Exam 3: Adjusting Accounts for Financial Statements

The ________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

After preparing and posting the closing entries for revenues and expenses,the income summary account has a debit balance of $33,000.The entry to close the income summary account will be:

Using the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" for overstatements,a "-" for understatements,and a "0" for no effect.The first one is provided as an example.

List the three-steps of the adjusting process.

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.Which of the following statements is true?

Match the following terms with the appropriate definition. -A ratio that is used to help evaluate a company's ability to pay its short-term obligations, calculated by dividing current assets by current liabilities.

Match the following terms with the appropriate definition. -The process of allocating the costs of long-term assets to the income statement over their expected useful lives.

Using the selected information given below for Luk Company,calculate the return on assets,debt ratio,and profit margin.Comment on the results of operations and the financial position of the company for the year. Sales 1,050,000 Expenses 795,000 Assets (beginning of the year) 1,500,000 Assets (end of the year) 1,900,000 Liabilities 850,000

Given the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" followed by the amount for overstatements,a "-" followed by the amount for understatements,and a "0" for no effect.The first one is done as an example. Ex.Failed to recognize that $600 of unearned revenues,previously recorded as liabilities,had been earned by year-end. 1.Failed to accrue interest expense of $200. 2.Forgot to record $7,700 of depreciation on machinery. 3.Failed to accrue $1,300 of revenue earned but not collected. Error Revenues Expenses Assets Liabilities Equity EX -$600 0 0 +$600 -$600 1.________ ________ ________ ________ ________ 2.________ ________ ________ ________ ________ 3.________ ________ ________ ________ ________

Which of the following accounts showing a balance on the post-closing trial balance indicate an error?

What is the proper adjusting entry at December 31,the end of the accounting period,if the balance in the prepaid insurance account is $7,750 before adjustment,and the unexpired amount per analysis of policies is,$3,250?

Gracio Co.had the following transactions in the last two months of its year ended December 31.Prepare entries for these transactions under the method that records prepaid expenses as expenses and records unearned revenues as revenues.Also prepare adjusting entries at the end of the year. Nov. 1 Paid \ 11,400 for 12 months of insurance coverage through October 31 of next 5 Received \ 8,000 cash for future services to be provided to a customer. 7 Paid \ 10,000 for future advertising. Dec. 31 A portion of the insurance paid for on November 1 has expired. No adjustment was made in November to the insurance account. 31 Services of \ 2,500 are not yet provided to the customer who paid on November 5. 31 Of the advertising paid for on November 7,\ 1,500 is not yet used.

On a work sheet,if the Debit total exceeds the Credit total of the Income Statement columns,a net loss is indicated.

A company had $7,000,000 in net income for the year.Its net sales were $15,200,000 for the same period.Calculate its profit margin.

Unearned revenue is reported in the financial statements as:

A company paid $9,000 for a twelve-month insurance policy on February 1.The policy coverage began on February 1.On February 28,$750 of insurance expense must be recorded.

On May 1,Sellers Marketing Company received $1,500 from Franco Marcelli for a marketing campaign effective from May 1 this year to April 30 of the following year.The Cash receipt was recorded as unearned fees and at year-end on December 31,$1,000 of the fees had been earned.Assuming adjustments are only made at year-end,the adjusting entry on December 31 would be:

The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

Kline Company accrued wages of $7,350 that were earned by employees unpaid at the year-end.Assuming Kline uses reversing entries,which of the following entries correctly reverses the accrued wages at the beginning of the following year?

Accrued revenues at the end of one accounting period are expected to result in cash collections in a future period.