Exam 2: Accounting for Accruals and Deferrals

The temporary or nominal accounts are closed prior to the start of the next accounting cycle. In this closing process, the amounts in each of these accounts are transferred to what other account(s)?

Garrison Company purchased a delivery van on January 1, 2013 for $20,000. The van is estimated to have a 5-year useful life and a $4,000 salvage value. How much expense should Garrison recognize in 2013 related to the use of the van?

The following transactions apply to Brunswick Corporation. a) Issued common stock for $35,000 cash. b) Provided services to customers for $18,000 on account. c) Purchased land for $18,000 cash. d) Purchased $500 of supplies on account. e) Paid $9,000 for operating expenses. f) Paid $450 on accounts payable. g) Collected $15,000 cash from customers. h) Accrued $400 of salary expense at year end. i) Paid $2,500 dividends to stockholders. Required: a) Identify the effect on the statement of cash flows for each of the above transactions. b) Classify the above accounting events into one of four types of transactions (asset source, asset use, asset exchange, claims exchange).

The amount of net cash flow from operating activities shown on Norris Company's 2013 statement of cash flows is

Which of the following accounts would not appear on a balance sheet?

Wyatt Company paid $57,000 in January 2013 for salaries that had been earned by employees in December 2012. Indicate whether each of the following statements about financial statement effects of the January 2013 event is true or false. _____ a) The income statement for 2013 is not affected because the salaries expense had been recognized at the end of December. _____ b) On the 2013 statement of cash flows, cash flows from operating activities decreased. _____ c) Payment of the salaries in 2013 decreased a liability. _____ d) The 2013 statement of changes in stockholders' equity would not be affected because the salaries expense had been recognized at the end of December. _____ e) Both assets and equity decreased as a result of this transaction.

Via Company paid $40 of accrued interest expense.

The purpose of the accrual basis of accounting is to:

Collins Company began 2013 with a note payable of $10,000 and interest payable of $400. During the year, the company accrued an additional $200 of interest expense, and paid off the note with interest. On the company's 2013 income statement, cash flows for financing activities related to the note would be:

In uncertain circumstances, the conservatism principle guides accountants to

Curtis Company received $250 from a customer for services to be performed at a future date.

Which of the following is not a common feature of ethical misconduct?

Regarding the relationships of revenues and expenses to assets and liabilities, state whether each of the following statements is true or false. _____ a) Recording an increase in a revenue account may be associated with an increase in assets. _____ b) Recording an increase in a revenue account may be associated with a decrease in liabilities. _____ c) An increase in Salaries Expense may be accompanied by a decrease in Salaries Payable. _____ d) Recording a decrease in assets may be associated with an increase in an expense account. _____ e) An increase in Supplies may be accompanied by an increase in Supplies Expense.

The recognition of an expense may be accompanied by which of the following?

Accounts that are closed include expenses, dividends, and unearned revenues.

Aztec Co. signed contracts for $20,000 of services to be performed in the future.

James Company paid $1,800 for one year's rent in advance beginning on October 1, 2013. James's 2013 income statement would report rent expense, and its statement of cash flows would report cash outflow for rent, respectively, of

Prior to closing, XYZ Company's accounting records showed the following balances: After closing, XYZ's retained earnings balance would be

Which of the following would cause net income on the accrual basis to be different than (either higher or lower than) "cash provided by operating activities" on the statement of cash flows?

Revenue on account amounted to $3,000. Cash collections of accounts receivable amounted to $2,700. Cash paid for expenses was $2,500. The amount of employee salaries accrued at the end of the year was $300. Cash flow from operating activities was