Question 1

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

Accepted Answer

A)  Matching principle 
B)  Revenue recognition principle 
C)  Time period principle 
D)  Accrual reporting principle 
E)  Going-concern principle 
A)  Matching principle 
B)  Revenue recognition principle 
C)  Time period principle 
D)  Accrual reporting principle 
E)  Going-concern principle

Question 2

The recurring steps performed each accounting period,starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance,are referred to as the:

Accepted Answer

A)  Accounting period 
B)  Operating cycle 
C)  Accounting cycle 
D)  Closing cycle 
E)  Natural business year 
A)  Accounting period 
B)  Operating cycle 
C)  Accounting cycle 
D)  Closing cycle 
E)  Natural business year

Question 3

The following items appeared on a company's December 31 work sheet for the current period.Based on the following information,what is net income for the current period?

Accepted Answer

A)  $1,400 
B)  $1,855 
C)  $1,905 
D)  $2,060 
E)  $4,670 
A)  $1,400 
B)  $1,855 
C)  $1,905 
D)  $2,060 
E)  $4,670

Question 4

Prepaid expenses,depreciation,accrued expenses,unearned revenues,and accrued revenues are all examples of:

Accepted Answer

A)  Items that require contra accounts. 
B)  Items that require adjusting entries. 
C)  Asset and equity. 
D)  Asset accounts. 
E)  Income statement accounts. 
A)  Items that require contra accounts. 
B)  Items that require adjusting entries. 
C)  Asset and equity. 
D)  Asset accounts. 
E)  Income statement accounts.

Question 5

The Income Summary account is closed to the retained earnings account.

Accepted Answer

A) True 
 B)False

Question 6

Ben and Jerry's had total assets of $149,501,000,net income of $6,242,000,and net sales of $209,203,000.Profit margin was 2.98%.

Accepted Answer

A) True 
 B)False

Question 7

Discuss the importance of periodic reporting and the time period assumption.

Accepted Answer

For information to be valuable to decisi

Question 8

What is the usual order in which financial statements are prepared from the adjusted trial balance? Why are they prepared in that order?

Accepted Answer

The income statement is prepared first.T

Question 9

__________________________ is the process of allocating the cost of plant assets to their expected useful lives.

Accepted Answer

The answer of __________________________ is the process of allocating the...

Question 10

Which of the following assets is not depreciated?

Accepted Answer

A)  Store fixtures 
B)  Computers 
C)  Land 
D)  Buildings 
E)  Vehicles 
A)  Store fixtures 
B)  Computers 
C)  Land 
D)  Buildings 
E)  Vehicles

Question 11

For a corporation,the equity section is divided into two main accounts: Common Stock and Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 12

On April 1,2014,a company paid $1,350 premium on a three-year insurance policy with benefits beginning on that date.What will be the insurance expense on the annual income statement for the year ended December 31,2014?

Accepted Answer

A)  $1,350 
B)  $450 
C)  $1,012.50 
D)  $337.50 
E)  $37.50 
A)  $1,350 
B)  $450 
C)  $1,012.50 
D)  $337.50 
E)  $37.50

Question 13

The following information is available for the Travis Travel Agency.After the closing entries have been journalized and posted,what will be the balance in the Retained Earnings account?
$$\begin{array} { | l | r | } 
\hline \text { Total revenues } & \$ 125,000 \
\hline \text { Total expenses } & 60,000 \
\hline \text { Retained earnirgs } & 8 0 , 0 0 0 \
\hline \text { Dividends } & 15,000 \
\hline
\end{array}$$

Accepted Answer

A)  $65,000 
B)  $80,000 
C)  $130,000 
D)  $145,000 
E)  $280,000 
A)  $65,000 
B)  $80,000 
C)  $130,000 
D)  $145,000 
E)  $280,000

Question 14

On May 1,2014,Giltus Advertising Company received $1,500 from Julie Bee for advertising services to be completed April 30,2015.The cash receipt was recorded as unearned fees.At December 31,2014,$500 of the fees had been earned.The adjusting entry on December 31,2014,should include:

Accepted Answer

A)  A debit to Unearned Fees for $500. 
B)  A credit to Unearned Fees for $500. 
C)  A credit to Earned Fees for $1,000. 
D)  A debit to Earned Fees for $1,000. 
E)  A debit to Earned Fees for $500. 
A)  A debit to Unearned Fees for $500. 
B)  A credit to Unearned Fees for $500. 
C)  A credit to Earned Fees for $1,000. 
D)  A debit to Earned Fees for $1,000. 
E)  A debit to Earned Fees for $500.

Question 15

Day Co.leases an office to a tenant at the rate of $5,000 per month.The tenant contacted Day and arranged to pay the rent for December 2014 on January 8,2015.Day agrees to this arrangement.
a.Prepare the journal entry that Day must make at December 31,2014,to record the accrued rental revenue.
b.Prepare the journal entry to record the receipt of the rent on January 8,2015.

Accepted Answer

a.
 \[\begin{array} { | l | l | r | r |

Question 16

A company issued financial statements for the year ended December 31 but failed to include the following adjusting entries:
A. Accrued service fees earned of $2,200.
B. Depreciation expense of $8,000.
C. Portion of office supplies (an asset) used, $3,100.
D. Accrued salaries of $5,200.
E. Revenues of $7,200, 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:
 $\begin{array}{|l|l|l|l|l|}
\hline& \text { Assets } & \text { Liabilities } & \text { Equity } & \text { Net Income }\
\hline \text { Reported amounts } & \$ 350,000 & \$ 200,000 & \$ 150,000 & \$ 70,000 \
\hline \begin{array}{l}
\text { Add (subtract) to correct for } \
\text { item }
\end{array} & & & & \
\hline \text { A } & & & & \
\hline \text { B } & & & & \
\hline \text { C } & & & & \
\hline \text { D } & & & & \
\hline \text { E } & & & & \
\hline \text { Corrected amounts } & \$ & \$ & \$ & \$\
\hline 
\end{array}$

Accepted Answer

None

Question 17

A company had revenue of $550,000,rent expense of $100,000,utility expense of $10,000,salary expense of $125,500,depreciation expense of $39,000,advertising expense of $40,200,dividends in the amount of $183,000,and an ending balance in retained earnings of $402,300.What is the appropriate journal entry to close income summary?

Accepted Answer

A)  Income Summary…………….$235,300 Retained Earnings………………..$235,300 
B)  Retained Earnings……………$235,300 Income Summary………………..$235,300 
C)  Income Summary…………….$52,300 Retained Earnings………………..$52,300. 
D)  Retained Earnings…………….$52,300 Income Summary………………...$52,300 
E)  Income Summary……………...$314,700 Retained Earnings…………………$314,700 
A)  Income Summary…………….$235,300 Retained Earnings………………..$235,300 
B)  Retained Earnings……………$235,300 Income Summary………………..$235,300 
C)  Income Summary…………….$52,300 Retained Earnings………………..$52,300. 
D)  Retained Earnings…………….$52,300 Income Summary………………...$52,300 
E)  Income Summary……………...$314,700 Retained Earnings…………………$314,700

Question 18

A classified balance sheet:

Accepted Answer

A)  Measures a company's ability to pay its bills on time. 
B)  Organizes assets and liabilities into important subgroups. 
C)  Presents revenues, expenses, and net income. 
D)  Reports operating, investing, and financing activities. 
E)  Reports the effect of profit and dividends on retained earnings. 
A)  Measures a company's ability to pay its bills on time. 
B)  Organizes assets and liabilities into important subgroups. 
C)  Presents revenues, expenses, and net income. 
D)  Reports operating, investing, and financing activities. 
E)  Reports the effect of profit and dividends on retained earnings.

Question 19

Describe a worksheet and explain why it is useful.

Accepted Answer

A worksheet is a useful tool for organiz

Question 20

Under the cash basis of accounting,no adjustments are made for prepaid,unearned,and accrued items.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting Accounts and Preparing Financial Statements

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

The recurring steps performed each accounting period,starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance,are referred to as the:

The following items appeared on a company's December 31 work sheet for the current period.Based on the following information,what is net income for the current period?

Prepaid expenses,depreciation,accrued expenses,unearned revenues,and accrued revenues are all examples of:

The Income Summary account is closed to the retained earnings account.

Ben and Jerry's had total assets of $149,501,000,net income of $6,242,000,and net sales of $209,203,000.Profit margin was 2.98%.

Discuss the importance of periodic reporting and the time period assumption.

What is the usual order in which financial statements are prepared from the adjusted trial balance? Why are they prepared in that order?

__________________________ is the process of allocating the cost of plant assets to their expected useful lives.

Which of the following assets is not depreciated?

For a corporation,the equity section is divided into two main accounts: Common Stock and Retained Earnings.

On April 1,2014,a company paid $1,350 premium on a three-year insurance policy with benefits beginning on that date.What will be the insurance expense on the annual income statement for the year ended December 31,2014?

The following information is available for the Travis Travel Agency.After the closing entries have been journalized and posted,what will be the balance in the Retained Earnings account? Total revenues \ 125,000 Total expenses 60,000 Retained earnirgs 80,000 Dividends 15,000

On May 1,2014,Giltus Advertising Company received $1,500 from Julie Bee for advertising services to be completed April 30,2015.The cash receipt was recorded as unearned fees.At December 31,2014,$500 of the fees had been earned.The adjusting entry on December 31,2014,should include:

A classified balance sheet:

Describe a worksheet and explain why it is useful.

Under the cash basis of accounting,no adjustments are made for prepaid,unearned,and accrued items.

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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