Exam 3: Accrual Accounting

The ____________________ basis of accounting requires that revenues be recorded in the period they are earned rather than in the period they are received.

Camper City started business on January 1, 2013. Stanton performed services for customers totaling $250,000 of which 40% remain uncollected at the end of December. Under the accrual basis, what amounts would appear on the company's financial statements for 2013? Income Statement Statement of Cash Flows

When cash is paid before an expense is incurred, an accrual is necessary.

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

The six steps for preparing the worksheet are unadjusted trial balance, adjusting entries, adjusted trial balance, ______________, retained earnings statement, and balance sheet.

Which one of the following is an example of a deferred revenue?

A company forgot to record four adjustments during 2013. Which one of the following omissions of adjustments will understate assets?

Match the following types of adjusting entries to the listed situation. (Choices may be used more than once.) a.a deferred (prepaid)expense b.a deferred (unearned)revenue c.an accrued expense d.an accrued revenue -Utility expense was incurred, but not yet paid at the end of the year

The ____________________ principle requires that expenses be recorded and reported in the same period as the revenue that it helped to generate.

Publicly traded companies must prepare an additional financial statement called The Worksheet.

For each transaction select the type of adjustment that would be required. (Choices may be used more than once.) a.Deferred (prepaid)expense b.Deferred (unearned)revenue c.Accrued expense d.Accrued revenue -The cost of supplies used during the year is recorded

Chattahoochee Excursions, a calendar year company, purchased supplies at a cost of $12,215 during 2013. At January 1, 2013, supplies on hand were $10,312. During the year, the company used $14,000 of supplies.

The following amounts were taken from a company's unadjusted trial balance at December 31, 2012: Prepare any adjusting entries necessary at December 31, 2012, for each of the transactions that follow.

Select the correct revenue recognition principle for each of the following. (Choices may be used more than once.) a.Recognize revenue over the passage of time. b.Recognize revenue when the customer takes possession of the product. c.Recognize revenue when cash is collected. d.Recognize revenue when service is performed. -Interest

Chicago Works employs 20 workers. Each employee is paid wages of $25 per hour and works an 8-hour workday, Monday through Friday. Employee wages are paid every Friday for the workweek just ending.

What is the matching principle? How does it relate to the revenue recognition process?

Based on its income for the month, a company estimates that it will owe $23,000 of federal income taxes for the month of May. What is the effect of the adjustment on the financial statements?

Match each statement to the item listed below a.Accrual basis accounting f.Depreciation b.Adjusted trial balance g.Matching principle c.Adjusting entries h.Revenue recognition principle d.Cash basis accounting i.Time period assumption e.Contra accounts j.Worksheet -Allows companies to artificially divide their operations into periods for ease of communication

Cherokee Hills began operations on December 1, 2013, and immediately paid $60,000 for 6 months rent in advance for the period beginning December 1, 2013. The company's accounting period ends on December 31, 2013. Indicate how much will be reported for each of the following accounts on the company's financial statements for the period ending December 31, 2013. If the amount reported is zero, indicate so by writing $0, and explain why zero is the appropriate amount.

From the list of accounts, determine whether the account is a temporary or permanent account. (Choices may be used more than once.) a.temporary account b.permanent account -Depreciation Expense