Exam 4: Adjustments, Financial Statements, and the Quality of Earnings

Which of the following does not correctly describe an adjusting journal entry that debits interest expense and credits interest payable?

Which of the following correctly describes the effects of accruing income tax expense at year-end?

At the end of the accounting period, the balances in the temporary accounts are closed while the balances in the permanent accounts are carried forward to the next accounting period.

Describe the adjusted trial balance.

On July 1, 2016, Goode Company borrowed $100,000. The company signed a note payable with interest at 6 percent per year. The note and interest are due on December 31, 2016. On December 31, 2016, Goode paid $103,000 to settle the debt in full. Assuming no accruals for interest have been made during the year, transaction analysis of the $103,000 cash payment on December 31, 2016 should reflect which of the following?

Which of the following transactions does not create a deferral?

Which of the following account balances would not be affected by closing entries?

Which of the following transactions and events results in an increase in liabilities and a decrease in net income?

On January 1, 2016, the balance in the prepaid insurance account was $2,500. On December 31, 2016, after the 2016 adjusting entries were made, the balance of the prepaid insurance account was $1,200. During 2016, cash payments for insurance premiums amounted to $5,000, which was debited to the prepaid insurance account. Prepare the adjusting entry, which must have been made at December 31, 2016.

On November 1, 2016, Bug Busters collected $6,000 in advance for three months of service to be provided beginning on that date. Bug credited unearned service revenue for $6,000. The books are adjusted only at year-end. Required: Prepare the adjusting entry required on December 31, 2016.

At December 31, 2016, the following adjusting entries were recorded in the accounts of ABD Company.

Which is the correct sequence of the following steps in the accounting cycle?

Which of the following transactions and events results in a decrease in both total assets and net income?

Which of the following account balances would be closed at year-end by crediting the account?

Failure to make an adjusting entry to recognize rent revenue receivable would cause which of the following?

Which of the following correctly describes the accounts reported on the post-closing trial balance?

Which of the following accounts requires a debit to close the account at year-end?

On January 1, 2016, Ryan Company paid the premium on a three-year insurance policy in the amount of $6,000. At that time, the full amount paid was recorded as prepaid insurance. After recording the adjusting entry for the insurance policy on December 31, 2016, what would be the balance in Ryan Company's prepaid insurance account?

The total asset turnover ratio measures sales dollars generated per dollar of assets and is a measure of efficient management of assets.

Which of the following correctly describes the following adjusting journal entry?