Exam 3: Adjusting the Accounts

The following is selected information from Monty Corporation for the fiscal year ending October 31 2016. Cash received from customers \ 300,000 Revenue recognized 378,000 Cash paid for expenses 180,000 Cash paid for computers on November 1,2015 that will be used for 3 years (annual depreciation is \ 15,000 ) 45,000 Expenses incurred, including interest, but excluding any depreciation 230,000 Proceeds from a bank loan, part of which was used to pay for the computers 100,000 Based on the accrual basis of accounting what is Monty Corporation's net income for the year ending October 31 2016?

Which of the following would not result in unearned revenue?

On-Time Truckers prepares monthly financial statements. On July 1 the Supplies account had a balance of $3500. During July additional supplies were purchased for $4800 and that amount was debited to Supplies Expense. On July 31 a physical count of supplies revealed that there was $2200 on hand. Prepare the adjusting journal entry that On-Time Truckers should make on July 31. 2. Zumba Rental Agency prepares monthly financial statements. On September 1 a check for $9600 was received from a tenant for six months' rent. The full amount was credited to Rent Revenue. Prepare the adjusting entry the company should make on September 30.

Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause

An item is considered material if

Accumulated Depreciation is

The ______________ principle gives accountants guidance as to when revenue is to be recorded.

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

RockNRoll Music Store borrowed $24000 from the bank signing a 5% 3-month note on September 1. Principal and interest are payable to the bank on December 1. If the company prepares monthly financial statements the adjusting entry that the company should make for interest on September 30 would be

Unearned revenues are

The following terms relate to the fundamental qualities of useful information. Match the key letter of the correct term with the descriptive statement below.

The revenue recognition principle dictates that revenue should be recognized in the accounting records

The adjusting entry at the end of the period to record an expired cost may be different depending on whether the cost was initially recorded as an asset or an expense.

Expenses sometimes make their contribution to revenue in a different period than when they are paid. When salaries and wages are incurred in one period and paid in the next period this often leads to which account appearing on the balance sheet at the end of the time period?

The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.

An accounting time period that is one year in length but does not begin on January 1 is referred to as

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause

The economic entity assumption states that economic events can be identified with a particular unit of accountability.

Book value is also referred to as

An adjusted trial balance should be prepared before the adjusting entries are made.