Question 1

The current ratio is computed by dividing current liabilities by current assets.

Accepted Answer

A) True 
 B)False  False

Question 2

How is the profit margin calculated? Discuss its use in analyzing a company's performance.

Accepted Answer

Profit margin is calculated by dividing net income by net sales.The resulting percent reflects the percent of profit a company makes for every dollar in sales.The profit margin ratio is useful in comparing a company's performance to that of its competitors and as a relative measure of the company's performance across periods.

Question 3

On the work sheet,net income is entered in the Income Statement Credit column as well as the Balance Sheet Debit column.

Accepted Answer

A) True 
 B)False  False

Question 4

The following information is available for the Wooden Company:
 $$\begin{array} { | l | r | r | r | } 
\hline & 2010 & 2009 &  { 2008 } \
\hline \text { Net income } & 2 , 6 3 0 & 2 , 1 0 0  &  1 , 8 5 0 \
\hline \text { Net Sales } & 3 6 , 5 0 0 &3 2 , 8 5 0 & 3 1 , 2 0 0 \
\hline \text { Total assets } & 400,000 & 3 8 5 , 0 0 0&3 5 0 , 0 0 0 \
\hline
\end{array}$$ 
From the information provided,calculate Wooden's profit margin ratio for each of the three years.Comment on the results,assuming that the industry average for the profit margin ratio is 6% for each of the three years.

Accepted Answer

Analysis comment: The profit margin has

Question 5

Shown below are selected data taken from the unadjusted and adjusted trial balances for the Simonson Company for the current year ended December 31.Determine the items A through H below.

Accepted Answer

a. No adjustments to cash
b. $700 - Off

Question 6

Under the alternative method for accounting for unearned revenues,which of the following pairs of journal entry formats is correct?
$$\begin{array} { | c | c } 
\hline \text { Initial Entry } & \text { Adjusting Entry } \
\hline
\end{array}$$
A.
$\begin{array}{|c|c|}
\hline \text { Cash } & \text { Unearned Consulting Revenue } \
\hline \text { Unearned Consulting Revenue } & \text { Consulting Revenue }\
\hline
\end{array}$
B.
$\begin{array}{|c|c|}
\hline \text { Cash } & \text { Consulting Revenue } \
\hline \text { Consulting Revenue } & \text { Unearned Revenue }\
\hline
\end{array}$
C.
$\begin{array}{|c|c|}
\hline\text { Cash } & \text { Unearned Revenue } \
\hline \text { Unearned Revenue } & \text { Cash }\
\hline
\end{array}$
D.
$\begin{array}{|c|c|}
\hline \text { Consulting Revenue } & \text { Unearned Revenue } \
\hline \text { Cash } & \text { Consulting Revenue }\
\hline 
\end{array}$
E.
$\begin{array}{|c|c|}
\hline\text { Cash } & \text { Consulting Revenue } \
\hline \text { Unearned Revenue } & \text { Unearned Revenue }\
\hline
\end{array}$

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
E) Option E 
A) Option A 
B) Option B 
C) Option C 
D) Option D 
E) Option E

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue.If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned,one effect will be:

Accepted Answer

A) An overstatement of equity 
B) An overstatement of liabilities 
C) An understatement of assets 
D) An understatement of liabilities 
E) An overstatement of assets 
A) An overstatement of equity 
B) An overstatement of liabilities 
C) An understatement of assets 
D) An understatement of liabilities 
E) An overstatement of assets

Question 9

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used,representing the expense of using the assets is called:

Accepted Answer

A) Accumulated depreciation 
B) A contra account 
C) The matching principle 
D) Depreciation 
E) An accrued account 
A) Accumulated depreciation 
B) A contra account 
C) The matching principle 
D) Depreciation 
E) An accrued account

Question 10

What is an adjusted trial balance? Why is it prepared?

Accepted Answer

An adjusted trial balance is a list of a

Question 11

Manning,Co.collected 6-months' rent in advance from a tenant on November 1 of the current year.When cash was collected,the following entry was made:
 $$\begin{array} { | l | l | l | l | } 
\hline \text { Nov. 01 } & \text { Cash } & 15,000 & \
\hline & \text { Rent Revenue Earned } & & 15,000 \
\hline
\end{array}$$ 
Prepare the required adjusting entry at December 31 of the current year.

Accepted Answer

($15,000/6 mo. = $2,

Question 12

__________________________ 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 13

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Accepted Answer

A) Accrual basis accounting 
B) Operating cycle accounting 
C) Cash basis accounting 
D) Revenue recognition accounting 
E) Current basis accounting 
A) Accrual basis accounting 
B) Operating cycle accounting 
C) Cash basis accounting 
D) Revenue recognition accounting 
E) Current basis accounting

Question 14

On April 1,2011,a company paid the $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 31,2011?

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 15

Due to an oversight,a company made no adjusting entry for accrued and unpaid employee wages of $24,000 on December 31.This oversight would:

Accepted Answer

A) Understate net income by $24,000 
B) Overstate net income by $24,000 
C) Have no effect on net income 
D) Overstate assets by $24,000 
E) Understate assets by $24,000 
A) Understate net income by $24,000 
B) Overstate net income by $24,000 
C) Have no effect on net income 
D) Overstate assets by $24,000 
E) Understate assets by $24,000

Question 16

Financial statements are typically prepared in the following order:

Accepted Answer

A) Balance sheet,statement of retained earnings,income statement 
B) Statement of retained earnings,balance sheet,income statement 
C) Income statement,balance sheet,statement of retained earnings 
D) Income statement,statement of retained earnings,balance sheet 
E) Balance sheet,income statement,statement of retained earnings 
A) Balance sheet,statement of retained earnings,income statement 
B) Statement of retained earnings,balance sheet,income statement 
C) Income statement,balance sheet,statement of retained earnings 
D) Income statement,statement of retained earnings,balance sheet 
E) Balance sheet,income statement,statement of retained earnings

Question 17

Match between columns
                        Premises:  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

Accepted Answer

The Answer of Working papers and Operating cycle of a is...

Question 18

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

Accepted Answer

A) Report form balance sheet 
B) Account form balance sheet 
C) Classified balance sheet 
D) Unadjusted balance sheet 
E) Unclassified balance sheet 
A) Report form balance sheet 
B) Account form balance sheet 
C) Classified balance sheet 
D) Unadjusted balance sheet 
E) Unclassified balance sheet

Question 19

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 20

Given the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" followed by the amount for overstatements,a "-" followed by the amount for understatements and a "0" for no effect.The first one is done as an example.
Ex.Failed to recognize that $600 of unearned revenues,previously recorded as liabilities,had been earned by year-end.
1.Failed to accrue salaries expense of $1,200.
2.Forgot to record $2,700 of depreciation on office equipment.
3.Failed to accrue $300 of interest on a note receivable.
 $\begin{array}{|c|c|c|c|c|c|}
\hline \text { Error } & \text { Revenues } & \text { Expenses } & \text { Assets } & \text { Liabilites } & \text { Equity } \
\hline \text { Ex. } & -\$ 600 & 0 & 0 & \$ 600 & -\$ 600 \
\hline 1 . & & & & & \
\hline 2 . & & & & & \
\hline 3 . & & & & & \
\hline
\end{array}$

Accepted Answer

None

The current ratio is computed by dividing current liabilities by current assets.

How is the profit margin calculated? Discuss its use in analyzing a company's performance.

On the work sheet,net income is entered in the Income Statement Credit column as well as the Balance Sheet Debit column.

Shown below are selected data taken from the unadjusted and adjusted trial balances for the Simonson Company for the current year ended December 31.Determine the items A through H below.

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

A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue.If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned,one effect will be:

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used,representing the expense of using the assets is called:

What is an adjusted trial balance? Why is it prepared?

Manning,Co.collected 6-months' rent in advance from a tenant on November 1 of the current year.When cash was collected,the following entry was made: Nov. 01 Cash 15,000 Rent Revenue Earned 15,000 Prepare the required adjusting entry at December 31 of the current year.

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

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

On April 1,2011,a company paid the $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 31,2011?

Due to an oversight,a company made no adjusting entry for accrued and unpaid employee wages of $24,000 on December 31.This oversight would:

Financial statements are typically prepared in the following order:

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

Introducing Accounting in Business

Analyzing and Recording Transactions

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Investments and International Operations

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

Filters

Exam 3: Adjusting Accounts and Preparing Financial Statements

The current ratio is computed by dividing current liabilities by current assets.

How is the profit margin calculated? Discuss its use in analyzing a company's performance.

On the work sheet,net income is entered in the Income Statement Credit column as well as the Balance Sheet Debit column.

Shown below are selected data taken from the unadjusted and adjusted trial balances for the Simonson Company for the current year ended December 31.Determine the items A through H below.

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

A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue.If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned,one effect will be:

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used,representing the expense of using the assets is called:

What is an adjusted trial balance? Why is it prepared?

Manning,Co.collected 6-months' rent in advance from a tenant on November 1 of the current year.When cash was collected,the following entry was made: Nov. 01 Cash 15,000 Rent Revenue Earned 15,000 Prepare the required adjusting entry at December 31 of the current year.

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

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

On April 1,2011,a company paid the $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 31,2011?

Due to an oversight,a company made no adjusting entry for accrued and unpaid employee wages of $24,000 on December 31.This oversight would:

Financial statements are typically prepared in the following order:

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

Introducing Accounting in Business

Analyzing and Recording Transactions

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Investments and International Operations

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

Filters