Exam 3: Adjusting Accounts and Preparing Financial Statements

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:

A company had revenues of $75,000 and expenses of $62,000 for the accounting period. Which of the following entries could not be a closing entry?

An unadjusted trial balance is a listing of accounts and their balances prepared before adjustments are recorded.

Compute profit margin ratio given the following information.

Western Company had $500 of store supplies available at the beginning of the current year. During the year Western Company purchased $2,750 worth of store supplies. On December 31 of this year $375 worth of store supplies remained. a. Calculate the amount of Western Company's store supplies expense for the current year. (Show your calculations.) b. Prepare the journal entry to adjust the supplies account.

Which of the following statements is true?

Expenses incurred but unpaid that are recorded during the adjusting process with a debit to an expense and a credit to a liability are:

Profit margin = ___________________ divided by net sales.

On April 30, 2011, a three-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31, 2011?

Compute profit margin ratio given the following information.

The total amount of depreciation recorded against an asset or group of assets during the entire time the asset or assets have been used in the day to day operations of the business:

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

If a company forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:

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.

How is a classified balance sheet different from an unclassified balance sheet? List the order of the usual classifications on a classified balance sheet.

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

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

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

Profit margin is defined as:

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: