Exam 3: Adjusting Accounts for Financial Statements

A company had no office supplies available at the beginning of the year.During the year,the company purchased $250 worth of office supplies.On December 31,$75 worth of office supplies remained.How much should the company report as office supplies expense for the year?

A company shows a $600 balance in Prepaid Rent in the Unadjusted Trial Balance columns of the work sheet.The Adjustments columns show expired rent of $200.This adjusting entry results in:

A trial balance prepared after adjustments have been recorded is called a(n):

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

At the beginning of the year,a company's balance sheet reported the following balances: Total Assets = $225,000; Total Liabilities = $25,000; Total Paid-in capital of $100,000; and Retained earnings = $100,000.During the year,the company reported revenues of $46,000 and expenses of $30,000.In addition,dividends for the year totaled $20,000.Assuming no other changes to Retained earnings,the balance in the Retained earnings account at the end of the year would be:

Costs incurred during an accounting period but unpaid and unrecorded are accrued expenses.

Under the accrual basis of accounting,adjustments are often made for prepaid expenses and unearned revenues.

Which of the following accounts is a permanent (real)account?

Two accounting principles central to accrual accounting basis that are relied on in the adjusting process are:

The adjusting entry to record an accrued expense is:

How is a classified balance sheet different from an unclassified balance sheet? List the usual order of the categories on a classified balance sheet.

Accrued revenues at the end of one accounting period are expected to result in cash collections in a future period.

Plant assets are usually listed in order from most liquid to least liquid.

The following information is available for Cubic Company before closing the accounts.After all closing entries are made,what will be the balance in the Retained earnings account?

Assuming prepaid expenses are originally recorded in balance sheet accounts,the adjusting entry to record use of a prepaid expense is:

Which of the following statements is incorrect?

All necessary amounts to prepare the balance sheet,including ending retained earnings,can be found in the Balance Sheet columns of the work sheet.

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

Accrued expenses reflect transactions where cash is paid before a related expense is recognized.

Record the December 31 adjusting entries for the following transactions and events in general journal form.Assume that December 31 is the end of the annual accounting period. a.The Prepaid Insurance account shows a debit balance of $2,340,representing the cost of a two-year fire insurance policy that was purchased on October 1 of the current year and has not been adjusted to-date. b.The Store Supplies account has a debit balance of $400; a year-end inventory count reveals $80 of supplies still on hand. c.On November 1 of the current year,Rent Earned was credited for $1,500.This amount represented the rent earned for a three-month period beginning November 1. d.Estimated depreciation on store equipment is $600. e.Accrued salaries amount to $1,400.