Exam 2: A Review of the Accounting Cycle

A company loaned $6,000 to another corporation on December 1,Year 1,and received a 90-day,10 percent,interest-bearing note with a face value of $6,000.The lender's December 31,Year 1,adjusting entry is

Adjusting entries normally involve

The following errors were made in preparing a trial balance: the $1,350 balance of Inventory was omitted;the $450 balance of Prepaid Insurance was listed as a credit;and the $300 balance of Salaries Expense was listed as Utilities Expense.The debit and credit totals of the trial balance would differ by

Five percent bonds with a total face value of $12,000 were purchased at par during the year.The last interest payment for the year was received on July 31.The bonds pay interest semiannually.The adjusting entry at December 31 would include a

The premium on a two-year insurance policy expiring on June 30,2015,was paid in total on July 1,2013.The original payment was debited to the insurance expense account.The appropriate journal entry has been recorded on December 31,2013.The balance in the prepaid asset account on December 31,2013,should be

The work sheet of PSI Company shows Income Tax Expense of $9,000 and Income Tax Payable of $9,000 in the Adjustments columns.What will be the ultimate disposition of these items on the work sheet?

Which of the following is true regarding the accounting process?

Chips-n-Bits Company sells service contracts for personal computers.The service contracts are for a one-year,two-year,or three-year period.All sales are for cash and all receipts are credited to Unearned Service Contract Revenues.This account had a balance of $144,000 at December 31,2012,before year-end adjustment.Service contract costs are charged as incurred to the Service Contract Expense account,which had a balance of $36,000 at December 31,2012.Service contracts still outstanding at December 31,2012,expire as follows: What amount should be reported as unearned service contract revenues in Chips-n-Bits December 31,2012,balance sheet?

A chart of accounts is a

An example of an adjusting entry involving a deferred revenue is

Pheasant Tail Company's total equity increased by $32,000 during 2013.New stockholder investment during the year totaled $65,000.Total revenues during the year were $500,000 and total expenses were $460,000.Cash on hand decreased by $7,500 during the year.What amount of dividends did Pheasant Tail declare during 2013?

Which of the following is not among the first five steps in the accounting cycle?

Which of the following is not presented in an income statement?

For each of the journal entries below,write a description of the underlying event.Assume that for prepaid expenses original debits are made to an expense account.

L.Lane received $12,000 from a tenant on December 1 for four months' rent of an office.This rent was for December,January,February,and March.If Lane debited Cash and credited Unearned Rental Income for $12,000 on December 1,what necessary adjustment would be made on December 31?

On August 1 of the current year,Kyle Company borrowed $278,000 from the local bank.The loan was for 12 months at 9 percent interest payable at the maturity date.The adjusting entry at the end of the fiscal year relating to this obligation would include a

What is the correct order of the following events in the accounting process? I.Financial statements are prepared. II)Adjusting entries are recorded. III)Nominal accounts are closed.

Moon Company purchased equipment on November 1,2013,by giving its supplier a 12-month,9 percent note with a face value of $48,000.The December 31,2013,adjusting entry is

Which of the following errors will be detected when a trial balance is properly prepared?

The following is a summary of the increases in the account categories of the balance sheet of Riley Company for the most recent fiscal year: The only change to retained earnings during the fiscal year was for $20,000 of dividends.What was the company's net income for the fiscal year?