Exam 2: Accounting for Accruals and Deferrals

Chester Company began Year 2 with a note payable of $20,000 and an interest payable of $800.During the year,the company accrued an additional $400 of interest expense,and paid off the note with interest.What is the amount of cash flows for financing activities that will be reported on the statement of cash flows as a result of these transactions?

[The following information applies to the questions displayed below.] Nelson Company experienced the following transactions during Year 1, its first year in operation. Acquired $12,000 cash by issuing common stock Provided $4,600 of services on account Paid $3,200 cash for operating expenses Collected $3,800 of cash from customers in partial settlement of its accounts receivable Paid a $200 cash dividend to stockholders -What is the balance of the retained earnings that will be reported on the balance sheet as of December 31,Year 1?

Which of the following types of accounts is closed at the end of an accounting cycle?

Janzen Company recorded employee salaries earned but not yet paid.Which of the following represents the effect of this transaction on the financial statements?

A company may recognize a revenue or expense without a corresponding cash collection or payment in the same accounting period.

Which of the following would cause net income on the accrual basis to be different from (either higher or lower than)"cash provided by operating activities" on the statement of cash flows?

The ethical standards for certified public accountants only require that such accountants comply with applicable laws and regulations.

Which of the following is an asset exchange transaction?

On December 31,Year 1,Gaskins Co.owed $4,500 in salaries to employees who had worked during December but will not be paid until January,Year 2.If the year-end adjustment is properly recorded on December 31,Year 1,what will be the effect of this accrual on net income and cash flows from operating activities reported for Year 1?

When a company purchases a depreciable asset,it must estimate the asset's useful life and salvage value.

The internal controls of a business are designed to reduce the probability of occurrence of fraud.

The bankruptcies of Enron and WorldCom both indicated the occurrence of major audit failures.