Question 1

The income statement summarizes the operating activity of a firm at a particular point in time.

Accepted Answer

A) True 
 B)False  False

Question 2

What is an accrued liability?

Accepted Answer

An accrued liability results from an expense being incurred prior to cash payment. Examples include interest and wages payable.

Question 3

What is the purpose of the closing process?

Accepted Answer

The closing process serves a dual purpose: (1) the temporary accounts are reduced to a zero balance, ready to measure activity in the next accounting period, and (2) the balances of these temporary accounts are transferred to retained earnings to reflect the changes that have occurred in that account during the period. Revenue and expense accounts are first transferred to income summary. The net balance in income summary is then transferred to retained earnings.

Question 4

Adjusting journal entries are required to comply with the realization and matching principles.

Accepted Answer

A) True 
 B)False

Question 5

Prepare a classified balance sheet for China Tea Company as of December 31, 2009.

Accepted Answer

The answer of Prepare a classified balance sheet for China...

Question 6

Carolina Mills purchased $270,000 in supplies this year. The supplies account increased by $10,000 during the year to an ending balance of $66,000. What was supplies expense for Carolina Mills during the year?

Accepted Answer

A) $300,000. 
B) $280,000. 
C) $260,000. 
D) $240,000. 
A) $300,000. 
B) $280,000. 
C) $260,000. 
D) $240,000.

Question 7

You are reviewing O'Brian Co.'s adjusted trial balance for the year ended 12/31/09. You notice several omissions and incorrect items during your review, some of which are noted below. For each one, you are to determine what effect, if any, these items would have on the stated components of O'Brian Co.'s 2009 Income Statement and 12/31/09 Balance Sheet if they are not corrected or updated. Assume, no income taxes.
Use the following code for your answers. You need not include any dollar amounts.
N = No Effect
O = Overstated
U = Understated
-$\begin{array}{|l|c|c|c|c|}
\hline \text { Additional Information } & \begin{array}{c}
12 / 31 / 09 \
\text { Assets }
\end{array} & \begin{array}{c}
12 / 31 / 09 \
\text { Liabilities }
\end{array} & \begin{array}{c}
12 / 31 / 09 \
\text { Owners' } \
\text { Equity }
\end{array} & \begin{array}{c}
2009 \
\text { Net } \
\text { Income }
\end{array} \\hline \begin{array}{l}
\text { The journal entry for depreciation on } \
\text { equipment for } 2009 \text { was recorded for } \
\$ 48,000 . \text { It should have been } \$ 66,000 .
\end{array} & \
\hline
\end{array}$

Accepted Answer

The answer of You are reviewing O'Brian Co.'s adjusted trial...

Question 8

Prepare an income statement for China Tea Company for the year ended December 31, 2009.

Accepted Answer

The answer of Prepare an income statement for China Tea...

Question 9

Closed the income summary account, assuming there was a net income for the period.

Accepted Answer

The answer of Closed the income summary account, assuming there...

Question 10

Based on the information presented above, prepare the 12/31/09 Balance Sheet for Krafty Foods.

Accepted Answer

The answer of Based on the information presented above, prepare...

Question 11

Suppose that Laramie Company's adjusted trial balance ignored the following information. For each item of information, indicate what effects, if any, these omissions would have on the stated components of Laramie Company's 2009 Income Statement and 12/31/09 Balance Sheet. Assume no income taxes.
Use the following code for your answers and be sure to include the dollar amounts of the effects:
0 = No Effect
+ = Overstated
    = Understated
-$$\begin{array} { | l | c | c | c | c | } 
\hline  { \text { Additional Information } } & \begin{array} { c } 
12 / 31 / 09 \
\text { Assets }
\end{array} & \begin{array} { c } 
12 / 31 / 09 \
\text { Liabilities }
\end{array} & \begin{array} { c } 
12 / 31 / 09 \
\text { Owners' Equity }
\end{array} & \begin{array} { c } 
2009 \
\text { Net Income }
\end{array} \
\hline \begin{array} { l } 
\text { \$4,000 in cash dividends } \
\text { declared and paid in December } \
2009 \text { were unrecorded. }
\end{array} & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of Suppose that Laramie Company's adjusted trial balance...

Question 12

Suppose that Laramie Company's adjusted trial balance ignored the following information. For each item of information, indicate what effects, if any, these omissions would have on the stated components of Laramie Company's 2009 Income Statement and 12/31/09 Balance Sheet. Assume no income taxes.
Use the following code for your answers and be sure to include the dollar amounts of the effects:

0 = No Effect
+ = Overstated
    = Understated
-$$\begin{array} { | l | c | c | c | c | } 
\hline  { \text { Additional Information } } & \begin{array} { c } 
12 / 31 / 09 \
\text { Assets }
\end{array} & \begin{array} { c } 
12 / 31 / 09 \
\text { Liabilities }
\end{array} & \begin{array} { c } 
12 / 31 / 09 \
\text { Owners' Equity }
\end{array} & \begin{array} { c } 
2009 \
\text { Net Income }
\end{array} \
\hline \begin{array} { l } 
\text { \$10,000 of the paid and recorded } \
\text { rent expense pertains to the year } \
2010 .
\end{array} & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of Suppose that Laramie Company's adjusted trial balance...

Question 13

Describe what is meant by unearned revenues and give two examples.

Accepted Answer

Unearned revenues are created when a com

Question 14

-Supplies expense

Accepted Answer

None

Question 15

Collected a note receivable at maturity, including the interest that had already been accrued.

Accepted Answer

The answer of Collected a note receivable at maturity, including...

Question 16

Accruals occur when the cash flow precedes either revenue or expense recognition.

Accepted Answer

A) True 
 B)False

Question 17

-Accounts receivable

Accepted Answer

Accounts receivable refers to

Question 18

Accrued the interest earned but not collected on notes receivable.

Accepted Answer

The answer of Accrued the interest earned but not collected...

Question 19

Permanent accounts would not include:

Accepted Answer

A) Cost of goods sold. 
B) Inventory. 
C) Current liabilities. 
D) Accumulated depreciation. 
A) Cost of goods sold. 
B) Inventory. 
C) Current liabilities. 
D) Accumulated depreciation.

Question 20

An example of a contra account is:

Accepted Answer

A) Depreciation expense. 
B) Accounts receivable. 
C) Sales revenue. 
D) Accumulated depreciation. 
A) Depreciation expense. 
B) Accounts receivable. 
C) Sales revenue. 
D) Accumulated depreciation.

The income statement summarizes the operating activity of a firm at a particular point in time.

What is an accrued liability?

What is the purpose of the closing process?

Adjusting journal entries are required to comply with the realization and matching principles.

Prepare a classified balance sheet for China Tea Company as of December 31, 2009.

Carolina Mills purchased $270,000 in supplies this year. The supplies account increased by $10,000 during the year to an ending balance of $66,000. What was supplies expense for Carolina Mills during the year?

Prepare an income statement for China Tea Company for the year ended December 31, 2009.

Closed the income summary account, assuming there was a net income for the period.

Based on the information presented above, prepare the 12/31/09 Balance Sheet for Krafty Foods.

Describe what is meant by unearned revenues and give two examples.

-Supplies expense

Collected a note receivable at maturity, including the interest that had already been accrued.

Accruals occur when the cash flow precedes either revenue or expense recognition.

-Accounts receivable

Accrued the interest earned but not collected on notes receivable.

Permanent accounts would not include:

An example of a contra account is:

Environment and Theoretical Structure of Financial Accounting

The Balance Sheet and Financial Disclosures

The Income Statement and Statement of Cash Flows

Income Measurement

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Operational Assets: Acquisition and Disposition

Operational Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Appendix a Derivatives

Filters

Exam 2: Review of the Accounting Process

The income statement summarizes the operating activity of a firm at a particular point in time.

What is an accrued liability?

What is the purpose of the closing process?

Adjusting journal entries are required to comply with the realization and matching principles.

Prepare a classified balance sheet for China Tea Company as of December 31, 2009.

Carolina Mills purchased $270,000 in supplies this year. The supplies account increased by $10,000 during the year to an ending balance of $66,000. What was supplies expense for Carolina Mills during the year?

Prepare an income statement for China Tea Company for the year ended December 31, 2009.

Closed the income summary account, assuming there was a net income for the period.

Based on the information presented above, prepare the 12/31/09 Balance Sheet for Krafty Foods.

Describe what is meant by unearned revenues and give two examples.

-Supplies expense

Collected a note receivable at maturity, including the interest that had already been accrued.

Accruals occur when the cash flow precedes either revenue or expense recognition.

-Accounts receivable

Accrued the interest earned but not collected on notes receivable.

Permanent accounts would not include:

An example of a contra account is:

Environment and Theoretical Structure of Financial Accounting

The Balance Sheet and Financial Disclosures

The Income Statement and Statement of Cash Flows

Income Measurement

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Operational Assets: Acquisition and Disposition

Operational Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Appendix a Derivatives

Filters