Exam 3: Accrual Accounting Concepts

Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

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Question 1

Correct Answer:

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Item: Accrued Expense Assets = Liabilities + Stockholders' Equity Cash Office Equipment Accumulated Depreciation Interest Payable Common Stock Retained Earnings Adjustment 180 -180- Interest expense End.Bal. 180 -180

Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

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Question 2

Correct Answer:

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Item: Expense Deferral Assets = Liabilities + Stockholders' Equity Cash Supplies Office Equipment Accounts Payable Common Stock Retained Earnings Beg.Bal. -700 -700 400- Supplies expense Adjustment -400 End.Bal. -700 300 -400

The fixed asset section of a balance sheet may also be labeled as property,plant,and equipment.

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Question 3

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Unearned rent,representing rent for the next six months' occupancy,would be reported on the landlord's balance sheet as a(n):

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Question 4

Land is an example of a current asset.

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Question 5

Cash receipts from interest and dividends are classified as:

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Question 6

On the statement of cash flows,the cash flows from operating activities section would include:

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Question 7

To determine cash payments for operating expenses for the cash flow statement using the direct method,depreciation expense is added to net income.

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Question 8

Under the accrual basis of accounting,net cash flows from operating activities on the statement of cash flows will normally be the same as net income.

(True/False)

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Question 9

Physical assets of a long-term nature are referred to as fixed assets.

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Question 10

As time passes,fixed assets,other than land,lose their capacity to provide useful services.To account for this decrease in usefulness,the cost of fixed assets is systematically allocated to expense through a process called:

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Question 11

The accrual basis of accounting requires revenue to be recorded when the service is performed.

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Question 12

Why is a physical count of supplies necessary at the end of the accounting period?

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Question 13

The unearned rent account has a balance of $60,000.If $4,000 of the $60,000 is unearned at the end of the accounting period,the amount of the adjusting entry is:

(Multiple Choice)

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Question 14

Accrued expenses are expenses that have been incurred and paid.

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Question 15

An adjusting entry would adjust an expense account so that the expense is reported when incurred.

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Question 16

Electrodo Co.purchased land for $55,000 with $20,000 paid in cash and $35,000 in notes payable.What effect does this transaction have on the accounts under the accrual basis of accounting?

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Question 17

Depreciation Expense and Accumulated Depreciation are classified,respectively,as:

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Question 18

Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

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Question 19

If land costing $75,000 was sold for $135,000,the amount reported in the investing activities section of the statement of cash flows would be $135,000.

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Question 20

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Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

The fixed asset section of a balance sheet may also be labeled as property,plant,and equipment.

Unearned rent,representing rent for the next six months' occupancy,would be reported on the landlord's balance sheet as a(n):

Land is an example of a current asset.

Cash receipts from interest and dividends are classified as:

On the statement of cash flows,the cash flows from operating activities section would include:

To determine cash payments for operating expenses for the cash flow statement using the direct method,depreciation expense is added to net income.

Under the accrual basis of accounting,net cash flows from operating activities on the statement of cash flows will normally be the same as net income.

Physical assets of a long-term nature are referred to as fixed assets.

As time passes,fixed assets,other than land,lose their capacity to provide useful services.To account for this decrease in usefulness,the cost of fixed assets is systematically allocated to expense through a process called:

The accrual basis of accounting requires revenue to be recorded when the service is performed.

Why is a physical count of supplies necessary at the end of the accounting period?

The unearned rent account has a balance of $60,000.If $4,000 of the $60,000 is unearned at the end of the accounting period,the amount of the adjusting entry is:

Accrued expenses are expenses that have been incurred and paid.

An adjusting entry would adjust an expense account so that the expense is reported when incurred.

Electrodo Co.purchased land for $55,000 with $20,000 paid in cash and $35,000 in notes payable.What effect does this transaction have on the accounts under the accrual basis of accounting?

Depreciation Expense and Accumulated Depreciation are classified,respectively,as:

Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

If land costing $75,000 was sold for $135,000,the amount reported in the investing activities section of the statement of cash flows would be $135,000.

The Role of Accounting in Business

Basic Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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