A) Affect only income statement accounts. B) Affect only balance sheet accounts. C) Affect both income statement and balance sheet accounts. D) Affect only cash flow statement accounts. E) Affect only equity accounts. A) Affect only income statement accounts. B) Affect only balance sheet accounts. C) Affect both income statement and balance sheet accounts. D) Affect only cash flow statement accounts. E) Affect only equity accounts.

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.) $\begin{array}{|l|r|} \hline \text { Retained earnings } & \$ 7,000 \\ \hline \text { Dividends } & 9,600 \\ \hline \text { Service Revenue } & 29,000 \\ \hline \text { Rent expense } & 3,600 \\ \hline \text { Salaries expense } & 7,200 \\ \hline \text { Insurance expense } & 920 \\ \hline \text { Depr. Expense - equipment } & 500 \\ \hline \text { Accum depr. - equipment } & 1,500\\ \hline \end{array}$

A) $16,780 debit B) $7,180 credit C) $16,780 credit D) $18,280 credit E) $23,780 credit A) $16,780 debit B) $7,180 credit C) $16,780 credit D) $18,280 credit E) $23,780 credit

Exam 3: Adjusting Accounts and Preparing Financial Statements

Use the following partial work sheet from Matthews Lanes to prepare its income statement,statement of changes in retained earnings,and a balance sheet

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Question 181

On October 15,a company received $15,000 cash as a down payment on a consulting contract.The amount was credited to Unearned Consulting Revenue.By October 31,10% of the services required by the contract were completed.The company will record consulting revenue of $1,500 from this contract for October.

(True/False)

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Question 182

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

(Multiple Choice)

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Question 183

The alternative method of accounting for prepayments

(Multiple Choice)

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Question 184

When expenses exceed revenues,there is a net loss and the Income Summary account would have a credit balance.

(True/False)

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Question 185

Adjusting entries:

(Multiple Choice)

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Question 186

Match the following definitions and terms

Statements that show the effects of proposed transactions as if the transactions had already occurred.

Working papers

Entries recorded at the end of each accounting period to transfer end-of-period balances in revenue, expense and dividends accounts to retained earnings.

Operating cycle

A spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted trial balance and financial statements.

Income summary

Correct Answer:

Verified

Statements that show the effects of proposed transactions as if the transactions had already occurred.

Entries recorded at the end of each accounting period to transfer end-of-period balances in revenue, expense and dividends accounts to retained earnings.

A spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted trial balance and financial statements.

The time span from when cash is used to acquire goods and services until cash is received from the sale of those goods and services.

Accounts that are used to record transactions and events for one accounting period only; they include revenues, expenses and dividends.

Accounts that reflect on activities related to one or more future periods; they include all balance sheet accounts.

Recurring steps performed each accounting period, starting with analyzing and recording of transactions in the journal and continuing through the post-closing trial balance.

Analyses and other informal reports prepared by accountants when organizing the information presented in reports and financial statements.

A list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

A temporary account used only in the closing process and to where the balances of revenue and expense accounts are transferred.

(Matching)

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Question 187

Unearned revenue is reported on the financial statements as:

(Multiple Choice)

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Question 188

On December 31,Connelly Company had performed $5,000 of management services for clients that had not yet been billed.Prepare Connelly's adjusting entry to record these fees earned.

(Essay)

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Question 189

Prepare general journal entries on December 31 to record the following unrelated year-end adjustments. a.Estimated depreciation on office equipment for the year,$4,000. b.The Prepaid Insurance account has a $3,680 debit balance before adjustment.An examination of insurance policies shows $950 of insurance expired. c.The Prepaid Insurance account has a $2,400 debit balance before adjustment.An examination of insurance policies shows $600 of unexpired insurance. d.The company has three office employees who each earn $100 per day for a five-day workweek that ends on Friday.The employees were paid on Friday,December 26,and have worked full days on Monday,Tuesday,and Wednesday,December 29,30,and 31. e.On November 1,the company received six months' rent in advance from a tenant whose rent is $700 per month.The $4,200 was credited to the Unearned Rent account. f.The company collects rent monthly from its tenants.One tenant whose rent is $750 per month has not paid his rent for December.

(Essay)

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Question 190

The Income Summary account is used to close the permanent accounts at the end of an accounting period.

(True/False)

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Question 191

July 31,2013,the end of the quarter is on a Wednesday.Employees get paid each Friday for the week worked.Abel Co.has five employees who earn $100 per day each.Make the necessary adjusting journal entry for June 30.

(Essay)

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Question 192

An asset that cost $50,000 was purchased on January 1.The asset has an estimated useful life of three years and an estimated salvage value of $3,200.Using the straight-line method,prepare the necessary adjusting journal entry for the end of the year.

(Essay)

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Question 193

Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

(True/False)

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Question 194

Since the revenue recognition principle requires that revenues be earned,there are no unearned revenues in accrual accounting.

(True/False)

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Question 195

The Retained Earnings account has a credit balance of $17,000 before closing entries are made.If total revenues for the period are $55,200,total expenses are $39,800 and dividends are $9,000,what is the ending balance in the Retained Earnings account after all closing entries are made?

(Multiple Choice)

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Question 196

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees.If the company fails to make the end-of-period adjusting entry to record the portion of these fees that has been earned,one effect will be:

(Multiple Choice)

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Question 197

Which of the following accounts would not be on the post- closing trial balance?

(Multiple Choice)

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Question 198

Western Company has an annual reporting period that runs from July 1 through June 30.Based on this information,which of the following is a true statement?

(Multiple Choice)

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Question 199

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.) Retained earnings \ 7,000 Dividends 9,600 Service Revenue 29,000 Rent expense 3,600 Salaries expense 7,200 Insurance expense 920 Depr. Expense - equipment 500 Accum depr. - equipment 1,500

(Multiple Choice)

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Question 200

Showing 181 - 200 of 236

Exam 3: Adjusting Accounts and Preparing Financial Statements

Use the following partial work sheet from Matthews Lanes to prepare its income statement,statement of changes in retained earnings,and a balance sheet

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

The alternative method of accounting for prepayments

When expenses exceed revenues,there is a net loss and the Income Summary account would have a credit balance.

Adjusting entries:

Unearned revenue is reported on the financial statements as:

On December 31,Connelly Company had performed $5,000 of management services for clients that had not yet been billed.Prepare Connelly's adjusting entry to record these fees earned.

The Income Summary account is used to close the permanent accounts at the end of an accounting period.

July 31,2013,the end of the quarter is on a Wednesday.Employees get paid each Friday for the week worked.Abel Co.has five employees who earn $100 per day each.Make the necessary adjusting journal entry for June 30.

An asset that cost $50,000 was purchased on January 1.The asset has an estimated useful life of three years and an estimated salvage value of $3,200.Using the straight-line method,prepare the necessary adjusting journal entry for the end of the year.

Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

Since the revenue recognition principle requires that revenues be earned,there are no unearned revenues in accrual accounting.

The Retained Earnings account has a credit balance of $17,000 before closing entries are made.If total revenues for the period are $55,200,total expenses are $39,800 and dividends are $9,000,what is the ending balance in the Retained Earnings account after all closing entries are made?

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees.If the company fails to make the end-of-period adjusting entry to record the portion of these fees that has been earned,one effect will be:

Which of the following accounts would not be on the post- closing trial balance?

Western Company has an annual reporting period that runs from July 1 through June 30.Based on this information,which of the following is a true statement?

Introducing Accounting in Business

Analyzing and Recording Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing

Activity-Based Costing and Analysis

Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Decentralization and Performance Measurement

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Accounting With Special Journals

Time Value of Money

Investments and International Operations

Accounting for Partnerships

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