Exam 3: Accrual Accounting Concepts

A&M Co. purchased land for $50,000 with $10,000 paid in cash and $40,000 in a note payable due three years from now. What effect does this transaction have on the accounts under the accrual basis of accounting?

On June 1, Green Pea, Inc. purchased $1,200 worth of supplies on account. Prior to the purchase, the balance in the supplies account was $0. On December 31, the fiscal year-end for Green Pea, it is determined that $500 of supplies still remain. What is the balance in the supplies account after adjustment?

XYZ Co. paid $1,000 in dividends to stockholders. How does this transaction affect the accounts of XYZ?

Which of the following best describes an accrual adjustment?

On the statement of cash flows, the cash flows from operating activities section would include:

The balance in the office supplies account on June 1 was $5,200, supplies purchased during June were $2,500, and the supplies on hand at June 30 were $1,500. The amount to be used for the appropriate adjusting entry is:

Receiving cash in advance of performing a service creates a liability for the company.

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

Donald Duck Co. Donald Duck Co. has a five-day workweek (Monday through Friday). Employees earn $500 per day. Refer to Donald Duck Co. How much cash will be paid on Friday?

Accrued revenues would appear on the balance sheet as:

Speedy Company's weekly payroll of $250 is paid on Fridays (five-day work week). Assume that the last day of the month falls on Thursday. Which of the following is the required month-end adjusting entry?