Exam 4: Adjusting the Accounts and Preparing Financial Statements

C_____________ l______________ are obligations of the firm that are expected,in the normal course of business,to be settled in the next twelve months.

Deferral type adjustments occur when cash for expenses is paid in advance or cash from incomes is pre-collected.How many of the following will require a deferral type adjustment? ? Rent paid for in advance ? Buildings to be depreciated ? Rent collected in advance from tenants ? Stationery used by the office staff during the period

The publishers of 'Guide to the Stock Market',a magazine published monthly,received $121 in advance,including $11 GST on 1 March,for a 1 year's subscription 11 issues)beginning with the March issue.On receipt of the subscription which entry will the company make?

It is correct that each balance day adjustment

Tan Traders received a $750 advance payment from a customer for work to be carried out in the next accounting period.The accounting entry to initially record the $750 is:

The capital account of a sole trader was credited with $5000.Which of these items would not give rise to such a credit?

On July 1 2011 the Pepper Diner rented out part of its property and collected $9000 in advance for a nine-month period.The receipt was credited to a liability account.At 31 December 2011,Pepper Diner's year-end,which of the following adjusting journal entries should be made?

Under the ______________ basis of accounting,income is recognised when earned and expenses when incurred.

Goodwill is classified in the balance sheet as an i_____________ asset.

The cash approach to profit measurement will not give a reliable profit figure for an entity that conducts a significant portion of its business:

Because income and expense accounts are reduced to zero at the end of the year they are known as t ____________ accounts.

The office supplies inventory account of Tan Traders shows a balance of $1 600 on 31 December 2011.The adjusting entry to record office supplies of $550 issued to staff in the 12 months up to 31 December 2011 is:

ABC collects rents from several properties.Prior to recording adjusting entries,assume the Rent Income account has a credit balance of $8000.Two adjustments are to be made at the end of the financial year 1)an accrual for accrued rent income of $600 2)the Unearned Rent Income account is to be decreased by $200.After processing these adjusting entries the amount of Rent Income to be shown in the income statement is:

Which of the following is not an advantage of preparing an adjusted trial balance?

If an adjustment for depreciation is omitted from the financial reports the affect is:

The statement concerning accrual accounting that is true is:

During 2011 The Style Hairdressing Salon paid out $41 000 in wages from its bank account.At year-end 2011 wages owing but unpaid were $2 400.The salon uses accrual accounting.How much would be reported as wages expense for 2011?

On 1 July 2011 Tan Traders paid $600,representing a two-year insurance premium.The $600 was initially recorded in the Insurance expense account.After adjustment at 31 December 2012,the close of the annual accounting period:

Michael purchased two vehicles for his business on 1 January 2011.These vehicles cost $50,000 each and have a useful life of 5 years with an expected residual of $20,000 each.The adjusting entry for depreciation on 31 December 2011,using the straight-line method,is:

Under the cash approach to profit measurement income is recorded in the accounting period when: