Exam 4: Income Measurement and Accrual Accounting

Which one of the following is the last step in the accounting cycle?

Match the most probable matching method to the costs listed below. -Cost of two-year insurance policy

Vivo Co.received an 8-month, 9% note for $100,000 from its agent on October 1, 2016.The note is due on May 30, 2017.If Vivo accounting period ends on December 31, 2016, how much interest revenue should Vivo recognize during 2016 and 2017? ​ a. \ 3,750 \ 2,250 b. \ 2,250 \ 3,750 c. \ 9,000 \ 0 d. \ 3,375 \ 5,625

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. Employees are owed $750 for services since the last payday in July, to be paid the first week in August.The amount to be reported in the July income statement for salaries expense is:

What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers?

Every company prepares only four adjustments-one for each of the four types of adjustments.

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

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? ​ Income Statement Statement of Cash Flows a. ( \2 ,000) ( \2 ,000) b. ( \2 ,000) ( \1 ,500) c. ( \1 ,500) ( \1 ,500) d. ( \5 00) ( \5 00)

When a company recognizes the portion of supplies used during a year, the effect is to decrease net income.

Matching can occur directly (like cost of goods sold), indirectly (like plant assets), or immediately when no future benefits from the cost are expected.

Lucky Company purchased a truck at a cost of $12,000 in 2011.As of January 1, 2016, depreciation of $10,000 had been recorded on this asset.Depreciation expense for 2016 is $2,000.After the adjustments are recorded and posted at December 31, 2016, what is the carrying value of the truck?

Failure to record accrued interest expense would result in which of the following?

Match the following choices to the listed situation. -One year's premium on truck insurance was paid in advance

Temporary accounts are also known as _________________ accounts.

An accountant describes the effects of an economic event on an entity by recording the transaction and reporting the amount on the financial statements.What is this called?

Autumn Resorts purchased guest room furniture on January 1, 2015 for $120,000.The furniture has an estimated useful life of ten years.What amount will appear on Autumn's income statement for depreciation expense for the year ending June 30, 2016?

A decline in purchasing power is evidenced by all of the following except:

For each transaction select the letter of the type of adjustment that would be required -The cost of salaries earned by employees, but not paid at the end of the accounting period is recorded

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. On July 31, the amount of supplies on hand is $520.What amount is reported in the July income statement for supplies expense?

Starlight Associates, Inc.recorded salary expense of $100,000 in 2016.However, additional salaries of $5,000 had been earned, but not paid or recorded at December 31, 2016.After the adjustments are recorded and posted at December 31, 2016, the balances in the Salaries Expense and Salaries Payable accounts will be: ​ a. \ 105,000 \ 5,000 b. \ 100,000 \ 0 c. \ 100,000 \ 5,000 d. \ 105,000 \ 0