Exam 3: Adjusting Accounts for Financial Statements

Flo's Flowers' current ratio is 1.3.The industry average for the current ratio is 1.2.This indicates that Flo's can cover its short term liabilities with its short term assets.

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

Current liabilities are cash and other resources that are expected to be sold,collected or used within one year or the company's operating cycle whichever is longer.

The length of time covered by a set of periodic financial statements,primarily a year for most companies,is referred to as the:

The assets section of a classified balance sheet usually includes the subgroups:

Permanent accounts carry their balances into the next accounting period.

All of the following statements regarding profit margin are true except:

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

The cash basis of accounting recognizes revenues when cash payments from customers are received.

Which of the following accounts would be included in a post-closing trial balance?

An optional columnar working paper used to prepare a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements is a(n):

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

Match the following terms with the appropriate definition. -A journal entry made at the end of an accounting period to reflect a transaction or event that is not yet recorded; affects one or more income statement account and one or more balance sheet account,but never cash.

Explain the difference between temporary and permanent accounts.

An annual reporting period consisting of any twelve consecutive months is known as:

A company entered into a 2-month contract for $50,000 on April 1.It earned $25,000 of the contract services in April and billed the customer.The company should recognize the revenue when it receives the customer's check.

An unclassified balance sheet provides more information to users than a classified balance sheet.

Why are financial statements prepared in a specific order?What is the usual order in which financial statements are prepared from the adjusted trial balance?

The last four steps in the accounting cycle include preparing the adjusted trial balance,preparing financial statements,and recording closing and adjusting entries.

In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column.The Balance Sheet columns will balance on completing the work sheet but with the wrong net income,if the amount sorted in error is: