss how accrual accounting enhances the usefulness of financial statements.

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:

Under the cash basis of accounting,no adjustments are made for prepaid,unearned,and accrued items.

The following information is available for the Wooden Company: From the information provided,calculate Wooden's profit margin ratio for each of the three years.Comment on the results,assuming that the industry average for the profit margin ratio is 6% for each of the three years.

Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

Manning,Co.collected six months' rent in advance from a tenant on November 1 of the current year.When cash was collected,the following entry was made: Prepare the required adjusting entry at December 31 of the current year.

The accrual basis of accounting:

A 10-column spreadsheet used to draft a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements and which is an optional tool in the accounting process is a(n):

From the adjusted trial balance,prepare an income statement for Martin Sky Taxi Services.

The adjusted trial balance of Thomas Company follows: Prepare the closing entries for Thomas Company.

On December 31,Connelly Company had performed $5,000 of management services for clients that had not yet been billed.Prepare Connelly's adjusting entry to record these fees earned.

An unadjusted trial balance is a listing of accounts and their balances prepared before adjustments are recorded.

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

Describe a work sheet and explain why it is useful.

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

How is the profit margin calculated? Discuss its use in analyzing a company's performance.

The Income Summary account is used to close the permanent accounts at the end of an accounting period.

Introducing Financial Accounting

Accounting System and Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters

Exam 3: Adjusting Accounts for Financial Statements

If a company failed to make the end-of-period adjustment to remove the amount earned from the Unearned Management Fees account,there would be an:

Discuss how accrual accounting enhances the usefulness of financial statements.

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:

Under the cash basis of accounting,no adjustments are made for prepaid,unearned,and accrued items.

The following information is available for the Wooden Company: From the information provided,calculate Wooden's profit margin ratio for each of the three years.Comment on the results,assuming that the industry average for the profit margin ratio is 6% for each of the three years.

Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

Manning,Co.collected six months' rent in advance from a tenant on November 1 of the current year.When cash was collected,the following entry was made: Prepare the required adjusting entry at December 31 of the current year.

The accrual basis of accounting:

A 10-column spreadsheet used to draft a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements and which is an optional tool in the accounting process is a(n):

From the adjusted trial balance,prepare an income statement for Martin Sky Taxi Services.

The adjusted trial balance of Thomas Company follows: Prepare the closing entries for Thomas Company.

On December 31,Connelly Company had performed $5,000 of management services for clients that had not yet been billed.Prepare Connelly's adjusting entry to record these fees earned.

An unadjusted trial balance is a listing of accounts and their balances prepared before adjustments are recorded.

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

Describe a work sheet and explain why it is useful.

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

How is the profit margin calculated? Discuss its use in analyzing a company's performance.

The Income Summary account is used to close the permanent accounts at the end of an accounting period.

Introducing Financial Accounting

Accounting System and Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters