Exam 3: Adjusting Accounts and Preparing Financial Statements

Western Company had $500 of store supplies available at the beginning of the current year. During the year Western Company purchased $2,750 worth of store supplies. On December 31 of this year $375 worth of store supplies remained. a. Calculate the amount of Western Company's store supplies expense for the current year. (Show your calculations.) b. Prepare the journal entry to adjust the supplies account.

Which of the following assets is not depreciated?

The length of time covered by a set of periodic financial statements is referred to as the:

What is the usual order in which financial statements are prepared from the adjusted trial balance? Why are they prepared in that order?

Topflight Company had $1,500 of store supplies at the beginning of the current year. During this year, Topflight purchased $8,250 worth of store supplies. On December 31, $1,125 worth of store supplies remained. Calculate the amount of Topflight Company's store supplies expense for the current year.

Adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account.

Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are:

Profit margin is calculated by dividing net sales by net income.

On December 31, Connelly Company had performed $5,000 of management services for clients that had not yet been billed. Prepare Connelly's adjusting entry to record these fees earned.

Accrued revenues at the end of one accounting period often result in cash _______________________ in the next period.

Reed's net income was $180,000; its total assets were $1,050,000; and its net sales were $3,500,000. Calculate the company's profit margin ratio.

A company entered into a 2-month contract for $50,000 on April 1. It earned $25,000 of the contract services in April and billed the customer. The company should recognize the revenue when it receives the customer's check.

PPW Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $800. This other company paid the entire $6,400 cash on October 1, which PPW Co. recorded as unearned revenue. The journal entry made by PPW Co. at year-end on December 31 would include:

The total amount of depreciation recorded against an asset or group of assets during the entire time the asset or assets have been owned:

Which of the following statements is incorrect?

On June 30 Apricot Co. paid $7,500 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On June 30 Apricot should record:

Each adjusting entry affects only one or more income statements account and never cash.

The accounting principle that requires revenue to be recorded when earned is the:

Ben had total assets of $149,501,000, net income of $6,242,000, and net sales of $209,203,000. Its profit margin was 2.98%. $6,242,000/$209,203,000 = 2.98%

A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period?