Exam 3: Adjusting Accounts and Preparing Financial Statements

When preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column.The Balance Sheet columns will balance on completing the work sheet but with the wrong net income,if the amount sorted in error is:

Using the following table indicate the impact of the following errors made during the adjusting entry process.Use a "+" for overstatements,a "-" for understatements and a "0" for no effect.The first one is provided as an example

Earned but uncollected revenues that are recorded during the adjusting process with a credit to a revenue account and a debit to an expense account are referred to as accrued expenses.

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

A company purchased a new truck at a cost of $42,000 on July 1,2011.The truck is estimated to have a useful life of 6 years and a salvage value of $3,000.How much depreciation expense will be recorded for the truck for the year ended December 31,2011?

Based on the adjusted trial balance,prepare a statement of retained earnings for Martin Sky Taxi Services. Martin Sky Taxi Services Adjusted Trial Balance For the year ended December 31 Cash \ 28,000 Accounts receivable 14,200 Office supplies 1,700 Airplanes 100,000 Accumulated depreciation - Airplanes 45,000 Accounts payable 11,500 Common stock 25,000 Retained earnings 46,900 Dividends 40,000 Fees earned 150,000 Rent expense 13,000 Office supplies expense 2,000 Utilities expense 2,500 Depreciation Expense - Airplanes 15,000 Salary expense 50,000 Fuel expense 12,000 Totals \ 278,400 \ 278,400

Based on the adjusted trial balance,prepare a balance sheet for Martin Sky Taxi Services. Martin Sky Taxi Services Adjusted Trial Balance For the vear ended December 31 Cash \ 28,000 Accounts receivable 14,200 Office supplies 1,700 Airplanes 100,000 Accumulated depreciation - Airplanes 45,000 Accounts payable 11,500 Common stock 25,000 Retained earnings 46,900 Dividends 40,000 Fees earned 150,000 Rent expense 13,000 Office supplies expense 2,000 Utilities expense 2,500 Depreciation Expense - Airplanes 15,000 Salary expense 50,000 Fuel expense 12,000 Totals \ 278,400 \ 278,400

IFRS tends to be more principles-based compared to GAAP which is viewed as more rules-based.Which of the following is a true statement about a principles-based system?

Match the following terms with the appropriate definition. -     Prepaid expenses 

What are the types of adjusting entries used for prepaid expenses,depreciation and unearned revenues?

Closing entries are normally entered in the general journal and then posted to the work sheet.

A classified balance sheet:

The accrual basis of accounting is an accounting system in which revenues are reported as earned when cash is received.

Before an adjusting entry is made to recognize insurance expired,Prepaid Insurance and Insurance Expense are both overstated.

From the adjusted trial balance,prepare an income statement for Martin Sky Taxi Services. Martin Sky Taxi Services Adjusted Trial Balance For the year ended December 31 Cash \ 28,000 Accounts receivable 14,200 Office supplies 1,700 Airplanes 100,000 Accumulated depreciation - Airplanes 45,000 Accounts payable 11,500 Common stock 25,000 Retained earnings 46,900 Dividends 40,000 Fees earned 150,000 Rent expense 13,000 Office supplies expense 2,000 Utilities expense 2,500 Depreciation Expense - Airplanes 15,000 Salary expense 50,000 Fuel expense 12,000 Totals \ 278,400 \ 278,400

A company had revenue of $250,000,rent expense of $10,000,utility expense of $3,500,salary expense of $18,500,depreciation expense of $9,000,advertising expense of $4,500,dividends in the amount of $18,000,and a beginning balance in retained earnings of $17,900.What is the amount in the income summary account before it is closed for the period?

A _____________ account is an account linked with another account,having an opposite normal balance and reported as a subtraction from that other account's balance.