Exam 3: Adjusting the Accounts

Mother Hips Garment Company purchased equipment on June 1 for $90000 paying $20000 cash and signing a 9% 2-month note for the remaining balance. The equipment is expected to depreciate $18000 each year. Mother Hips Garment Company prepares monthly financial statements. Instructions (a) Prepare the general journal entry to record the acquisition of the equipment on June 1st. (b) Prepare any adjusting journal entries that should be made on June 30th. (c) Show how the equipment will be reflected on Mother Hips Garment Company's balance sheet on June 30th.

A common application of materiality is weighing the factual nature of cost figures versus the relevance of fair value.

The income statement is an important financial statement used by individuals who are interested in the operations of a business enterprise. Explain how the time period assumption and the revenue recognition and expense recognition principles provide guidance to accountants in preparing an income statement.

On January 2 2016 Tucson Co. purchased a general liability insurance policy for $3600 for coverage for the calendar year. The entire $3600 was charged to Insurance Expense on January 2 2016. If the firm prepares monthly financial statements the proper adjusting entry on January 31 2016 will be: a. Insurance Expense 3,300 Prepaid Insurance 3,300 b. Prepaid Insurance 3,300 Insurance Expense 3,300 c. Insurance Expense 300 Prepaid Insurance 300 d. Prepaid Insurance 300 Insurance Expense 300

Which of the statements below is not true?

Hoo Ya Corporation issued a one-year 4% $180000 note on August 31 2016. Interest expense for the year ended December 31 2016 was

Boneta City College sold season tickets for the 2016 football season for $250000. A total of 8 games will be played during September October and November. In September three games were played. The adjusting journal entry at September 30

Which one of the following is not an application of revenue recognition?

The revenue recognition principle dictates that revenue be recognized in the accounting period

Adjusting entries are not necessary if the trial balance debit and credit column balances are equal.

From an accounting standpoint the acquisition of productive facilities can be thought of as a long-term

The White Stripes Animal Encounters operates a drive through tourist attraction. The company adjusts its accounts at the end of each month. The selected accounts appearing below reflect balances after adjusting entries were prepared on April 30. The adjusted trial balance shows the following: Prepaid Rent \ 16,000 Buildings 30,000 Accumulated Depreciation-Buildings 6,600 Unearned Ticket Revenue 600 Other data: 1. Three months' rent had been prepaid on April 1. 2. The buildings are being depreciated at $7200 per year. 3. The unearned ticket revenue represents tickets sold for future visits. The tickets were sold at $5.00 each on April 1. During April thirty of the tickets were used by customers. Instructions (a) Calculate the following: 1. Monthly rent expense. 2. The age of the buildings in months. 3. The number of tickets sold on April 1. (b) Prepare the adjusting entries that were made by the White Stripes Animal Encounters on April 30.

The balance in the Prepaid Rent account before adjustment at the end of the year is $24000 which represents three months' rent paid on December 1. The adjusting entry required on December 31 is to

Which of the following time periods would not be referred to as an interim period?

The time period assumption is used under

In general the shorter the time period the difficulty of making the proper adjustments to accounts

If unearned revenues are initially recorded in revenue accounts and not all the related services been performed at the end of the accounting period then failure to make an adjusting entry will cause

The time period assumption states that the economic life of a business can be divided into

To be faithfully representative accounting information should predict future events confirm prior expectations and be reported on a timely basis.

Which of the following is not a common time period chosen by businesses as their accounting period?