Jenning Co. adjusts its books each month but closes its books at the end of the year. The trial balance at July 31 before adjustments is as follows: $\begin{array} { l r r } & \text { Debit } & \text { Credit } \\ \text { Cash } & \$ 12,920 & \\ \text { Accounts Receivable } & 9,620 & \\ \text { Supplies } & 1,400 & \\ \text { Prepaid Insurance } & 3,120 & \\ \text { Equipment } & 26,000 & \\ \text { Accumulated Depreciation-Equipment } && \$ 10,400 \\ \text { Unearned Service Revenue } && 6,500 \\ \text { Capital Stock } && 7,190 \\ \text { Retained Earnings } && 23,500\\ \text { Dividends } & 1,560 & \\ \text { Service Revenue } & & 16,510 \\ \text { Wages and Salaries Expense } & 7,800 & \\ \text { Utilities Expense } & 380 & \\ \text { Rent Expense } & 1,300 \\ &\$ 64.100& \$ 64.100\\ \end{array}$ -Refer to the trial balance for Jenning Co. According to contracts, $4,810 of Unearned Service Revenue has been earned in July.Which of the following is the correct amount of Service Revenue to be reported in the July income statement?

A) $20,410 B) $11,700 C) $21,320 D) $16,510 A) $20,410 B) $11,700 C) $21,320 D) $16,510

Exam 4: Income Measurement and Accrual Accounting

The justification for the accrual basis of accounting lies in the needs of financial statement users for periodic information on the financial position and the profitability of the entity.

(True/False)

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Question 41

After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $37,875 and $32,735, respectively.What is the amount of net income or net loss for the period?

(Multiple Choice)

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Question 42

All financial statements are prepared using the accrual basis of accounting.

(True/False)

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Question 43

Alexander City Consultants started business on January 1, 2016, 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, 2016? Income Statement Statement of Cash Flows a. ( \1 ,000) ( \1 ,000) b. ( \1 ,000) ( \7 50) c. ( \8 00) ( \2 5) d. ( \8 00) ( \7 50)

(Short Answer)

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Question 44

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?

(Multiple Choice)

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Question 45

Under the accrual basis of accounting, at what point in time should a publisher of magazines record revenue? ______________________________

(Short Answer)

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Question 46

Jenning Co. adjusts its books each month but closes its books at the end of the year. The trial balance at July 31 before adjustments is as follows: Debit Credit Cash \ 12,920 Accounts Receivable 9,620 Supplies 1,400 Prepaid Insurance 3,120 Equipment 26,000 Accumulated Depreciation-Equipment \ 10,400 Unearned Service Revenue 6,500 Capital Stock 7,190 Retained Earnings 23,500 Dividends 1,560 Service Revenue 16,510 Wages and Salaries Expense 7,800 Utilities Expense 380 Rent Expense 1,300 \ 64.100 \ 64.100 -Refer to the trial balance for Jenning Co. According to contracts, $4,810 of Unearned Service Revenue has been earned in July.Which of the following is the correct amount of Service Revenue to be reported in the July income statement?

(Multiple Choice)

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Question 47

Vake purchased supplies at a cost of $18,000 during 2016.At January 1, 2016, the beginning balance in the supplies account was $1,000.For 2016, supplies expense was $16,000.How much "Supplies" are on hand as of December 31, 2016?

(Multiple Choice)

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Question 48

Remaz Corp.purchased equipment at a cost of $220,000 in January, 2015.As of January 1, 2016, depreciation of $160,000 had been recorded on this asset.Depreciation expense for 2014 is $50,000.After the adjustments are recorded and posted at December 31, 2016, what are the balances for the Equipment and Accumulated Depreciation? a. \ 220,000 \ 210,000 b. \ 220,000 \ 0 c. \ 160,000 \ 50,000 d. \ 120,000 \ 210,000

(Short Answer)

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Question 49

What does the phrase, "Revenue is recognized at the point of sale" mean?

(Multiple Choice)

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Question 50

A(n) _________________________ results when cash is received before the related amount is reported on the income statement.

(Short Answer)

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Question 51

An entry that includes the Cash account is probably an adjustment.

(True/False)

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Question 52

____________________ is a rise in the general level of prices in the economy and results in a decrease in purchasing power.

(Short Answer)

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Question 53

Dom's Motor Mart sold merchandise to a customer for $3,000 on credit on March 10.The customer paid Fox Auto the amount due on March 31.Under the accrual basis of accounting, which of the following statements is true?

(Multiple Choice)

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Question 54

A(n) _________________________ results when cash is paid before the related amount is reported on the income statement.

(Short Answer)

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Question 55

The revenue recognition principle involves two factors: paid and incurred.

(True/False)

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Question 56

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

(Multiple Choice)

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Question 57

____________________ is the name given to revenue, expense, and dividend accounts because they are closed at the end of the period.

(Short Answer)

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Question 58

Accumulated Depreciation

(Multiple Choice)

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Question 59

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

(Short Answer)

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Question 60

The justification for the accrual basis of accounting lies in the needs of financial statement users for periodic information on the financial position and the profitability of the entity.

After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $37,875 and $32,735, respectively.What is the amount of net income or net loss for the period?

All financial statements are prepared using the accrual basis of accounting.

Under the accrual basis of accounting, at what point in time should a publisher of magazines record revenue? ______________________________

Vake purchased supplies at a cost of $18,000 during 2016.At January 1, 2016, the beginning balance in the supplies account was $1,000.For 2016, supplies expense was $16,000.How much "Supplies" are on hand as of December 31, 2016?

What does the phrase, "Revenue is recognized at the point of sale" mean?

A(n) _________________________ results when cash is received before the related amount is reported on the income statement.

An entry that includes the Cash account is probably an adjustment.

____________________ is a rise in the general level of prices in the economy and results in a decrease in purchasing power.

Dom's Motor Mart sold merchandise to a customer for $3,000 on credit on March 10.The customer paid Fox Auto the amount due on March 31.Under the accrual basis of accounting, which of the following statements is true?

A(n) _________________________ results when cash is paid before the related amount is reported on the income statement.

The revenue recognition principle involves two factors: paid and incurred.

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

____________________ is the name given to revenue, expense, and dividend accounts because they are closed at the end of the period.

Accumulated Depreciation

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

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities, Contingencies, and the True Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Exploring Accounting Standards and Differences around the World

Filters

Exam 4: Income Measurement and Accrual Accounting

The justification for the accrual basis of accounting lies in the needs of financial statement users for periodic information on the financial position and the profitability of the entity.

After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $37,875 and $32,735, respectively.What is the amount of net income or net loss for the period?

All financial statements are prepared using the accrual basis of accounting.

Under the accrual basis of accounting, at what point in time should a publisher of magazines record revenue? ______________________________

Vake purchased supplies at a cost of $18,000 during 2016.At January 1, 2016, the beginning balance in the supplies account was $1,000.For 2016, supplies expense was $16,000.How much "Supplies" are on hand as of December 31, 2016?

What does the phrase, "Revenue is recognized at the point of sale" mean?

A(n) _________________________ results when cash is received before the related amount is reported on the income statement.

An entry that includes the Cash account is probably an adjustment.

____________________ is a rise in the general level of prices in the economy and results in a decrease in purchasing power.

Dom's Motor Mart sold merchandise to a customer for $3,000 on credit on March 10.The customer paid Fox Auto the amount due on March 31.Under the accrual basis of accounting, which of the following statements is true?

A(n) _________________________ results when cash is paid before the related amount is reported on the income statement.

The revenue recognition principle involves two factors: paid and incurred.

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

____________________ is the name given to revenue, expense, and dividend accounts because they are closed at the end of the period.

Accumulated Depreciation

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

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities, Contingencies, and the True Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Exploring Accounting Standards and Differences around the World

Filters

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