Exam 3: Adjusting Accounts for Financial Statements

On December 31,the balance in the Prepaid Insurance account was $4,500,which is the remaining balance of a 12-month policy purchased on October 31 in the current year.How much did this policy originally cost?

Reebok's net income was $180,000; its total assets were $1,050,000; and its net sales were $3,500,000.Calculate the company's profit margin ratio.

What is an adjusted trial balance? Why is it prepared?

The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses,not when cash is paid.

The difference between the cost of an asset and the accumulated depreciation for that asset is called:

Unearned revenue is reported on the financial statements as:

Plant assets and intangible assets are usually long-term assets that are used to produce or sell products and services.

The dividends account is normally closed by debiting it.

A company's fiscal year must correspond with the calendar year.

Western Company has an annual reporting period that runs from July 1 through June 30.Based on this information,which of the following is a true statement?

During the current year ended December 31,clients paid fees in advance for accounting services amounting to $25,000.These fees were recorded in an account called Unearned Accounting Fees.If $3,500 of these fees are still unearned on December 31 of this year,prepare the December 31 adjusting entry.

The Unadjusted Trial Balance columns of a company's work sheet show the balance in the Office Supplies account as $750.The Adjustments columns show that $425 of these supplies was used during the period.The amount shown as Office Supplies in the Balance Sheet columns of the work sheet is:

Before an adjusting entry is made to recognize expired insurance,Prepaid Insurance and Insurance Expense are both overstated.

Calculate the current ratio in each of the following separate cases.

Following are selected accounts and their balances for a company after the adjustments as of May 31,the end of its fiscal year.(All accounts have normal balances.) Prepare all the necessary closing entries for this company.

Statements that show the effects of proposed transactions as if the transactions had already occurred are called:

Accrual accounting and the adjusting process rely on two principles: the ___________________ principle and the ________________________ principle.

Black Company's unadjusted and adjusted trial balances on December 31 of the current year are as follows Present the four adjusting journal entries that were recorded by Black Company.

Adjusting entries result in a better matching of revenues and expenses.

Use the following information to prepare the adjusted trial balance for Bella's Beauty Salon.Bella's Beauty Salon's unadjusted trial balance for the current year follows: Additional information: a.An insurance policy examination showed $1,240 of expired insurance. b.An inventory count showed $210 of unused shop supplies still available. c.Depreciation expense on shop equipment,$350. d.Depreciation expense on the building,$2,220. e.A beautician is behind on space rental payments and $200 of accrued revenue was unrecorded at the time the trial balance was prepared. f.$800 of the Unearned Rent account balance was earned by year-end. g.The one employee,a receptionist,works a five-day workweek at $50 per day.The employee was paid last week but has worked four days this week for which she has not been paid. h.Three months' property taxes,totaling $450,have accrued.This additional amount of property taxes expense has not been recorded. i.One month's interest on the note payable,$600,has accrued but is unrecorded.