Exam 3: Adjusting Accounts for Financial Statements

A company had no office supplies at the beginning of the year.During the year,the company purchased $250 worth of office supplies.On December 31,$75 worth of office supplies remained.How much should the company report as office supplies expense for the year?

(Multiple Choice)

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Question 141

Profit margin is defined as:

(Multiple Choice)

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Question 142

All necessary numbers to prepare the income statement can be taken from the income statement columns of the work sheet,including the net income or net loss.

(True/False)

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Question 143

On October 1 of the current year,Morton Company paid $9,600 cash for a one-year insurance policy that took effect on that day.On the date of the payment,Morton recorded the following entry: Prepare the required adjusting entry at December 31 of the current year.

(Essay)

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Question 144

The Prepaid Insurance account had an unadjusted balance of $8,000 balance on December 31,2014.An analysis of insurance policies shows that $2,000 of unexpired insurance benefits remain at December 31,2014.How would the company record the related adjusting entry at December 31,2104?

(Multiple Choice)

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Question 145

A ____________________ is useful in preparing interim statements and in showing the effects of proposed transactions.

(Short Answer)

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Question 146

During its first year of operations,Able Co.purchased $39,600 worth of supplies.Atthe end of the year,the balance sheet showed a balance of $1,760 in the Supplies account.Prepare the necessary adjusting entry.

(Essay)

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Question 147

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

(Multiple Choice)

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Question 148

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of an asset.

(True/False)

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Question 149

Match the following terms with the appropriate definition:

Matching principle

Net income divided by net sales.

Profit margin

Items paid for in advance of receiving their benefits.

Accrual basis accounting

The expense created by allocating the cost of plant and equipment to the periods in which they are used.

Correct Answer:

Verified

Matching principle

Profit margin

Accrual basis accounting

Cash basis accounting

Revenue recognition principle

Depreciation

Time period assumption

Prepaid expenses

Accrued revenues

(Matching)

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Question 150

List the steps in the accounting cycle.

(Essay)

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Question 151

The accrual basis of accounting is an accounting system in which revenues are reported as earned when cash is received.

(True/False)

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Question 152

Match the following terms with the appropriate definition:

A spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted trial balance and financial statements.

Permanent accounts

Entries recorded at the end of each accounting period to transfer end-of-period balances in revenue, expense and dividends accounts to retained earnings.

Accounting cycle

Recurring steps performed each accounting period, starting with analyzing and recording of transactions in the journal and continuing through the post-closing trial balance.

Income summary

Correct Answer:

Verified

A spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted trial balance and financial statements.

Entries recorded at the end of each accounting period to transfer end-of-period balances in revenue, expense and dividends accounts to retained earnings.

Recurring steps performed each accounting period, starting with analyzing and recording of transactions in the journal and continuing through the post-closing trial balance.

The time span from when cash is used to acquire goods and services until cash is received from the sale of those goods and services.

A temporary account used only in the closing process and to where the balances of revenue and expense accounts are transferred.

A list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

Statements that show the effects of proposed transactions as if the transactions had already occurred.

Accounts that reflect on activities related to one or more future periods; they include all balance sheet accounts.

Analyses and other informal reports prepared by accountants when organizing the information presented in reports and financial statements.

Accounts that are used to record transactions and events for one accounting period only; they include revenues, expenses and dividends.

(Matching)

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Question 153

Net income for a period will be overstated if accrued salaries are not recorded at the end of the accounting period.

(True/False)

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Question 154

The time period assumption presumes that an organization's activities can be divided into specific time periods.

(True/False)

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Question 155

A company shows a $600 balance in prepaid insurance in the Unadjusted Trial Balance columns of the work sheet.The Adjustments columns show expired insurance of $200.This adjusting entry results in:

(Multiple Choice)

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Question 156

Based on the following information,what would be the total on the credit side of a post- closing trial balance,assuming all accounts have a normal balance?

(Multiple Choice)

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Question 157

A company had revenue of $550,000,rent expense of $100,000,utility expense of $10,000,salary expense of $125,500,depreciation expense of $39,000,advertising expense of $40,200,dividends in the amount of $183,000,and an ending balance in retained earnings of $402,300.What was the beginning retained earnings for the period?

(Multiple Choice)

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Question 158

One-half of the landscaping work related to $35,000 cash received in advance is performed this period.(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?

(Multiple Choice)

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Question 159

Which of the following accounts would not be on the post- closing trial balance?

(Multiple Choice)

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Question 160

A company had no office supplies at the beginning of the year.During the year,the company purchased $250 worth of office supplies.On December 31,$75 worth of office supplies remained.How much should the company report as office supplies expense for the year?

Profit margin is defined as:

All necessary numbers to prepare the income statement can be taken from the income statement columns of the work sheet,including the net income or net loss.

On October 1 of the current year,Morton Company paid $9,600 cash for a one-year insurance policy that took effect on that day.On the date of the payment,Morton recorded the following entry: Prepare the required adjusting entry at December 31 of the current year.

The Prepaid Insurance account had an unadjusted balance of $8,000 balance on December 31,2014.An analysis of insurance policies shows that $2,000 of unexpired insurance benefits remain at December 31,2014.How would the company record the related adjusting entry at December 31,2104?

A ____________________ is useful in preparing interim statements and in showing the effects of proposed transactions.

During its first year of operations,Able Co.purchased $39,600 worth of supplies.Atthe end of the year,the balance sheet showed a balance of $1,760 in the Supplies account.Prepare the necessary adjusting entry.

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of an asset.

List the steps in the accounting cycle.

The accrual basis of accounting is an accounting system in which revenues are reported as earned when cash is received.

Net income for a period will be overstated if accrued salaries are not recorded at the end of the accounting period.

The time period assumption presumes that an organization's activities can be divided into specific time periods.

A company shows a $600 balance in prepaid insurance in the Unadjusted Trial Balance columns of the work sheet.The Adjustments columns show expired insurance of $200.This adjusting entry results in:

Based on the following information,what would be the total on the credit side of a post- closing trial balance,assuming all accounts have a normal balance?

Which of the following accounts would not be on the post- closing trial balance?

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

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