Exam 3: Adjusting Accounts for Financial Statements

Classified balance sheets commonly include the following categories: A. Current assets B. Long-term investments C. Plant assets D. Intangible assets E. Current liabilities F. Long-term liabilities G. Equity. Match the typical classification of each item below with its correct balance sheet category (A through G). -Long-term Note Payable

Match the following terms with the appropriate definition. -Assets that are held for more than the longer of one year or the operating cycle of the company and are not used in operations.

On the work sheet,net income is entered in the Income Statement Credit column as well as the Balance Sheet or Statement of Retained Earnings Credit column.

On December 31,Chu Company had performed $3,000 of management services for clients that had not yet been billed.Prepare Chu's adjusting entry to record these fees earned.

Adjusting entries are made after the preparation of financial statements.

The steps in the closing process are (1)close credit balances in revenue accounts to Income Summary; (2)close debit balances in expense accounts to Income Summary; (3)close Income Summary to Retained Earnings; (4)close Dividends to Retained Earnings.

Based on the unadjusted trial balance for Highlight Styling and the adjusting information given below,prepare the adjusting journal entries for Highlight Styling. Highlight Stylings' unadjusted trial balance for the current year follows: Additional information: a.An insurance policy examination showed $1,040 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,$2,020. e.A beautician is behind on space rental payments,and this $200 of accrued revenues was unrecorded at the time the trial balance was prepared. f.$800 of the Unearned Rent account balance was still unearned 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.

Adjusting is a three-step process (1)________, (2)________,and (3)________.

How is the current ratio calculated? How is it used to evaluate a company?

Using the information given below,prepare an income statement and statement of retained earnings for Rapid Car Services from the adjusted trial balance. Rapid Car Services Adjusted Trial Balance For the year ended December 31 Cash \ 33,000 Accounts receivable 14,200 Office supplies . 1,700 Vehicles 100,000 Accumulated depreciation - Vehicles 45,000 Accounts payable 11,500 Common stock 20,000 Retained earnings 51,900 Dividends 40,000 Fees earned 155,000 Rent expense 13,000 Office supplies expense 2,000 Utilities expense 2,500 Depreciation Expense - Vehicles 15,000 Salary expense 50,000 Fuel expense 12.000 Totals

If a company failed to make the end-of-period adjustment to move the amount of management fees that were earned from the Unearned Management Fees account to the Management Fees Revenue account,this omission would cause:

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

A balance sheet that places the assets above the liabilities and equity is called a(n):

Using the information given below,prepare a balance sheet for Rapid Car Services from the adjusted trial balance. Rapid Car Services Adjusted Trial Balance For the year ended December 31 Cash \ 33,000 Accounts receivable 14,200 Office supplies . 1,700 Vehicles 100,000 Accumulated depreciation - Vehicles 45,000 Accounts payable 11,500 Common stock 20,000 Retained earnings 51,900 Dividends 40,000 Fees earned 155,000 Rent expense 13,000 Office supplies expense 2,000 Utilities expense 2,500 Depreciation Expense - Vehicles 15,000 Salary expense 50,000 Fuel expense 12.000 Totals

Match the following terms with the appropriate definition. -The owners' claims on the assets of a company.

If a company records prepayment of expenses in an asset account,the adjusting entry when all or part of the prepaid asset is used or expired would:

Recording revenues early overstates current-period income; recording revenues late understates current period income.

The accounting principle that requires revenue to be recorded when earned is the:

Asset and liability balances are transferred from the adjusted trial balance to the balance sheet.

List and explain the steps in preparing a 10-column worksheet.