Exam 3: Adjusting Accounts and Preparing Financial Statements

The adjusted trial balance of Sara's Web Services follows: (a) Prepare the closing entries for Sara's Web Services. (b) What is the balance of the retained earnings account after the closing entries are posted?

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

List the steps in the accounting cycle.

Current liabilities include accounts receivable, unearned revenues and salaries payable.

Based on the following information, determine the current ratio, 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 ?

The ________________________________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

What is the usual order in which financial statements are prepared from the adjusted trial balance? Why are they prepared in that order?

Profit margin is calculated by dividing net sales by net income.

Accrual accounting and the adjusting process rely on two principles: the ___________________ principle and the ________________________ principle.

Which of the following accounts would not be on the post closing trial balance?

Identify the differences between accrual accounting and cash basis accounting.

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:

For a corporation, the equity section is divided into two main accounts: Common Stock and Retained Earnings.

The following information is available for the Travis Travel Agency. After the closing entries have been journalized and posted, what will be the balance in the Retained Earnings account? Total revenues \ 125,000 Total expenses 60,000 Retained earnings 80,000 Dividends 15,000

Under the cash basis of accounting, no adjustments are made for prepaid, unearned and accrued items.

Based on the following information, determine the current assets, 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 ?

Failure to record depreciation expense will overstate the asset and understate the expense.

Nike's net income was $780,000; its net assets were $5,200,000; and its net sales were $9,000,000. Calculate its profit margin ratio.

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

A company's post-closing trial balance has a debit total of $475,000 and a credit total of $457,000. This indicates that __________________________.