Exam 4: Income Measurement and Accrual Accounting

Roman Industries' plant operates five days per week with a daily payroll of $6,000.Employees are paid every Saturday for the workweek just completed (Monday through Friday).The last day of the month is Wednesday,March 31.What is the amount of Wages Expense recorded on the next payday,Saturday,April 3?

Place Corp.purchased supplies at a cost of $12,000 during the year.At January 1,supplies on hand were $2,000.At December 31,supplies on hand are $1,000.Determine the amount of supplies expense for the year.

A company forgot to record four adjustments during 2012.Which one of the following omissions of adjustments will overstate assets?

Gregory Company purchased a dump truck at a cost of $48,000 on January 1,2013.The truck has an estimated useful life of 6 years and a $6,000 estimated residual value.Show how the truck and any related amounts would appear on the December 31,2014,balance sheet immediately after the adjustments are recorded and posted.

Claxton Corp.purchased equipment at a cost of $320,000 in January,2010.As of January 1,2014,depreciation of $160,000 had been recorded on this asset.Depreciation expense for 2014 is $40,000.After the adjustments are recorded and posted at December 31,2014,what are the balances for the Equipment and Accumulated Depreciation? Equipment Accumulated Depreciation

Under the ____________________ basis of accounting,revenues are recognized when earned and expenses when incurred.

Adjustments are necessary only if

Matching can occur directly (like cost of goods sold),indirectly (like plant assets),or immediately when no future benefits from the cost are expected.

Measurement in accounting requires choosing an attribute and a unit of measure._________________________ is the attribute used for many of the assets included in the financial statements.

Statements prepared monthly,quarterly,or at other intervals less than a year in duration are called _____________________.

Answer each of the following questions (a-c)with a separate short paragraph per question. (a)What is the difference between a real account and a nominal account? Give an example of each type of account.Why is this distinction important for the closing process? (b)What two purposes are served in making closing entries? (c)Why is the Dividends account closed directly to Retained Earnings rather than to the Income Summary account?

Pub Company's plant operates five days per week with a daily payroll of $50,000.Employees are paid every Tuesday for the prior week's work (Monday through Friday).The last day of the month is Tuesday,April 30.What effect does the accrual at April 30 have on Pub's net income?

Which one of the following is an example of a deferred revenue?

Balance sheet accounts are also known as which of the following?

Brompton Book Club Company received advance payments from customers during 2014 of $5,000.At December 31,2014,$1,200 of the advance payments still had not been earned.After the adjustments are recorded and posted at December 31,2014,what will the balances be in the Unearned Book Revenue and Book Revenue accounts? Unearned Book Revenue Book Revenue

Failure to record the supplies used during the year would result in which of the following?

Does the Retained Earnings account that appears in the balance sheet credit column of a work sheet reflect the beginning or the ending balance in the account? Explain.

All of the following statements are true regarding the use of a work sheet at the end of an accounting period except:

What is the revenue recognition principle? Are there any exceptions to this rule? If so,what are they? If not,explain why

Calzone,Inc.signs a 9% 4-month $50,000 loan with Reliable Bank on October 1,2014.Determine the effects on the accounting equation for the following items: