Exam 3: Adjusting Accounts for Financial Statements

What is the purpose of a post-closing trial balance?

Why are financial statements prepared in a specific order?What is the usual order in which financial statements are prepared from the adjusted trial balance?

On April 1,Garcia Publishing Company received $1,548 from Otisco,Inc.for 36-month subscriptions to several different magazines.The subscriptions started immediately.What is the amount of revenue that should be recorded by Garcia Publishing Company for the second year of the subscription assuming the company uses a calendar-year reporting period?

An annual reporting period consisting of any twelve consecutive months is known as:

On April 1,Otisco,Inc.paid Garcia Publishing Company $1,548 for 36-month subscriptions to several different magazines.Otisco debited the prepayment to a Prepaid Subscriptions account,and the subscriptions started immediately.What amount should appear in the Prepaid Subscription account for Otisco,Inc.after adjustments on December 31 of the second year assuming the company is using a calendar-year reporting period and the previous year adjustment had been made?

On a work sheet,the adjusted balances of revenues and expenses are sorted to the Income Statement columns of the work sheet.

The Retained earnings account has a credit balance of $37,000 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?

Cash and office supplies are both classified as current assets.

On November 1,Jasper Company loaned another company $100,000 at a 6.0% interest rate.The note receivable plus interest will not be collected until March 1 of the following year.The company's annual accounting period ends on December 31.The amount of interest revenue that should be reported in the first year is:

Identify the primary differences between accrual accounting and cash basis accounting.

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

The current ratio:

A benefit of using a work sheet is that it aids in the preparation of the financial statements.

If accrued salaries were recorded on December 31 with a debit to Salaries Expense and a credit to Salaries Payable,and no reversing entries were made on January 1,the entry to record payment of these wages on the following January 5 would include:

In preparing statements from the adjusted trial balance,the balance sheet must be prepared first.

Based on the following information from Scranton Company's balance sheet,calculate the current ratio.

Accumulated Depreciation and Service Fees Earned would be sorted to which respective columns in completing a work sheet?

Given the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" followed by the amount for overstatements,a "-" followed by the amount for understatements,and a "0" for no effect.The first one is done as an example. Ex.Failed to recognize that $600 of unearned revenues,previously recorded as liabilities,had been earned by year-end. 1.Failed to accrue interest expense of $200. 2.Forgot to record $7,700 of depreciation on machinery. 3.Failed to accrue $1,300 of revenue earned but not collected.

If the Balance Sheet and Statement of Retained Earnings columns of a work sheet fail to balance when the net income is added to the Balance Sheet and Statement of Retained Earnings Credit column,the cause could be:

A company performs 20 days of work on a 30-day contract before the end of the year.The total contract is valued at $6,000 and payment is not due until the contract is fully completed.The required adjusting entry includes a $4,000 debit to Unearned Revenue.