Exam 2: Review of the Accounting Process

Eve's Apples opened business on January 1,2016,and paid for two insurance policies effective that date.The liability policy was $36,000 for 18 months,and the crop damage policy was $12,000 for a two-year term.What is the balance in Eve's prepaid insurance as of December 31,2016?

An economic resource of an entity is:

Permanent accounts would not include:

A reversing entry at the beginning of a period for salaries would include a debit to salaries expense.

Use the following to answer questions The December 31,2016 (pre-closing)adjusted trial balance for Kline Enterprises was as follows: Required: Assuming no income taxes,compute the following,and place your answer in the space provided: -Kline's 12/31/16 total current liabilities:

Use the following to answer questions Using the chart of accounts provided,indicate by account number the account or accounts that would be debited and credited in the following transactions and indicate the type of transaction as: (1)an external transaction, (2)an internal transaction recorded as an adjusting journal entry,or (3)a closing entry.The company uses a perpetual inventory system.All prepayments are initially recorded in permanent accounts. -Salaries and wages have been earned but are unpaid at the end of an accounting period.

When a business makes an end-of-period adjusting entry with a debit to supplies expense,the usual credit entry is made to:

Accruals occur when the cash flow precedes either revenue or expense recognition.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

The payment of cash to a supplier would be recorded in a purchases journal.

Compared to the accrual basis of accounting,the cash basis of accounting produces a higher amount of income by the net decrease during the accounting period of:

-Interest revenue

Prepare the closing entries for China Tea Company for the year ended December 31,2016.

Use the following to answer questions Using the chart of accounts provided,indicate by account number the account or accounts that would be debited and credited in the following transactions and indicate the type of transaction as: (1)an external transaction, (2)an internal transaction recorded as an adjusting journal entry,or (3)a closing entry.The company uses a perpetual inventory system.All prepayments are initially recorded in permanent accounts. -Declared cash dividends on common stock.

Use the following to answer questions Using the chart of accounts provided,indicate by account number the account or accounts that would be debited and credited in the following transactions and indicate the type of transaction as: (1)an external transaction, (2)an internal transaction recorded as an adjusting journal entry,or (3)a closing entry.The company uses a perpetual inventory system.All prepayments are initially recorded in permanent accounts. -Sold inventory on account.

Use the following to answer questions The December 31,2016 (pre-closing)adjusted trial balance for Kline Enterprises was as follows: Required: Assuming no income taxes,compute the following,and place your answer in the space provided: -Kline's 2016 net income (or loss):

The sale of merchandise on account would be recorded in a sales journal.

What is an accrued liability?

When a tenant makes an end-of-period adjusting entry credit to the "Prepaid rent" account:

In its first year of operations Acme Corp.had income before tax of $400,000.Acme made income tax payments totaling $150,000 during the year and has an income tax rate of 40%.What is the balance in income tax payable at the end of the year?