Exam 3: Review of a Companys Accounting System

Several accounts are listed below: a.Purchases Returns and Allowances b.SalesDiscounts c.Wages Expense d.Allowance for Doubtful Accounts e.Une anned Rent f.Income Taxes Payable g.Dividends Distributed h.Interest Revenue i.Inventory Required: List the accounts above that would normally have a credit balance.

On October 1, 2010, Billy's Beach Umbrellas borrowed $2, 000 on a 12%, one-year note payable.Interest was payable semiannually.A correct adjusting entry was made on December 31, 2010, and a correct reversing entry was made on January 1, 2011.The entry that should be made on March 31, 2011, is

Which of the following is a contra account?

On June 1, 2010, Barker Industries purchased a one-year comprehensive insurance policy and paid the annual premium of $12, 000.Which of the following could not result from the acquisition of the insurance coverage on June 1?

The accountant failed to make the adjusting entry to record the depreciation for the year.This error would cause

Triple Play Company engaged in the following transactions during the month of August: August $4 \quad$ Purchased $\$ 2,000$ of merchandise on account, terms $1 / 10,12 / 30$ . 5 $\quad$ Returned $\$ 300$ of the merchandise purchased on Aug 4 because it was defective. 6 $\quad$ Purchased a machine for $\$ 4,000$ . Paid $20 \%$ down and signed an $8 \%$ , two-month note for the balance 8 $\quad$ Purchased $\$ 800$ of merchanchse and paid $\$ 820$ , which included freight. 13 $\quad$ Paid the balance due on the purchase of Aug 4 . Required: Record these transactions in a general journal, assuming Triple Play uses a periodic inventory system.

Which of the following is an economic resource that should be depreciated over the accounting periods estimated to be benefited?

Which of the following adjusting entries would not be reversed in the following accounting period?

On November 1, 2010, the Morrison Company purchased a two-year umbrella insurance policy for $3, 000 and recorded the transaction by debiting Prepaid Insurance and crediting Cash.Which of the following adjusting entries would be used by Morrison to properly account for prepaid insurance on December 31, 2010?

The accrual basis of accounting is a system that attempts to measure changes in economic value in an entity as they affect the accounting equation, regardless of the timing of actual cash flows. Required: First, describe the timing of revenue and expense recognition under the accrual basis versus the cash basis of accounting.Then, give two examples of (1)a revenue-related transaction and (2)an expense-related transaction that would be reported at significantly different points in time using the accrual basis versus the cash basis.

Figure APC-2 is the condensed worksheet for the Ralph Company as of December 31, 2010. Additional Information: Required: Complete the worksheet, assuming that adjusting entries are made only at December 31.

Accrued revenues

Which statement is not true?

Computer software has become an important element in every company's accounting information system today.Most companies are now using computers to process their accounting information. Required: List the common types of software packages used for the financial accounting functions and explain what each is designed to provide.

Which of the following errors will be detected by a trial balance?

Which of the following is a nominal account?

The accountant failed to make the adjusting entry to record the amount of interest owed on a note to the bank at the end of the year.This error would cause an overstatement of

Several transactions for Buckner, Inc., are presented below.The company adjusts its books only at year-end. a. On August 1, the company rented some land from another company for $\$ 2,160$ for a three-year time period. Buckner charged an expense account on August 1. b. On Febuary 1, Buckner received $\$ 6,000$ for a four-ye ar techrical service contract. Buckner is performing the services evenly over the four-year period. The company credited a liability account on February 1. c.On May 1, Buckner loaned $\$ 4,400$ to another company on a $12 \%$ , one-year note. d.The weekly (five-day) payroll of Buckner amounts to $\$ 2,000$ . All employees are prid at the close of business each Friday. December 31 falls on a Thursday. Required: Prepare adjusting entries for December 31.

On March 31, 2010, the Trident Company purchased a two-year fire insurance policy.Tricot recorded the purchase by debiting Prepaid Insurance and crediting Cash for $12, 000.Which of the following adjusting entries should Trident prepare at the end of 2010?

On a worksheet, the balance in the accumulated depreciation account should be extended to which column?