Exam 3: Adjusting Accounts for Financial Statements

It is acceptable to record cash received in advance of providing products or services to revenue accounts if an adjusting entry is made at the end of the period to bring the liability account balance to the correct unearned amount.

Which of the following statements is true?

The calendar year-end adjusted trial balance for Blessinger Co.follows: BLESSINGER CO. Adjusted Trial Balance December 31 Required: (a)Prepare a classified year-end balance sheet.(Note: A $9,000 installment on the long-term note payable is due within one year.) (b)Prepare the required closing entries.

A balance sheet that places the liabilities and equity to the right of the assets is a(n):

A ________ account is an account linked with another account,having an opposite normal balance,and reported as a subtraction from that other account's balance.

An account linked with another account that has an opposite normal balance and is subtracted from the balance of the related account is a(n):

Long-term investments can include land held for future expansion.

Accrual accounting and the adjusting process rely on two principles: the ________ principle and the ________ principle.

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation.What is the book value of the furniture on December 31 of the first year?

Revenue and expense accounts are permanent (real)accounts and should not be closed at the end of the accounting period.

The expense recognition (matching)principle does not aim to record expenses in the same accounting period as the revenue earned as a result of these expenses.

Closing entries are required at the end of each accounting period to close all ledger accounts.

A trial balance prepared before any adjustments have been recorded is:

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:

Fragmental Co.leased a portion of its store to another company for eight months beginning on October 1,at a monthly rate of $800.Fragmental collected the entire $6,400 cash on October 1 and recorded it as unearned revenue.Assuming adjusting entries are only made at year-end,the adjusting entry made by Fragmental Co.on December 31 would be:

Which of the following accounts showing a balance on the post-closing trial balance indicate an error?

Assets are often classified into current assets,long-term investments,plant assets,and intangible assets.

On October 1,Vista View Goodwell Company rented warehouse space to a tenant for $2,500 per month and received $12,500 for five months' rent in advance on that date,with the lease beginning immediately.The cash receipt was credited to the Unearned Rent account.The company's annual accounting period ends on December 31.The Unearned Rent account balance at the end of December,after adjustment,should be:

Closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period.

A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400.If office supplies expense for the year is $3,100,what amount of office supplies was purchased during the period?