Exam 4: Income Measurement and Accrual Accounting

Motor Repair Shop uses the accrual basis of accounting, and had the following account balances on its financial statements at December 31, 2014: On January 1, the Utilities Payable Account had a zero balance. Motor Repair paid cash for utilities totaling $45,000 during 2014. How much should Motor Repair report as utilities expense as of December 31, 2014?

The following unadjusted amounts were taken from Ruben Gifts' accounting records at December 31, 2015: A Determine the effects on the accounting equation of any adjusting entries necessary for Ruben Gifts at December 31, 2015, for both of the following transactions: 1 During December of 2015, Ruben Gifts had received payments from tenants that were renting storage space in its warehouse. The payments received by Ruben Gifts were for the period December, 2015, and January, 2016. 2 At the end of the year, Ruben Gifts determined that $240 of office supplies remained on hand. B What is the effect of omitting these adjustments on the current year's net income?

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

On August 31, Farrell Corporation signed a one-year contract to provide services to Harris Company for $30,000. Harris will pay for the services on September 1. Using the accrual basis of accounting, when should Farrell Corporation recognize revenue?

Mendes Company sells merchandise to customers. Mendes should normally recognize

Failure to record amounts earned for services provided to customers but not yet paid results in which of the following

Starlight Associates, Inc. recorded salary expense of $100,000 in 2015. However, additional salaries of $5,000 had been earned, but not paid or recorded at December 31, 2015. After the adjustments are recorded and posted at December 31, 2015, the balances in the Salaries Expense and Salaries Payable accounts will be:

Select the correct revenue recognition principle for each of the following. -Carpet cleaning

A cost can be an asset or expense depending on whether the future economic benefits have expired or not.

Refer to the consolidated statements of income for Scenic View Foods Corporation. Required: 1 Notice that Scenic View Foods reported "Provision for income taxes." What type of account is this? What adjustment would have been made if this accrual were necessary at December 31, 2016? 2 Scenic View Foods reported $3.1 million and $2.8 million of accrued interest in the liability section of its balance sheet at December 31, 2016 and 2015, respectively. How much cash did it pay during 2016 for interest? 3 Is Scenic View Foods income statement an "interim statement"? Explain.

Because of its objective nature, historical cost is the attribute used to measure many of the assets recognized on the balance sheet.

What is the significance of the timing in which cash is paid or received as it relates to the adjusting process?

According to the revenue recognition principle, revenues are recognized when they are _________________________.

Calzone, Inc. signs a 9% 4-month $50,000 loan with Reliable Bank on October 1, 2015. Determine the effects on the accounting equation for the following items: A. The signing of the loan on October 1, 2015 by Calzone, Inc. B. The recording of the interest on December 31, 2015 by Calzone, Inc.

From the list of accounts below, determine whether the account would be a nominal account or a real account. -Office Equipment

Which one of the following steps in the accounting cycle is optional rather than required?

Adjusting entries are recorded at the end of each accounting period so that net income is accurately reflected in the financial statements for the period

Match the following choices to the listed situation. -A warehouse building was acquired for cash

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?

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