Exam 3: Adjusting Accounts and Preparing Financial Statements

Which of the following accounts would be closed at the end of the accounting period?

Prior to recording adjusting entries at the end of an accounting period, some accounts may not show proper financial statement amounts even though all transactions were correctly recorded.

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?

Accumulated Depreciation, Accounts Receivable and Service Fees Earned would be sorted to which respective columns in completing a work sheet?

It is acceptable to record prepayment of expenses as debits to expense accounts.

In preparing statements from the adjusted trial balance, the balance sheet must be prepared first.

The asset section of a classified balance sheet usually includes:

A classified balance sheet:

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees. If the company fails to make the end-of-period adjusting entry to record the portion of these fees that has been earned, one effect will be:

Statements that show the effects of proposed transactions as if the transactions had already occurred are called:

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 13,718 Office supplies 2,625 Rent expense 3,673 Land 37,153 Salaries expense 6,642 Office equipment 14,535 Telephone expense 560 Accounts payable 6,463 Miscellaneous expense 280 Common stock 54,490 Retained Earnings ?

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.

A classified balance sheet organizes assets and liabilities into important subgroups that are not found on an unclassified balance sheet.

Intangible assets are long-term resources used to produce or sell products and services; they generally lack ______________ and their benefits are highly ____________.

A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

Which of the following is the usual final step in the accounting cycle?

Profit margin can also be called return on sales.

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.

On June 30, 2011, Apricot Co. paid $5,000 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On June 30, 2011 Apricot should record:

The account form of the balance sheet matches the accounting equation. That is, assets are on the left side of the statement and liabilities and equity are on the right side of the statement.