Question 1

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.) 
  Retained earnings $7,000 Dividends 9,600 Service Revenue 29,000 Rent expense 3,600 Salaries expense 7,200 Insurance expense 920 Depr. Expense - equipment 500 Accum depr. - equipment 1,500\begin{array}{|l|r|}\hline 	ext { Retained earnings } & \$ 7,000 \\hline 	ext { Dividends } & 9,600 \\hline 	ext { Service Revenue } & 29,000 \\hline 	ext { Rent expense } & 3,600 \\hline 	ext { Salaries expense } & 7,200 \\hline 	ext { Insurance expense } & 920 \\hline 	ext { Depr. Expense - equipment } & 500 \\hline 	ext { Accum depr. - equipment } & 1,500\\hline \end{array} Retained earnings  Dividends  Service Revenue  Rent expense  Salaries expense  Insurance expense  Depr. Expense - equipment  Accum depr. - equipment ​$7,0009,60029,0003,6007,2009205001,500​​

Accepted Answer

A)   $16,780 debit
B)   $7,180 credit
C)   $16,780 credit
D)   $18,280 credit
E)   $23,780 credit F) B) and C)
G) C) and D)

Question 2

An asset that cost $50,000 was purchased on January 1.The asset has an estimated useful life of three years and an estimated salvage value of $3,200.Using the straight-line method,prepare the necessary adjusting journal entry for the end of the year.

Accepted Answer

Accumulated Deprecia...

Question 3

Since the revenue recognition principle requires that revenues be earned,there are no unearned revenues in accrual accounting.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following accounts would not be on the post- closing trial balance?

Accepted Answer

A)   Accounts Payable
B)   Accounts Receivable
C)   Common Stock
D)   Dividends
E)   Retained EarningsF) A) and E)
G) B) and D)

Question 5

Adjusting entries:

Accepted Answer

A)   Affect only income statement accounts.
B)   Affect only balance sheet accounts.
C)   Affect both income statement and balance sheet accounts.
D)   Affect only cash flow statement accounts.
E)   Affect only equity accounts.F) B) and E)
G) A) and D)

Question 6

When expenses exceed revenues,there is a net loss and the Income Summary account would have a credit balance.

Accepted Answer

A) True 
 B)False

Question 7

Prepare general journal entries on December 31 to record the following unrelated year-end adjustments.
a.Estimated depreciation on office equipment for the year,$4,000.
b.The Prepaid Insurance account has a $3,680 debit balance before adjustment.An examination of insurance policies shows $950 of insurance expired.
c.The Prepaid Insurance account has a $2,400 debit balance before adjustment.An examination of insurance policies shows $600 of unexpired insurance.
d.The company has three office employees who each earn $100 per day for a five-day workweek that ends on Friday.The employees were paid on Friday,December 26,and have worked full days on Monday,Tuesday,and Wednesday,December 29,30,and 31.
e.On November 1,the company received six months' rent in advance from a tenant whose rent is $700 per month.The $4,200 was credited to the Unearned Rent account.
f.The company collects rent monthly from its tenants.One tenant whose rent is $750 per month has not paid his rent for December.

Accepted Answer

a.
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Question 8

On October 15,a company received $15,000 cash as a down payment on a consulting contract.The amount was credited to Unearned Consulting Revenue.By October 31,10% of the services required by the contract were completed.The company will record consulting revenue of $1,500 from this contract for October.

Accepted Answer

A) True 
 B)False

Question 9

Unearned revenue is reported on the financial statements as:

Accepted Answer

A)   A revenue on the balance sheet.
B)   A liability on the balance sheet.
C)   An unearned revenue on the income statement.
D)   An asset on the balance sheet.
E)   An operating activity on the statement of cash flows.F) A) and C)
G) A) and E)

Question 10

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

Accepted Answer

A)   Debit Prepaid Insurance, $1,800; credit Cash, $1,800.
B)   Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440.
C)   Debit Prepaid Insurance, $360; credit Insurance Expense, $360.
D)   Debit Insurance Expense, $360; credit Prepaid Insurance, $360.
E)   Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440.F) B) and D)
G) A) and B)

Question 11

The Income Summary account is used to close the permanent accounts at the end of an accounting period.

Accepted Answer

A) True 
 B)False

Question 12

Western Company has an annual reporting period that runs from July 1 through
June 30.Based on this information,which of the following is a true statement?

Accepted Answer

A)   Western probably has little seasonal variation in their sales.
B)   Western has violated the time period principle.
C)   Western must prepare financial statements as of December 31 each year.
D)   Western has adopted a fiscal year.
E)   Western does not have an accountant.F) None of the above
G) B) and D)

Question 13

Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

Accepted Answer

A) True 
 B)False

Question 14

The Retained Earnings account has a credit balance of $17,000 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)   $8,000
B)   $15,400
C)   $23,400
D)   $17,000
E)   $32,400F) C) and D)
G) B) and C)

Question 15

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees.If the company fails to make the end-of-period adjusting entry to record the portion of these fees that has been earned,one effect will be:

Accepted Answer

A)   An overstatement of equity.
B)   An understatement of equity.
C)   An understatement of assets.
D)   An understatement of liabilities.
E)   An overstatement of assets.F) A) and B)
G) B) and E)

Question 16

Use the following partial work sheet from Matthews Lanes to prepare its income statement,statement of changes in retained earnings,and a balance sheet

Accepted Answer

None...

Question 17

On December 31,Connelly Company had performed $5,000 of management services for clients that had not yet been billed.Prepare Connelly's adjusting entry to record these fees earned.

Accepted Answer

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Question 18

July 31,2013,the end of the quarter is on a Wednesday.Employees get paid each Friday for the week worked.Abel Co.has five employees who earn $100 per day each.Make the necessary adjusting journal entry for June 30.

Accepted Answer

Wages Payable…………………...

Question 19

The alternative method of accounting for prepayments

Accepted Answer

A)   Initially records all prepaid expenses with debits to expense accounts.
B)   Initially records all prepaid expenses with credits to expense accounts.
C)   Requires an adjusting entry because expenses are understated.
D)   Requires an adjusting entry if the prepaid is consumed during the period.
E)   Requires an adjusting entry because net income is understated.F) All of the above
G) A) and D)

Question 20

Match between columns
                        Premises:  Statements that show the effects of proposed transactions as if the transactions had already occurred.
 Entries recorded at the end of each accounting period to transfer end-of-period balances in revenue, expense and dividends accounts to retained earnings.
 A spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted trial balance and financial statements.
 The time span from when cash is used to acquire goods and services until cash is received from the sale of those goods and services.
 Accounts that are used to record transactions and events for one accounting period only; they include revenues, expenses and dividends.
 Accounts that reflect on activities related to one or more future periods; they include all balance sheet accounts.
 Recurring steps performed each accounting period, starting with analyzing and recording of transactions in the journal and continuing through the post-closing trial balance.
 Analyses and other informal reports prepared by accountants when organizing the information presented in reports and financial statements.
 A list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.
 A temporary account used only in the closing process and to where the balances of revenue and expense accounts are transferred.

Accepted Answer

The Answer of Working papers and Operating cycle and Income is...

Exam 3: Adjusting Accounts and Preparing Financial Statements

Use the following partial work sheet from Matthews Lanes to prepare its income statement,statement of changes in retained earnings,and a balance sheet

Correct Answer
verified
None...
View Answer

An asset that cost $50,000 was purchased on January 1.The asset has an estimated useful life of three years and an estimated salvage value of $3,200.Using the straight-line method,prepare the necessary adjusting journal entry for the end of the year.

Correct Answer
verified
Accumulated Deprecia...
View Answer

Correct Answer
verified

Unearned revenue is reported on the financial statements as:

Correct Answer
verified

Adjusting entries:

Correct Answer
verified

When expenses exceed revenues,there is a net loss and the Income Summary account would have a credit balance.

Correct Answer
verified

On December 31,Connelly Company had performed $5,000 of management services for clients that had not yet been billed.Prepare Connelly's adjusting entry to record these fees earned.

Correct Answer
verified
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View Answer

The Retained Earnings account has a credit balance of $17,000 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?

Correct Answer
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Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

Correct Answer
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Correct Answer
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A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees.If the company fails to make the end-of-period adjusting entry to record the portion of these fees that has been earned,one effect will be:

Correct Answer
verified

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

Correct Answer
verified

Correct Answer
verified
a.
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View Answer

July 31,2013,the end of the quarter is on a Wednesday.Employees get paid each Friday for the week worked.Abel Co.has five employees who earn $100 per day each.Make the necessary adjusting journal entry for June 30.

Correct Answer
verified
Wages Payable…………………...
View Answer

Which of the following accounts would not be on the post- closing trial balance?

Correct Answer
verified

Match the following definitions and terms

The alternative method of accounting for prepayments

Correct Answer
verified

The Income Summary account is used to close the permanent accounts at the end of an accounting period.

Correct Answer
verified

Western Company has an annual reporting period that runs from July 1 through June 30.Based on this information,which of the following is a true statement?

Correct Answer
verified

Since the revenue recognition principle requires that revenues be earned,there are no unearned revenues in accrual accounting.

Correct Answer
verified

Exam 3: Adjusting Accounts and Preparing Financial Statements

Use the following partial work sheet from Matthews Lanes to prepare its income statement,statement of changes in retained earnings,and a balance sheet

Correct AnswerverifiedNone...View AnswerShow Answer

An asset that cost $50,000 was purchased on January 1.The asset has an estimated useful life of three years and an estimated salvage value of $3,200.Using the straight-line method,prepare the necessary adjusting journal entry for the end of the year.

Correct AnswerverifiedAccumulated Deprecia...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Unearned revenue is reported on the financial statements as:

Correct AnswerverifiedShow Answer

Adjusting entries:

Correct AnswerverifiedShow Answer

When expenses exceed revenues,there is a net loss and the Income Summary account would have a credit balance.

Correct AnswerverifiedShow Answer

On December 31,Connelly Company had performed $5,000 of management services for clients that had not yet been billed.Prepare Connelly's adjusting entry to record these fees earned.

Correct Answerverified\[\begin{array} { | l | l | c ...View AnswerShow Answer

The Retained Earnings account has a credit balance of $17,000 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?

Correct AnswerverifiedShow Answer

Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees.If the company fails to make the end-of-period adjusting entry to record the portion of these fees that has been earned,one effect will be:

Correct AnswerverifiedShow Answer

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

Correct AnswerverifiedShow Answer

Correct Answerverified a. \[\begin{array} { | l | c | c | c | ...View AnswerShow Answer

July 31,2013,the end of the quarter is on a Wednesday.Employees get paid each Friday for the week worked.Abel Co.has five employees who earn $100 per day each.Make the necessary adjusting journal entry for June 30.

Correct AnswerverifiedWages Payable…………………...View AnswerShow Answer

Which of the following accounts would not be on the post- closing trial balance?

Correct AnswerverifiedShow Answer

Match the following definitions and terms

The alternative method of accounting for prepayments

Correct AnswerverifiedShow Answer

The Income Summary account is used to close the permanent accounts at the end of an accounting period.

Correct AnswerverifiedShow Answer

Western Company has an annual reporting period that runs from July 1 through June 30.Based on this information,which of the following is a true statement?

Correct AnswerverifiedShow Answer

Since the revenue recognition principle requires that revenues be earned,there are no unearned revenues in accrual accounting.

Correct AnswerverifiedShow Answer

Correct Answer
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None...
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Accumulated Deprecia...
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a.
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View Answer

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Wages Payable…………………...
View Answer

Correct Answer
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