Exam 4: Income Measurement and Accrual Accounting

Cumberland City Consultants started business on January 1, 2015, and immediately purchased $1,000 of supplies to use in the business.At the end of the month, 25 percent of the supplies remains unpaid and 20% are still on hand.What amounts should appear on the financial statements for January, 2015?

Accumulated depreciation is increased when depreciation is recognized.

The asset account, Supplies, has a balance of $700 on January 1.During January, the company purchased $16,000 of supplies on account and the liability was appropriately recorded.A count of supplies at the end of January indicates a balance of $900.Which one of the following is a correct amount to be reported on the company's financial statements for the month ending January 31?

The names of the four major types of adjusting entries are , _________________________, _________________________, and _________________________.

Which one of the following is not a recognized method of recognizing assets as expenses in a particular accounting period?

Most companies use the cash basis of accounting.

Balance sheet accounts are called real accounts.

Recognition is the process of formally recording or incorporating an item into the financial statements.

Esquire Industrial plant operates five days per week with a daily payroll of $4,000.Employees are paid every Saturday for the workweek just completed Monday through Friday).The last day of the month is Wednesday, March 31.What is the effect of the correct adjustment at March 31?

Mitchell Company prepares monthly financial statements and will record.a prepaid account for each of the following except:

Roman Industries' plant operates five days per week with a daily payroll of $6,000.Employees are paid every Saturday for the workweek just completed Monday through Friday).The last day of the month is Wednesday, March 31.What is the amount of Wages Expense recorded on the next payday, Saturday, April 3?

The selection of historical cost over current value as the attribute to be measured for assets is an example of the trade-off of

The amount of cash that could be received by selling an asset currently is called historical cost.

Norys Corp.received an 8-month, 9% note for $100,000 from its agent on October 1, 2014.The note is due on May 30, 2015.If Norys' accounting period ends on December 31, 2014, how much interest revenue should Norys recognize during 2014 and 2015?

Carrington & Co.rented office space to a tenant on January 31 and received a total of $9,000 for the first three months of rent.The amount was recorded as Rent Collected in Advance when received.Adjustments are recorded only at the end of every quarter.What effect does the adjustment at March 31 have on Carrington's net income for the quarter ending March 31?

While most companies make adjustments and prepare statements monthly, many companies complete the accounting cycle only once per year.

Which one of the following adjustments will increase assets?

Failure to record depreciation expense for the period results in which of the following?

An) creates an increase in income for the period.

Hensley Painting Company painted four houses in June at $500 each.At the end of June, three homeowners had paid Hensley cash for the jobs.Under the accrual basis, what amounts will be reported on the income statement and the statement of cash flows for June?