Exam 3: Measuring Business Income

Use this information to answer the following question. The trial balance for Barnstable Corporation appears as follows: If the estimated depreciation for office equipment were $400,the adjusting entry would contain a

A cash payment that reduces a liability does not result in an expense.

Revenues are increases in stockholders' equity and result from

Use this information pertaining to the Essex Corporation to answer the following question. The adjusting entry to record the amount of service revenue earned during the accounting period is

The matching rule is most closely related to the cash basis of accounting.

The post-closing trial balance contains

Rent Expense is a permanent account.

A company's five-day weekly payroll of $2,940 is paid on Fridays.Assume that the last day of the month falls on Wednesday.Which of the following is the required adjusting entry for the month end?

Use this information pertaining to the Essex Corporation to answer the following question. The adjusting entry for Office Supplies would be

After all closing entries have been posted,the balance of the Income Summary account will equal net income for the period.

Which of the following accounts is a real account?

Which of the following is a nominal account?

A company recorded office supplies in an asset account when the supplies were purchased.Failure to take inventory and make an adjusting entry will result in an

Accounting periods of greater than a year are called interim periods.

Worcester Company purchased equipment for $72,000.The equipment has an estimated useful life of eight years and will be worthless at the end of that time.In the partial balance sheet below,show exactly how the equipment should be disclosed after it has been used for five years.Also calculate total assets.

On December 12,Roger Kent,a painter,received $1,800 in advance for performing a service that would extend into the following calendar year.By December 31,he still had three-fourths of the service remaining to perform.In the journal provided,prepare the December 12 entry,the December 31 end-of-period adjustment,as well as the entry on January 29 when the job was completed.Omit explanations.

Machinery might be depreciated over 10 years because

The matching rule is applied

Joan Miller owns an advertising agency.One of the adjustments her accountant made at the end of July was $360 for unpaid wages of the secretary.Joan Miller might ask,"Why go to the trouble of making this adjustment? Why worry about it? Doesn't everything come out in the end,when the secretary is paid in August? Because wages expense in total is the same for the two months,isn't the net income in total unchanged?" Give three reasons why adjusting entries can help Joan Miller assess the performance of her business.(Net income was $1,600.)

The recording of an expense could result in a corresponding increase in