Exam 4: Review of the Accounting Cycle

On January 1,the Thunderball Hockey Association sold 300 season passes for $200 each.The season lasts from February through May.If the amount received was credited to unearned revenue,what adjusting entry will be made on February 28?

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

After transactions are recorded in the general journal,the next step in the accounting cycle is to ________.

The accounting equation is correctly stated as ________.

Deferrals occur when a company receives or pays cash before recognizing the revenue or expense in the financial statements.

Recording depreciation expense is necessary to allocate the cost of an asset over its expected useful life.

Prepaid expenses may be initially recorded as assets or expenses.

Wesley Foundation had $25,000 in supplies inventory at the beginning of the year.The company purchased $65,000 in supplies throughout the year and used $72,000.What is the ending balance in the supplies inventory?

The post-closing trial balance proves the accuracy of the accounts.

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

List the steps in the accounting cycle in the correct order.

Reversing entries are used in connection with accrued revenues and accrued expenses.

Edmond Office Equipment borrowed $10,000 at 10% interest on July 1.Principal and interest are due on December 31.The company's fiscal year ends on October 31.What adjusting entry should be made on that date?

If a company initially records a deferred revenue as a liability,an adjusting entry must be made at the end of the period to increase the liability account.

The first step in the accounting cycle is recording transactions in the general journal.

The first step in the accounting cycle is to ________.

Which of the following recording errors will be revealed by the unadjusted trial balance?

Powers Company accrued unpaid wages of $3,000 on January 31.These wages will be included in paychecks totaling $4,000 on February 2.The reversing entry will include a(n)________.

To be recorded in the general journal,a transaction must be an economic event.

Boston Corporation purchased two insurance policies during the current year.On February 1,the company purchased a two-year liability policy for $18,000.On May 1,it purchased a one year automobile policy for $7,200.These payments were charged to insurance expense.Boston Company has a fiscal year end of June 30. Required: 1.How much insurance expense should be recognized from these policies on June 30? 2.What adjusting entry will be required on June 30?