Exam 3: Adjusting Accounts for Financial Statements

A company's post-closing trial balance has total debits of $40,560 and total credits of $40,650.Accordingly,the company should review for errors in the closing process.

Normally closing entries are first entered in the general journal and then posted to the work sheet.

Flagg records adjusting entries at its December 31 year end.At December 31,employees had earned $12,000 of unpaid and unrecorded salaries.The next payday is January 3,at which time $30,000 will be paid.Prepare the January 1 journal entry to reverse the effect of the December 31 salary expense accrual.

Intangible assets are assets that are long-term,have physical form,and are used to produce or sell products and services.

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). -Prepaid Rent

A company's employees earn a total of $10,000 per week for a 5-day week that begins on Monday.December 31 of Year 1 is a Monday,and all employees worked that day. a)Prepare the required adjusting journal entry to record accrued salaries on December 31,Year 1. b)Prepare the journal entry to record the payment of salaries on January 4,Year 2.(Assume no reversing entries were made).

A company issued financial statements for the year ended December 31,but failed to include the following adjusting entries: A.Accrued interest revenue earned of $1,200. B.Depreciation expense of $4,000. C.Portion of prepaid insurance expired (an asset)used $1,100. D.Accrued taxes of $3,200. E.Revenues of $5,200,originally recorded as unearned,have been earned by the end of the year. Determine the correct amounts for the December 31 financial statements by completing the following table:

All of the following are true regarding prepaid expenses except:

The adjusted trial balance contains information pertaining to:

The adjusting entry to record an accrued revenue is:

On September 1,Kennedy Company loaned $100,000,at 12% annual interest,to a customer.Interest and principal will be collected when the loan matures one year from the issue date.Assuming adjustments are only made at year-end,what is the adjusting entry for accruing interest that Kennedy would need to make on December 31,the calendar year-end

Match the following terms with the appropriate definition. -An account linked with another account and having an opposite normal balance.

Which of the following is classified as a plant asset?

What is the purpose of closing entries? Describe the closing process.

A worksheet can be helpful in showing the effects of proposed or "what if" transactions but not in helping to prepare interim financial statements.

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

Closing entries are necessary so that retained earnings will begin each period with a zero balance.

Match the following terms with the appropriate definition. -Aims to record expenses in the same accounting period as the revenues that are earned as a result of those expenses.

A company performs 20 days of work on a 30-day contract before the end of the year.The total contract is valued at $6,000 and payment is not due until the contract is fully completed.The required adjusting entry includes a $4,000 debit to Unearned Revenue.

Accounts that appear in the balance sheet are often called temporary (nominal)accounts.