Exam 4: Review of the Accounting Cycle

Presented is an adjusted trial balance for Steelman Accounting Services,Inc.for December 31 of the current year. a.Prepare a single-step income statement. b.Prepare a statement of stockholders' equity. c.Prepare a classified balance sheet.

Johnson Company neglected to accrue interest expense of $2,000 on its year-end trial balance.This results in a(n)________.

Which of the following accounts is a permanent account?

Selected transactions for Rosewood Industries are presented below.The fiscal year end for the company is April 30.Net income prior to these adjustments is $43,670. a.The company had purchased a 2-year insurance policy for $2,400 on January 1 and debited the prepaid insurance account. b.Depreciation on equipment for the month was $600. c.The company borrowed $15,000 on February 1 at 12% interest.Principal and interest are due on February 1 of the following year. d.The unadjusted trial balance showed a balance in Supplies of $2,650.A month-end inventory showed $900 on hand. e.The company loaned $8,000 to a customer on April 1.The note has an annual interest rate of 12% and is due along with accrued interest on March 31 of the following year. e.Employees had earned $5,600 in salaries as of April 30.These salaries will be paid on May 3. f.The unadjusted trial balance showed unearned revenues of $7,200.During April,$1,200 of these revenues were earned. Required: 1.Prepare the necessary adjusting entries for Rosewood Industries as of April 30.Please include explanations. 2.Compute net income after these adjustments have been made.

The adjusted trial balance is used to prepare the financial statements for an organization.

If a company fails to to adjust a deferred revenue recorded as a liability,revenues will be overstated on the income statement.

List and define the elements of the accounting equation.

When an unearned revenue is initially recorded as a liability,the adjusting entry includes ________.

If a prepaid expense is initially recorded as an asset,the end-of-period adjusting entry records the unexpired portion.

On July 1,Madrid Corporation received $7,200 from New Iberia Company for six months rent on a factory building and recorded it as a revenue.What adjusting entry will Madrid make on August 31?

Expense accounts are temporary accounts.

If a prepaid expense is initially recorded as an asset,the end-of-period adjusting entry records the expired portion.

The first financial statement to be prepared from the adjusted trial balance is the Statement of Net Income.

Which of the following accounts has a normal credit balance?

Temporary accounts carry a balance from period to period.

Which of the following errors would cause the adjusted trial balance to not balance?

The posting reference in the general journal is the general journal page number.

The final step in the accounting cycle is the preparation of a post-closing trial balance.

Which of the following transactions would never be reversed in the following period?

On November 1,Fisher and Sons Music Center loaned a customer $15,000 at 8% for six months.What is the interest receivable on the note at December 31?