Exam 3: Accrual Accounting

The bookkeeper for City Rentals closed the books before the accountant had had a chance to prepare the financial statements. Use the bookkeeper's closing entries to prepare, in good form, a statement of retained earnings for the year ended December 31, 2019, the first year of operations for this company. Closing Entries:

On December 31, 2019, a company signed a one-year contract to provide services to a particular customer for $12,000. The customer will pay for the services during January 2020. Using the accrual basis of accounting, when should the company recognize revenue?

-Refer to Cabana Club. Prepare all closing entries necessary based on the income statement for the year ended December 31, 2020.

The financial statements are prepared after

Match the following types of adjusting entries to the listed situation. (Choices may be used more than once.) -The cost of salaries earned by employees, but not paid at the end of the accounting period, is recorded

A company forgot to record four adjustments during the current year. Which one of the following omissions of adjustments will understate net income?

Which one of the following adjustments will increase assets?

Match the following types of adjusting entries to the listed situation. (Choices may be used more than once.) -The cost of supplies used during the year is recorded

Select the correct revenue recognition principle for each of the following. (Choices may be used more than once.) -Prepaid Subscriptions

The adjustment necessary to record the expense and the associated increase in the company's liabilities is ____________________.

Which statement presents financial information not based on accrual accounting?

What is the revenue recognition principle?

Match the following types of adjusting entries to the listed situation. (Choices may be used more than once.) -Insurance is earned in the current period, although collections from customers had been received in a previous period

Match the following types of adjusting entries to the listed situation. (Choices may be used more than once.) -Salaries Payable

-Refer to Cabana Club. Identify three specific expenses that might be accrued as a result of adjusting journal entries. Show what these entries would look like in journal format. Ignore amounts.

When revenue is earned after the earlier receipt of cash, an adjustment that increases a revenue account and decreases a liability account is recorded.

The worksheet facilitates preparation of the income statement, retained earnings statement and balance sheet but not the cash flow statement.

A company borrowed $100,000 from Better Bank on November 1, 2019. The terms of the loan (note) is 6% interest due in 4 months. A)Prepare the necessary journal entry on November 1, 2019, to record the loan. B)Prepare the necessary adjusting entry for this loan on December 31, 2019.

Why does the accrual basis of accounting require adjustments, while the cash basis does not?

When is revenue from the sale of merchandise normally recognized?