Exam 3: Accrual Accounting Concepts

The fixed asset section of a balance sheet may also be labeled as property, plant, and equipment.

Deferred expenses (prepaid expenses) are items initially recorded as assets but are expected to become _____ over time.

Which of the following is an example of an intangible asset?

Land is an example of a current asset.

Accumulated depreciation is _____ to get the carrying value.

Liabilities that will not be due for more that one year are called long-term liabilities.

To arrive at cash flows from operations, it is necessary to convert the income statement from an accrual basis to the cash basis of accounting.

An adjusting entry would adjust an expense account so that the expense is reported when incurred.

"Brand name" recognition is an example of goodwill.

Why is a physical count of supplies necessary at the end of the accounting period?

Under the accrual basis of accounting, net cash flows from operating activities on the statement of cash flows will normally be the same as net income.

Using accrual accounting, revenue is recorded and reported only:

If land costing $75,000 was sold for $135,000, the amount reported in the investing activities section of the statement of cash flows would be $135,000.

Assume the November transactions for Hoover Co. are as follows: a. Received cash of $\$ 40,000$ from investors in exchange for capital stock. b. Provided services of $\$ 15,600$ on accouni. c. Purchased supplies on account $\$ 800$ . d. Received cash of $\$ 10,900$ from clients for services previously billed. e. Received $\$ 5,100$ for services provided from clients who paid cash. f. Paid $\$ 400$ on account for supplies that had been purchased. g. Paid $\$ 2,400$ for a one-year insurance policy. h. Paid the following expenses: wages, $\$ 8,000$ ; utilities, $\$ 900$ ; rent, $\$ 2,000$ . i. Paid dividends of $\$ 1,500$ to stockholders. Record the transactions, using the integrated financial statement framework that follows:

Deferred revenues (unearned revenues) are items initially recorded as liabilities, but expected to become _____ over time.

Unearned revenue is what type of an account?

When are sales recognized under the cash basis of accounting? When are expenses recognized?

Identify the type of adjustment necessary (the type of item involved) and record the transaction for the event. Make sure to include the ending balances after adjustment. Assume that on June 1, 2013, Tasty Sausage Corp. has a balance of $100 for supplies. On June 6 it purchased $600 in supplies for cash. On June 30, at the end of the accounting period, there are $300 of supplies on hand. The June 30 adjustment is:

When cash is paid to suppliers on account, which section of the Statement of Cash Flows is affected?

Identify the type of adjustment necessary (the type of item involved) and record the transaction for the event. Make sure to include the ending balances after adjustment. Assume Tasty Sausage Corp. pays salaries on the 28th of each month. Sausage stuffers earn $200/day with a 7-day work week. June 30th is the end of the accounting period. Sausage stuffers have worked on the 29th and 30th but have not yet been paid for those days. The June 30 adjustment is: