Question 1

A company earned $3,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

Accepted Answer

A) 3%. 
B) 30%. 
C) 33%. 
D) 333%. 
E) $7,000. 
A) 3%. 
B) 30%. 
C) 33%. 
D) 333%. 
E) $7,000.

Question 2

The Retained Earnings account has a credit balance of $37,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

Accepted Answer

A) $37,000. 
B) $35,400. 
C) $43,400. 
D) $28,000. 
E) $52,400. 
A) $37,000. 
B) $35,400. 
C) $43,400. 
D) $28,000. 
E) $52,400.

Question 3

Financial statements are typically prepared in the following order:

Accepted Answer

A) Balance sheet, statement of retained earnings, income statement. 
B) Statement of retained earnings, balance sheet, income statement. 
C) Income statement, balance sheet, statement of retained earnings. 
D) Income statement, statement of retained earnings, balance sheet. 
E) Balance sheet, income statement, statement of retained earnings. 
A) Balance sheet, statement of retained earnings, income statement. 
B) Statement of retained earnings, balance sheet, income statement. 
C) Income statement, balance sheet, statement of retained earnings. 
D) Income statement, statement of retained earnings, balance sheet. 
E) Balance sheet, income statement, statement of retained earnings.

Question 4

On December 1, Milton Company borrowed $300,000, at 8% annual interest, from the Tennessee National Bank. Interest is paid when the loan matures one year from the issue date. What is the adjusting entry for accruing interest that Milton would need to make on December 31, the calendar year-end?

Accepted Answer

A) debit Interest Payable, $2,000; credit Interest Expense, $2,000 
B) debit Interest Expense, $2,000; credit Interest Payable, $2,000 
C) debit Interest Expense, $2,000; credit Cash, $2,000 
D) debit Interest Expense, $4,000; credit Interest Payable, $4,000 
E) debit Interest Expense, $24,000; credit Interest Payable, $24,000 
A) debit Interest Payable, $2,000; credit Interest Expense, $2,000 
B) debit Interest Expense, $2,000; credit Interest Payable, $2,000 
C) debit Interest Expense, $2,000; credit Cash, $2,000 
D) debit Interest Expense, $4,000; credit Interest Payable, $4,000 
E) debit Interest Expense, $24,000; credit Interest Payable, $24,000

Question 5

A company's employees earn a total of $10,000 per week for a 5-day week that begins on Monday. December 31 of Year 1 is a Monday, and all 20 employees worked that day.
a) Prepare the required adjusting journal entry to record accrued salaries on December 31, Year 1.
b) Prepare the journal entry to record the payment of salaries on January 4, Year 2, assuming reversing entries were not made.

Accepted Answer

@#IMG-DLM& ($10,000

Question 6

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and dividend accounts for the upcoming period and to update the retained earnings account for the events of the period just finished are referred to as:

Accepted Answer

A) Adjusting entries. 
B) Closing entries. 
C) Final entries. 
D) Work sheet entries. 
E) Updating entries. 
A) Adjusting entries. 
B) Closing entries. 
C) Final entries. 
D) Work sheet entries. 
E) Updating entries.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Discuss how accrual accounting enhances the usefulness of financial statements.

Accepted Answer

The accrual accounting method recognizes

Question 9

Under the alternative method for recording prepaid expenses, which is the correct set of journal entries?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 10

Cash and office supplies are both classified as current assets.

Accepted Answer

A) True 
 B)False

Question 11

Recording expenses early overstates current-period income; recording expenses late understates current period income.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following errors would cause the Balance Sheet columns of a work sheet to be out of balance?

Accepted Answer

A) Entering an asset amount in the Income Statement Debit column. 
B) Entering a liability amount in the Income Statement Credit column. 
C) Entering an expense amount in the Balance Sheet Debit column. 
D) Entering a revenue amount in the Balance Sheet Debit column. 
E) Entering a liability amount in the Balance Sheet Credit column. 
A) Entering an asset amount in the Income Statement Debit column. 
B) Entering a liability amount in the Income Statement Credit column. 
C) Entering an expense amount in the Balance Sheet Debit column. 
D) Entering a revenue amount in the Balance Sheet Debit column. 
E) Entering a liability amount in the Balance Sheet Credit column.

Question 13

Which of the following accounts is a permanent (real) account?

Accepted Answer

A) Fees earned. 
B) Office supplies expense. 
C) Interest revenue. 
D) Accounts payable. 
E) Salaries expense. 
A) Fees earned. 
B) Office supplies expense. 
C) Interest revenue. 
D) Accounts payable. 
E) Salaries expense.

Question 14

A partially completed work sheet is shown below. The unadjusted trial balance columns are complete. Complete the adjustments, adjusted trial balance, income statement, and balance sheet and statement of retained earnings columns.

Accepted Answer

The answer of A partially completed work sheet is shown...

Question 15

List the three-steps of the adjusting process.

Accepted Answer

(1) Determine what the current

Question 16

The closing process resets ________, __________, and ________ account balances to zero at the end of each accounting period.

Accepted Answer

revenue; e

Question 17

Two main accounting principles used in accrual accounting are matching and full closure.

Accepted Answer

A) True 
 B)False

Question 18

Compute Darling Company's current ratio using the following information:

Accepted Answer

Current Ratio = Current Assets

Question 19

Following are selected accounts and their balances for a company after the adjustments made on May 31, the end of its fiscal year. (All accounts have normal balances.)   Prepare all the necessary closing entries for this company.

Accepted Answer

The answer of Following are selected accounts and their balances...

Question 20

The closing process is necessary in order to:

Accepted Answer

A) Calculate net income or net loss for an accounting period. 
B) Ensure that all permanent accounts are closed to zero at the end of each accounting period. 
C) Ensure that the company complies with state laws. 
D) Ensure that net income or net loss and dividends for the period are closed into the retained earnings account. 
E) Ensure that management is aware of how well the company is operating. 
A) Calculate net income or net loss for an accounting period. 
B) Ensure that all permanent accounts are closed to zero at the end of each accounting period. 
C) Ensure that the company complies with state laws. 
D) Ensure that net income or net loss and dividends for the period are closed into the retained earnings account. 
E) Ensure that management is aware of how well the company is operating.

A company earned $3,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

The Retained Earnings account has a credit balance of $37,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

Financial statements are typically prepared in the following order:

On December 1, Milton Company borrowed $300,000, at 8% annual interest, from the Tennessee National Bank. Interest is paid when the loan matures one year from the issue date. What is the adjusting entry for accruing interest that Milton would need to make on December 31, the calendar year-end?

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and dividend accounts for the upcoming period and to update the retained earnings account for the events of the period just finished are referred to as:

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

Discuss how accrual accounting enhances the usefulness of financial statements.

Under the alternative method for recording prepaid expenses, which is the correct set of journal entries?

Cash and office supplies are both classified as current assets.

Recording expenses early overstates current-period income; recording expenses late understates current period income.

Which of the following errors would cause the Balance Sheet columns of a work sheet to be out of balance?

Which of the following accounts is a permanent (real) account?

A partially completed work sheet is shown below. The unadjusted trial balance columns are complete. Complete the adjustments, adjusted trial balance, income statement, and balance sheet and statement of retained earnings columns.

List the three-steps of the adjusting process.

The closing process resets , , and __ account balances to zero at the end of each accounting period.

Two main accounting principles used in accrual accounting are matching and full closure.

Compute Darling Company's current ratio using the following information:

Following are selected accounts and their balances for a company after the adjustments made on May 31, the end of its fiscal year. (All accounts have normal balances.) Prepare all the necessary closing entries for this company.

The closing process is necessary in order to:

Introducing Financial Accounting

Accounting System and Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 3: Adjusting Accounts for Financial Statements

A company earned $3,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

The Retained Earnings account has a credit balance of $37,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

Financial statements are typically prepared in the following order:

On December 1, Milton Company borrowed $300,000, at 8% annual interest, from the Tennessee National Bank. Interest is paid when the loan matures one year from the issue date. What is the adjusting entry for accruing interest that Milton would need to make on December 31, the calendar year-end?

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and dividend accounts for the upcoming period and to update the retained earnings account for the events of the period just finished are referred to as:

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

Discuss how accrual accounting enhances the usefulness of financial statements.

Under the alternative method for recording prepaid expenses, which is the correct set of journal entries?

Cash and office supplies are both classified as current assets.

Recording expenses early overstates current-period income; recording expenses late understates current period income.

Which of the following errors would cause the Balance Sheet columns of a work sheet to be out of balance?

Which of the following accounts is a permanent (real) account?

A partially completed work sheet is shown below. The unadjusted trial balance columns are complete. Complete the adjustments, adjusted trial balance, income statement, and balance sheet and statement of retained earnings columns.

List the three-steps of the adjusting process.

The closing process resets ________, __________, and ________ account balances to zero at the end of each accounting period.

Two main accounting principles used in accrual accounting are matching and full closure.

Compute Darling Company's current ratio using the following information:

Following are selected accounts and their balances for a company after the adjustments made on May 31, the end of its fiscal year. (All accounts have normal balances.) Prepare all the necessary closing entries for this company.

The closing process is necessary in order to:

Introducing Financial Accounting

Accounting System and Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

The closing process resets , , and __ account balances to zero at the end of each accounting period.