Exam 4: The Accounting Cycle: Accruals and Deferrals

Dolphin Co.received $1,500 in fees during 2014,1/3 of which will be earned in 2015,the rest was earned when the amount was received.The company should report which of the following amounts as income in 2014?

End-of-period adjustments-effect on net income Ocean View,Inc.reported revenues of $645,000 and expenses of $360,000 for the month of May,before making any month-end adjusting entries.The following data are provided regarding adjusting entries: (A.)Portion of insurance expiring in May,$2,520. (B.)A customer has used the facilities for two weeks in May; the fee of $4,200 has not yet been billed. (C.)Amount owed for salaries accrued in the last week of May,$1,650. (D.)Depreciation on equipment for May $1,290. (E.)Supplies used in May,$13,125. (F.)Fees collected in advance which have been earned during May,$23,400. Complete the schedule to determine the net income of Ocean View Inc.for May after these adjustments have been recorded.Begin your schedule with income before adjusting entries and then show the effect of each adjustment to arrive at net income after adjustment.

Prepaid expenses are assets that should appear on the balance sheet.

Great Kids Co.began providing day care for the children of employees of a large corporation on January 15 for an agreed monthly fee of $9,000.The first payment is to be received on February 15.The adjusting entry required by Great Kids Co.on January 31 includes:

Which of the following would not be considered an adjusting entry?

Before any month-end adjustments are made,the net income of Russell Company is $38,000.However,the following adjustments are necessary: office supplies used,$3,160; services performed for clients but not yet recorded or collected,$3,040; interest accrued on a note payable to bank,$3,640.After adjusting entries are made for the items listed above,Russell Company's net income would be:

Adjusting entries are prepared:

An adjusting entry to convert an asset to expense consists of:

Prepaid expenses appear:

The United Shipping Co.borrowed $25,000 at 12% interest on March 1,2015.The note is to be repaid,with interest,in six months.If United Shipping makes monthly adjusting entries,which of the following is included as part of the March 31 adjusting entry?

Immaterial items may be accounted for in the most convenient manner,without regard to other theoretical concepts.

Depreciation expense is:

Recently,Bon Appetite Café contracted and paid for a relatively expensive advertisement in Haute Cuisine magazine.Despite the fact that the ad will appear in Haute Cuisine three months after the end of Bon Appetite Café's current fiscal year,the Cafe's accountant recorded the disbursement to advertising expense.If no adjusting entry is made,how will this year's financial statements of Bon Appetite Café be affected?

In which of the following situations would Daystar Company record unearned revenue in May?

Videobusters,Inc.offered books of video rental coupons to its patrons at $40 per book.Each book contained a certain number of coupons for video rentals.During the current period 500 books were sold for $20,000,and this amount was credited to Unearned Rental Revenue.At the end of the period,it was determined that $15,000 worth of coupons had been used by customers to rent videos.The appropriate adjusting entry at the end of the period would be:

Swordfish Co.earned $75,000 in 2013 and expects to receive 2/3 of the amount in 2014 and the remainder in 2015.How much revenue should Swordfish Co.report in 2013?

The normal balance of the Accumulated Depreciation account is:

The concept of materiality:

Which of the following is not considered an end-of-period adjusting entry?

Regal Real Estate which maintains its accounts on the basis of a fiscal year ending June 30,began the management of an office building on June 15 for an agreed annual fee of $4,800.The first payment is due on July 15.The adjusting entry required at June 30 is: