Exam 3: Review of a Companys Accounting System

Which of the following is an accrued expense?

The accountant failed to make the adjusting entry to record the amount of interest owed on a note to the bank at the end of the year. This error would cause an overstatement of

Which of the following statements regarding a post-closing trial balance is false?

The following information is from the trial balance of the Basil Herb Company. (All of the above accounts have their normal debit or credit balances.) Required: Prepare adjusting journal entries at year end, December 31, 2014, for the Basil Herb Company using the following supplemental information.

The Little Company uses the cash basis of accounting. Little Company made $28,000 in payments to its suppliers during the year. Little's beginning inventory was $2,000, and its ending inventory was $1,000. In addition, Little had a beginning accounts payable of $7,000 and an ending accounts payable of $4,000. What is Little's cost of goods sold under the accrual basis of accounting?

The Orange Company made year-end adjusting entries affecting each of the following accounts: Office Salaries Payable (credited); Depreciation Expense (debited); Unearned Rental Revenue (debited); and Prepaid Insurance (credited). Which account is likely to appear in Orange's reversing entries?

Which of the following is a sales return?

The balance in deferred (unearned) revenue accounts represents amounts that are

Which of the following adjusting entries involves the recognition of an accrued expense?

Which of the following is a reason why companies use special journals?

Which of the following adjusting entries would be the most likely be reversed?

Companies create subsidiary ledgers to divide accounting tasks and to reduce the size of the general ledge, while keeping up to date records of customers and suppliers. This process is also used to minimize errors in recording transactions.

A company usually makes a reversing entry

Several accounts are listed below: a. Purchases Returns and Allowances b. Sales Discounts c. Wages Expense d. Allowance for Doubtful Accounts e. Unearned Rent f. Income Taxes Payable g. Dividends h. Interest Revenue i. Discount on Bonds Payable j. Common Stock k. Additional Paid in Capital-Common Stock l. Inventory Required: List the accounts above that would normally have a credit balance.

What is the order in which financial statements should be prepared?

An adjusting entry always affects

Special journals are used to divide accounting tasks, minimize errors, and to keep up to date records of customers and suppliers.

The primary purpose of an accounting system is to record how the business activities change the company's balance sheet.

The Oliver Construction Company received $18,000 for six months rental income in advance on November 1, 2014, and credited the Rental Revenue account. The required adjusting entry on December 31, 2014, would include a

Figure APC-1 is the condensed worksheet for the Amoss Company as of December 31, 2015. Additional Information: Prepaid insurance is for a two-year theft policy dated July 1, 2015. The ending inventory amounts to $300. The building is being depreciated over a 30-year life, straight-line, no salvage value. The balance in Unearned Consulting Revenue pertains to a contract sold on September 1, 2015, to provide service to a client for one year. Office supplies on hand at year-end amount to $24. At year-end, there are accrued salaries of $50. Repair Service Revenue includes a contract for $120 received on July 1, 2015, for a one-year period of time. The tax rate is 50%. Required: Complete the worksheet, assuming that adjusting entries are made only at December 31, 2015.