Exam 4: Adjustments,financial Statements,and Financial Results

Assume that no dividends were declared during the current year.Which of the following statements about the effect of a net loss on the closing process is correct?

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(Multiple Choice)

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Question 1

Correct Answer:

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Permanent accounts are found on:

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(Multiple Choice)

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Question 2

Correct Answer:

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On April 30,2016,Rudolph Inc.purchased a three-year insurance policy with a cash payment of $18,000.Coverage began immediately. Required: Part a.What is the amount of Insurance Expense relating to this insurance policy that will be reported for the year ended December 31,2016? Part b.What is the balance of the Prepaid Insurance account at December 31,2016?

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(Essay)

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Question 3

Correct Answer:

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Part a
Monthly insurance cost = $18,000 ÷ 36 months = $500 per month
Eight months of coverage (May through December)occurred during 2016
Insurance Expense for 2016 = $500 x 8 = $4,000
Part b
Ending Prepaid Insurance = Beginning Prepaid Insurance + Prepayment - Expired portion
= $0 +$18,000 - $4,000 (from part a)= $14,000
Alternatively:
28 months of coverage (January 2017 through March 2019)is unexpired at December 31,2016
Ending balance = Cash payment x Unexpired portion
= $18,000 x 28/36 = $14,000

Which of the following statements about the Dividends account is not correct?

(Multiple Choice)

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Question 4

The adjustment for supplies used during the period will result in a debit to the account and a credit to the account.

(Multiple Choice)

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Question 5

The table below includes some of the accounts that are included on a company's chart of accounts. Required: For each of the accounts listed,identify whether the account is a temporary (T)or a permanent (P)account.Then,indicate whether the account will be closed with a debit (Dr)or credit (Cr)or whether it will not be closed (NC).

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Question 6

After net income has been determined,it is then transferred to the:

(Multiple Choice)

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Question 7

What are the effects on the accounting equation from the adjustment for income tax expense accrued,but not paid,at the end of the accounting period?

(Multiple Choice)

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Question 8

What is the effect of the adjusting entry for depreciation on the accounting equation?

(Multiple Choice)

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Question 9

Which of the following statements about adjustments is not correct?

(Multiple Choice)

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Question 10

Which is the first financial statement that should prepared after the adjusted trial balance has been prepared?

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Question 11

Depreciation is a measure of the decline in market value of an asset.

(True/False)

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Question 12

Which line item is reported on both the income statement and statement of retained earnings?

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Question 13

One of the major advantages of making adjustments in order to improve the quality of financial statements is that they:

(Multiple Choice)

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Question 14

Lisa and Charlie operate a yacht maintenance service that they incorporated as Reliable Yacht Repair,Inc.They recently talked to their banker about obtaining a loan.The banker has requested their most recent financial statements prepared in accordance with GAAP.Lisa and Charlie are unsure of how to proceed and ask you for advice.You asked for their most recent unadjusted trial balance,which follows: Required: Review the unadjusted trial balance and identify the accounts that might require adjustment at June 30,2015.Then,describe what information you would need in order to determine the nature and amount of the adjusting entry for each of the accounts identified.

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Question 15

At the beginning of its first year of operations,Henry Corp.purchased $5,000 of supplies,which were debited to the Supplies account.It did not purchase any other supplies during the year.At the end of the year,it has $1,000 of supplies left.The appropriate adjusting journal entry is:

(Multiple Choice)

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Question 16

What is the main difference between accrual and deferral adjustments?

(Multiple Choice)

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Question 17

Which of the following statements about adjustments is correct?

(Multiple Choice)

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Question 18

Which of the following statements about the closing process is correct?

(Multiple Choice)

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Question 19

On December 16,2015,B.Darin Company received $3,600 from S.Dee Company for rent of an office owned by B.Darin Company.The payment covers the period from December 16,2015 through February 15,2016.B.Darin Company recorded this as Unearned Rent when it was received on December 16.The adjusting entry on December 31 would include a:

(Multiple Choice)

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Question 20

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Assume that no dividends were declared during the current year.Which of the following statements about the effect of a net loss on the closing process is correct?

Permanent accounts are found on:

Which of the following statements about the Dividends account is not correct?

The adjustment for supplies used during the period will result in a debit to the account and a credit to the account.

After net income has been determined,it is then transferred to the:

What are the effects on the accounting equation from the adjustment for income tax expense accrued,but not paid,at the end of the accounting period?

What is the effect of the adjusting entry for depreciation on the accounting equation?

Which of the following statements about adjustments is not correct?

Which is the first financial statement that should prepared after the adjusted trial balance has been prepared?

Depreciation is a measure of the decline in market value of an asset.

Which line item is reported on both the income statement and statement of retained earnings?

One of the major advantages of making adjustments in order to improve the quality of financial statements is that they:

At the beginning of its first year of operations,Henry Corp.purchased $5,000 of supplies,which were debited to the Supplies account.It did not purchase any other supplies during the year.At the end of the year,it has $1,000 of supplies left.The appropriate adjusting journal entry is:

What is the main difference between accrual and deferral adjustments?

Which of the following statements about adjustments is correct?

Which of the following statements about the closing process is correct?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

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Exam 4: Adjustments,financial Statements,and Financial Results

Assume that no dividends were declared during the current year.Which of the following statements about the effect of a net loss on the closing process is correct?

Permanent accounts are found on:

Which of the following statements about the Dividends account is not correct?

The adjustment for supplies used during the period will result in a debit to the ______ account and a credit to the ______ account.

After net income has been determined,it is then transferred to the:

What are the effects on the accounting equation from the adjustment for income tax expense accrued,but not paid,at the end of the accounting period?

What is the effect of the adjusting entry for depreciation on the accounting equation?

Which of the following statements about adjustments is not correct?

Which is the first financial statement that should prepared after the adjusted trial balance has been prepared?

Depreciation is a measure of the decline in market value of an asset.

Which line item is reported on both the income statement and statement of retained earnings?

One of the major advantages of making adjustments in order to improve the quality of financial statements is that they:

At the beginning of its first year of operations,Henry Corp.purchased $5,000 of supplies,which were debited to the Supplies account.It did not purchase any other supplies during the year.At the end of the year,it has $1,000 of supplies left.The appropriate adjusting journal entry is:

What is the main difference between accrual and deferral adjustments?

Which of the following statements about adjustments is correct?

Which of the following statements about the closing process is correct?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

The adjustment for supplies used during the period will result in a debit to the account and a credit to the account.