Exam 3: Adjusting Accounts and Preparing Financial Statements

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.Prepare the necessary adjusting journal entry for the end of the year.

Based on the following information,what would be the beginning balance in the Retained Earnings Account,assuming all accounts have a normal balance? Cash \ 6,754 Dividends \ 2,000 Accounts receivable 13,733 Consulting fees earned 13,71 Office supplies 2,625 Rent expense 3,67 Land 37,153 Salaries expense 6,64 Office equipment 14,535 Telephone expense 560 Accounts payable 6,463 Miscellaneous expense 280 Common stock 54,490 Retained Earnings ?

If all columns balance upon completion of a work sheet,you can be sure that no errors were made in preparing the work sheet.

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

The 12-month period that ends when a company's activities are at their lowest point is called the:

On October 1 of the current year,Morton Company paid $9,600 cash for a one-year insurance policy that took effect on that day.On the date of the payment,Morton recorded the following entry: Oct. 01 Insurance Expense 9,600 Cash 9,600 Prepare the required adjusting entry at December 31 of the current year.

The accrual basis of accounting:

Which of the following statements is incorrect?

Barnes Company has 20 employees who are each paid $80 per day for a 5-day workweek.The employees are paid each Friday.This year the accounting period ends on Tuesday.Prepare the December 31 year-end adjusting journal entry Barnes Company should make to accrue salaries.

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from)the retained earnings account is the:

A ____________________ is useful in preparing interim statements and in showing the effects of proposed transactions.

The calendar year-end adjusted trial balance for Acosta Co.follows: Required: a. Prepare a classified year-end balance sheet. (Note: A $7,000 installment on the long-term note payable is due within one year.) b. Calculate the current ratio.

Since it is an important financial statement,the trial balance must be prepared according to specified accounting procedures.

A contra account is an account linked with another account; it is added to that account to show the proper amount for the item recorded in the associated account.

The last four steps in the accounting cycle include preparing the adjusted trial balance,preparing financial statements and recording closing and adjusting entries.

Identify the differences between accrual accounting and cash basis accounting.

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

A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400.If office supplies expense for the year is $3,100,what amount of office supplies was purchased during the period?

A 10-column spreadsheet used to draft a company's unadjusted trial balance,adjusting entries,adjusted trial balance and financial statements and which is an optional tool in the accounting process is a(n):