Exam 3: Measuring Business Income: Adjusting the Accounts

Use this information pertaining to Tucson Company to answer the following question. 1)The corporation's Supplies account showed a beginning debit balance of $400 and supplies purchased of $1,600.There were $600 of supplies on hand at year end. 2)Depreciation on a building is estimated to be $10,000. 3)A one-year insurance policy was purchased for $4,800.Five months have passed since the purchase. 4)Accrued interest on a note receivable amounted to $200. 5)The company received a $3,600 advance payment during the year on services to be performed.By the end of the year,one-third of the services had been performed. -The adjusting entry for the insurance policy is

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

Accrual accounting recognizes revenues and expenses at the point that cash changes hands.

All decreases in stockholders' equity are a result of expenses.

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

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

Accrual accounting is an application of the matching rule.

When the estimates involved in earnings management begin moving outside a reasonable range,the financial statements can become misleading.

Major assumptions made in measuring business income include all of the following except

The heading of an adjusted trial balance might contain the line "For the Month Ended May 31,20x5."

Which of the following is an example of a deferral?

Use this information pertaining to Tucson Company to answer the following question. 1)The corporation's Supplies account showed a beginning debit balance of $400 and supplies purchased of $1,600.There were $600 of supplies on hand at year end. 2)Depreciation on a building is estimated to be $10,000. 3)A one-year insurance policy was purchased for $4,800.Five months have passed since the purchase. 4)Accrued interest on a note receivable amounted to $200. 5)The company received a $3,600 advance payment during the year on services to be performed.By the end of the year,one-third of the services had been performed. The adjusting entry for Supplies is

Net income + Expenses = Revenues.

Unearned Revenue was $1,200 at the end of May and $1,500 at the end of June.Service Revenue was $8,550 for the month of June.How much cash was received for services provided during June?

When an adjusting entry is made debiting an expense account,the credit can be made to any of the following accounts except

Which of the following accounts would appear on an adjusted trial balance but probably would not appear on a trial balance?

Gravel Manufacturing had supplies on hand costing $480 on December 31.During the same year,supplies costing $320 were purchased,and $640 in supplies were consumed during the year.What was the cost of supplies on hand on January 1 of that year?

The following steps in the accounting cycle are presented out of order below.Arrange the steps in proper order by placing a number from 1 through 6 in the blanks provided.Also identify each step as either a recurring activity (RA)-one that would be repeated during the fiscal period-or an end-of-period activity (EOP)-one performed at the end of the accounting period. ______ a.Prepare an adjusted trial balance. ______ b.Record entries in the journal. ______ c.Adjust the accounts. ______ d.Prepare a trial balance. ______ e.Analyze business transactions from source documents. ______ f.Post entries to the ledger.

Which of the following is a condition required by the SEC for the recognition of revenue?

Revenues