Exam 3: Adjusting Accounts for Financial Statements

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.

Permanent accounts include all of the following except:

Financial statements can be prepared directly from the information in the adjusted trial balance.

Identify the types of adjusting entries and explain the purpose of each type.

A company's employees earn a total of $10,000 per week for a 5-day week that begins on Monday.December 31 of Year 1 is a Monday,and all employees worked that day. a)Prepare the required adjusting journal entry to record accrued salaries on December 31,Year 1. b)Prepare the journal entry to record the payment of salaries on January 4,Year 2.(Assume no reversing entries were made).

If a company failed to make the end-of-period adjustment to move the amount of management fees that were earned from the Unearned Management Fees account to the Management Fees Revenue account,this omission would cause:

Profit margin = ________ divided by net sales.

The time period assumption assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

Each adjusting entry will affect a balance sheet account.

Which of the following statements is incorrect?

On December 1,Milton Company borrowed $300,000,at 8% annual interest,from the Tennessee National Bank.Interest is paid when the loan matures one year from the issue date.What is the adjusting entry for accruing interest that Milton would need to make on December 31,the calendar year-end?

It is obvious that an error occurred in the preparation and/or posting of closing entries if:

A company pays each of its two office employees each Friday at the rate of $100 per day for a five-day week that begins on Monday.If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday,the month-end adjusting entry to record the salaries earned but unpaid is:

A fiscal year refers to an organization's accounting period that spans twelve consecutive months or 52 weeks.

The trial balance prepared after all closing entries have been journalized and posted is called the:

The adjusted trial balance contains information pertaining to:

Permanent accounts carry their balances into the next accounting period.

The entry to record a cash receipt from a customer when the service is to be provided in a future period involves a debit to an unearned revenue account.

161.On July 1 of the current calendar year,Olive Co.paid $7,500 cash for management services to be performed over a two-year period beginning July 1.Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.The adjusting entry on December 31 of the current year for Olive would include:

The first five steps in the accounting cycle include analyzing transactions,journalizing,posting,preparing an unadjusted trial balance,and recording adjusting entries.