Question 1

Prepare adjusting entries for the year ended December 31,for each of these separate situations.Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance are initially recorded as liabilities.
a.The Prepaid Rent account has a debit balance of $8,000 before adjustment,representing a prepayment for four months' rent made on December 1 of the current year.
b.One-third of the work related to $18,000 of cash received in advance was performed during this period.
c.Unpaid accrued salaries at December 31 amounts to $15,000
d.Work was completed for a client on December 31 in the amount of $21,000,but was not previously billed or recorded.
e.Estimated depreciation on office equipment is $27,000.

Accepted Answer

The answer of Prepare adjusting entries for the year ended...

Question 2

On January 1,Fashion Forward Magazine received $15,000 from subscribers for the annual subscriptions that it recorded in Unearned Subscription Revenue.The issues of the magazine are mailed to subscribers quarterly.What amount of subscription revenue should the magazine recognize on March 31 when the first issue is sent in March?

Accepted Answer

A)  $15,000.
B)  $1,250.
C)  $7,500.
D)  $3,750.
E)  $0.F) A) and B)
G) C) and E)

Question 3

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

Accepted Answer

A)  Cash basis accounting.
B)  The expense recognition (matching) principle.
C)  The time period assumption.
D)  Accrual basis accounting.
E)  Revenue basis accounting.F) A) and E)
G) C) and E)

Question 4

All necessary amounts needed to prepare the income statement can be taken from the income statement columns of the work sheet,including the net income or net loss.

Accepted Answer

A) True 
 B)False

Question 5

An optional columnar working paper used to prepare a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements is a(n) :

Accepted Answer

A)  Adjusted trial balance.
B)  Work sheet.
C)  Post-closing trial balance.
D)  Unadjusted trial balance.
E)  General ledger.F) A) and C)
G) C) and D)

Question 6

Discuss how accrual accounting enhances the usefulness of financial statements.

Accepted Answer

The accrual accounting method recognizes...

Question 7

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________ year.

Accepted Answer

The answer of Companies experiencing seasonal variations in sales often...

Question 8

A company paid Jen Rogers,its sole stockholder,a total of $35,000 in dividends during the current year.The entry needed to close the dividends account is:

Accepted Answer

A)  Debit Income Summary and credit Cash for $35,000.
B)  Debit Dividends and credit Cash for $35,000.
C)  Debit Income Summary and credit Dividends for $35,000.
D)  Debit Retained earnings and credit Dividends for $35,000.
E)  Debit Dividends and credit Retained earnings for $35,000.F) None of the above
G) A) and D)

Question 9

Profit margin reflects the percent of profit in each dollar of revenue.

Accepted Answer

A) True 
 B)False

Question 10

________ revenues are liabilities requiring delivery of products and for services.

Accepted Answer

The answer of ________ revenues are liabilities requiring delivery of...

Question 11

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.Which of the following statements is true?

Accepted Answer

A)  It will have no effect on income.
B)  It will overstate assets and liabilities by $9,000.
C)  It will understate net income by $9,000.
D)  It will understate assets by $9,000.
E)  It will understate expenses and overstate net income by $9,000.F) C) and D)
G) A) and D)

Question 12

The accrual basis of accounting:

Accepted Answer

A)  Is generally accepted for external reporting because it is more useful than cash basis for most business decisions.
B)  Is flawed because it gives complete information about cash flows.
C)  Recognizes revenues when received in cash.
D)  Recognizes expenses when paid in cash.
E)  Eliminates the need for adjusting entries at the end of each period.F) None of the above
G) D) and E)

Question 13

A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period?

Accepted Answer

A)  $1,400.
B)  $1,855.
C)  $1,905.
D)  $2,060.
E)  $4,670.F) A) and E)
G) A) and D)

Question 14

Reversing entries:

Accepted Answer

A)  Are necessary when journal entries have been incorrectly recorded.
B)  Are a required step in the accounting cycle.
C)  Will often result temporarily in abnormal account balances in some accounts.
D)  Are required only if the company uses accounting software to record journal entries.
E)  Must be made before preparing the post-closing trial balance.F) A) and C)
G) B) and D)

Question 15

For the year ended December 31,a company had revenues of $187,000 and expenses of $109,000.$37,000 in dividends were paid during the year.Which of the following entries could not be a closing entry?

Accepted Answer

A)  Debit Income Summary $78,000; credit Retained earnings $78,000.
B)  Debit Retained earnings $37,000; credit Dividends $37,000.
C)  Debit revenues $187,000; credit Income Summary $187,000.
D)  Debit Income Summary $109,000,credit expenses $109,000.
E)  Debit Income Summary $187,000; credit revenues $187,000.F) A) and D)
G) B) and E)

Question 16

A classified balance sheet organizes assets and liabilities into important subgroups that provide more information to decision makers.

Accepted Answer

A) True 
 B)False

Question 17

The balances in Labeille Accounting Services' office supplies account on February 1 and February 28 were $1,200 and $375,respectively.If the office supplies expense for the month is $1,900,what amount of office supplies was purchased during February?

Accepted Answer

A)  $1,075
B)  $1,500
C)  $1,525
D)  $2,325
E)  $3,100F) A) and E)
G) B) and C)

Question 18

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.F) A) and E)
G) B) and E)

Question 19

A company's fiscal year must correspond with the calendar year.

Accepted Answer

A) True 
 B)False

Question 20

The cash basis of accounting commonly increases the comparability of financial statements from period to period.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting Accounts for Financial Statements

The cash basis of accounting commonly increases the comparability of financial statements from period to period.

Correct Answer
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Discuss how accrual accounting enhances the usefulness of financial statements.

Correct Answer
verified
The accrual accounting method recognizes...
View Answer

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________ year.

Correct Answer
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A company's fiscal year must correspond with the calendar year.

Correct Answer
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The accrual basis of accounting:

Correct Answer
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Correct Answer
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A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.Which of the following statements is true?

Correct Answer
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For the year ended December 31,a company had revenues of $187,000 and expenses of $109,000.$37,000 in dividends were paid during the year.Which of the following entries could not be a closing entry?

Correct Answer
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Profit margin reflects the percent of profit in each dollar of revenue.

Correct Answer
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A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period?

Correct Answer
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The closing process is necessary in order to:

Correct Answer
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The balances in Labeille Accounting Services' office supplies account on February 1 and February 28 were $1,200 and $375,respectively.If the office supplies expense for the month is $1,900,what amount of office supplies was purchased during February?

Correct Answer
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________ revenues are liabilities requiring delivery of products and for services.

Correct Answer
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Reversing entries:

Correct Answer
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An optional columnar working paper used to prepare a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements is a(n) :

Correct Answer
verified

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

Correct Answer
verified

A classified balance sheet organizes assets and liabilities into important subgroups that provide more information to decision makers.

Correct Answer
verified

All necessary amounts needed to prepare the income statement can be taken from the income statement columns of the work sheet,including the net income or net loss.

Correct Answer
verified

A company paid Jen Rogers,its sole stockholder,a total of $35,000 in dividends during the current year.The entry needed to close the dividends account is:

Correct Answer
verified

Correct Answer
verified

Exam 3: Adjusting Accounts for Financial Statements

The cash basis of accounting commonly increases the comparability of financial statements from period to period.

Correct AnswerverifiedShow Answer

Discuss how accrual accounting enhances the usefulness of financial statements.

Correct AnswerverifiedThe accrual accounting method recognizes...View AnswerShow Answer

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________ year.

Correct AnswerverifiedShow Answer

A company's fiscal year must correspond with the calendar year.

Correct AnswerverifiedShow Answer

The accrual basis of accounting:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.Which of the following statements is true?

Correct AnswerverifiedShow Answer

For the year ended December 31,a company had revenues of $187,000 and expenses of $109,000.$37,000 in dividends were paid during the year.Which of the following entries could not be a closing entry?

Correct AnswerverifiedShow Answer

Profit margin reflects the percent of profit in each dollar of revenue.

Correct AnswerverifiedShow Answer

A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period?

Correct AnswerverifiedShow Answer

The closing process is necessary in order to:

Correct AnswerverifiedShow Answer

The balances in Labeille Accounting Services' office supplies account on February 1 and February 28 were $1,200 and $375,respectively.If the office supplies expense for the month is $1,900,what amount of office supplies was purchased during February?

Correct AnswerverifiedShow Answer

________ revenues are liabilities requiring delivery of products and for services.

Correct AnswerverifiedShow Answer

Reversing entries:

Correct AnswerverifiedShow Answer

An optional columnar working paper used to prepare a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements is a(n) :

Correct AnswerverifiedShow Answer

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

Correct AnswerverifiedShow Answer

A classified balance sheet organizes assets and liabilities into important subgroups that provide more information to decision makers.

Correct AnswerverifiedShow Answer

All necessary amounts needed to prepare the income statement can be taken from the income statement columns of the work sheet,including the net income or net loss.

Correct AnswerverifiedShow Answer

A company paid Jen Rogers,its sole stockholder,a total of $35,000 in dividends during the current year.The entry needed to close the dividends account is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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The accrual accounting method recognizes...
View Answer

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