Exam 3: The Adjusting Process

On 1 January 2017,the Accounts receivable of Linda Company had a debit balance of $170,000.During January,the company provided services for $400,000 on account.The company collected $240,000 from its customers on account in January.What was the ending balance in the Accounts receivable account at the end of January?

Which of the following entries would be recorded if a company is using the cash-basis method of accounting?

Accrual accounting records transactions ONLY when cash is received or paid.

Al Shonky wants to improve his profit to support a bank loan application.How might he achieve this ethically?

If a company is using the cash-basis method of accounting,when is revenue recorded?

Which of the following accounts would NOT be included in the adjusting entries made at the end of an accounting period?

Which of the following strategies may be considered an unethical way to increase reported profit?

The financial statements should be prepared in this order: 1)income statement,2)balance sheet and 3)statement of changes in equity.

Ursula Tax Planning Service has the following plant assets: Communications equipment: Cost,$7120 with useful life of eight years; Furniture: Cost,$24,000 with useful life of 12 years; and Computer: Cost,$13,600 with useful life of four years. Ursula's monthly depreciation expense calculated using the straight-line method is: (Assume salvage value of all the assets to be zero)

Which of the following lists a company's assets,liabilities and equity to report its financial position?

Accrual accounting requires adjusting entries at regular intervals throughout the accounting period.

Education for All sells tickets in advance for their weekly productions and records the proceeds as Unearned revenue.At the end of each month,Education for All makes an adjusting entry to account for the tickets used during the month (ticket revenue).On 1 March,the Unearned revenue account had a credit balance of $5000.During March,they sold 600 tickets at $30 each and 550 tickets were used during the month.What is the balance in Unearned revenue at the end of March?

Under cash-basis accounting,an expense is recorded ONLY when cash is paid out.

Entries that record an expense before the cash is paid are:

Which of the following entries would be recorded ONLY if a company is using the accrual method of accounting?

Prepaid insurance is an asset account.

In cash-basis accounting,revenue is recognised when cash is received and expenses are recognised when they are paid.

If a company fails to make an adjusting entry for accrued revenues,the profit will be overstated.

Under accrual basis accounting,an expense is recorded ONLY when the cash is paid out.

Classic Artists' Services has hired a maintenance man to maintain a building they use for instruction.He will begin work on 1 February and work through till 31 May.Classic Artists' will pay the maintenance man $16,000 at the end of May.It accrues Maintenance expense at the end of every month.What is the balance in the Accounts payable account for amounts owed to the maintenance man at the end of March?