Exam 3: Accrual Accounting Income

A construction company purchased a new bulldozer for $108,000 on January 1,2019.The company estimates that the bulldozer will have a useful life of nine years and then be worthless.Using the straight-line depreciation method,yearly depreciation expense will be:

Generally Accepted Accounting Principles (GAAP)require the use of accrual accounting.

According to the joint new standard for revenue recognition,issued by FASB and IASB,which item below is NOT necessary?

The financial statements are prepared from which columns of the trial balance worksheet?

In the following table,indicate the effects of failing to recognize each of the indicated adjustments by writing "O" for overstated and "U" for understated.If there is no effect,write "NE."

Fiscal year 2018 (April 1,2018 - March 31,2019)has been great for Murphy Incorporated.Net income is higher than expected.Management believes that fiscal year 2019 will not be as profitable.On December 31,2018,Murphy signed a one-year contract for monthly advertising for $2,400,000.The advertising began on January 1,2019.The CEO has asked the accountant to expense the $2,400,000 during fiscal year 2018. You are the accountant.Comment on each of the following:

An interim period used for reporting purposes is generally:

On a multistep income statement,a common subtotal is:

Brankov Company has current assets of $115,000 and current liabilities of $140,000.The company decides to issue stock and receives cash of $150,000.After this transaction,the company's current ratio will be: (Round your final answer to two decimal places. )

The adjusting entry to record the accrual of income tax expense includes a:

Wilde Company earned revenues of $170,000 in cash and $230,000 on account during 2018.Of the $230,000 on account,$79,000 was collected in cash in 2018 and the rest in 2019.The company incurred expenses of $145,000 on account in 2018 and made cash payments of $100,000 towards the expenses in 2018.What is net income in 2018 under cash-basis accounting?

At the end of the accounting period,a company has accrued interest revenue that will not be received until the next accounting period.The adjusting entry would include a:

The expense recognition principle recognizes expenses in the period they are paid.

Temporary accounts are closed at the end of the accounting period.

A company purchased supplies during the year totaling $21,000.At the end of the year,they made an adjusting entry to record $16,000 of supplies that had been used during the year.The ending balance in the Supplies account after the adjustment was $12,000.The beginning balance in the Supplies account was:

List three groups of financial statement users and comment on how each group uses net working capital and the current ratio for decision making.

At December 31,the NBC Company owes an employee for four days of work that will not be paid until January 5th.The weekly rate of pay for a five-day workweek is $500.The adjusting entry to record the accrued wages on December 31 will include a:

When analyzing a company's current ratio:

________ is the allocation of the cost of an asset over the asset's useful life.

Cash-basis accounting does NOT record: