Question 1

A company pays its employees $4,000 each Friday,which amounts to $800 per day for the five-day workweek that begins on Monday.If the monthly accounting period ends on Thursday and the employees worked through Thursday,the amount of salaries earned but unpaid at the end of the accounting period is:

Accepted Answer

A) $4,000. 
B) $800. 
C) $1,600. 
D) $2,400. 
E) $3,200.

Question 2

Explain why temporary accounts are closed each period.

Accepted Answer

The answer of Explain why temporary accounts are closed each...

Question 3

After posting the entries to close all revenue and expense accounts,the Income Summary account of Cleaver Auto Services has a $4,000 debit balance.This result implies that Cleaver earned a net income of $4,000.

Accepted Answer

A) True 
 B)False

Question 4

________ basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid.________ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Accepted Answer

The answer of ________ basis accounting means that revenues are...

Question 5

The 12-month period that ends when a company's sales activities are at their lowest level is called the:

Accepted Answer

A) Fiscal year. 
B) Calendar year. 
C) Natural business year. 
D) Accounting period. 
E) Interim period.

Question 6

Closing entries are designed to transfer the end-of-period balances in the revenue accounts,the expense accounts,and the dividends account to retained earnings.

Accepted Answer

A) True 
 B)False

Question 7

Reversing entries are recorded in response to external transactions that were created in error during the prior accounting period.

Accepted Answer

A) True 
 B)False

Question 8

A roofing company collects fees when jobs are complete.The work for one customer,whose job was bid at $3,000,has been completed as of December 31,but the customer has not yet been billed.Assuming adjustments are only made at year-end,what is the adjusting entry the company would need to make on December 31,the calendar year-end?

Accepted Answer

A) Debit Cash,$3,000; credit Roofing Fees Revenue,$3,000. 
B) Debit Roofing Fees Revenue,$3,000; credit Accounts Receivable,$3,000. 
C) Debit Accounts Receivable,$3,000; credit Roofing Fees Revenue,$3,000. 
D) Debit Cash,$3,000; credit Accounts Receivable,$3,000. 
E) No adjustment is required.

Question 9

In accrual accounting,accrued revenues are recorded as liabilities.

Accepted Answer

A) True 
 B)False

Question 10

All of the following regarding reversing entries are true except:

Accepted Answer

A) Reversing entries are optional. 
B) Reversing entries are recorded in response to accrued assets and accrued liabilities that were created by adjusting entries at the end of the previous accounting period. 
C) Reversing entries are used to simplify a company's record keeping. 
D) Reversing entries are dated the first day of the new accounting period. 
E) Reversing entries should not be the exact opposite of previous period adjusting entries.

Question 11

Werner Company had $1,300 of store supplies at the beginning of the current year.During this year,Werner purchased $6,250 worth of store supplies.On December 31,$1,125 worth of store supplies remained.Calculate the amount of Werner Company's store supplies expense for the current year.

Accepted Answer

The answer of Werner Company had $1,300 of store supplies...

Question 12

Adjusting entries:

Accepted Answer

A) Affect only income statement accounts. 
B) Affect only balance sheet accounts. 
C) Affect both income statement and balance sheet accounts. 
D) Affect cash accounts. 
E) Affect only equity accounts.

Question 13

All of the following statements regarding the Income Statement columns on the worksheet are true except:

Accepted Answer

A) The balances in the Income Statement credit column are revenues. 
B) The balances in the Income Statement credit column are unearned revenues. 
C) The balances in the Income Statement debit column are expenses. 
D) The difference between the totals of the Income Statement columns is net income or net loss. 
E) The net income or net loss from the Income Statement columns is entered in the Balance Sheet & Statement of Retained Earnings columns.

Question 14

Which of the following is classified as a current asset?

Accepted Answer

A) Office equipment. 
B) Patent. 
C) Unearned revenue. 
D) Office supplies. 
E) Land.

Question 15

Asset and liability balances are transferred from the adjusted trial balance to the income statement.

Accepted Answer

A) True 
 B)False

Question 16

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Accepted Answer

A) Accrual basis accounting. 
B) Operating cycle accounting. 
C) Cash basis accounting. 
D) Revenue recognition accounting. 
E) Current basis accounting.

Question 17

Prepaid expenses,depreciation,accrued expenses,unearned revenues,and accrued revenues are all examples of:

Accepted Answer

A) Items that require contra accounts. 
B) Items that require adjusting entries. 
C) Asset and equity accounts. 
D) Asset accounts. 
E) Income statement accounts.

Question 18

The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750.The Adjustments columns shows a credit of $425 for supplies used during the period.The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:

Accepted Answer

A) $325 debit. 
B) $325 credit. 
C) $425 debit. 
D) $750 debit. 
E) $425 credit.

Question 19

At the beginning of the year,Sigma Company's balance sheet reported Total Assets of $195,000; Total Liabilities of $15,000; and Total Paid-in capital of $60,000.During the year,the company reported total revenues of $226,000 and expenses of $175,000.Also,dividends during the year totaled $48,000.Assuming no other changes to Retained earnings,the balance in the Retained earnings account at the end of the year would be:

Accepted Answer

A) $174,000. 
B) $78,000. 
C) $171,000. 
D) $120,000. 
E) $123,000.

Question 20

Temporary accounts include all of the following except:

Accepted Answer

A) Consulting revenue. 
B) Dividends. 
C) Rent expense. 
D) Prepaid rent. 
E) Income Summary.

Exam 3: Adjusting Accounts for Financial Statements

A company pays its employees $4,000 each Friday,which amounts to $800 per day for the five-day workweek that begins on Monday.If the monthly accounting period ends on Thursday and the employees worked through Thursday,the amount of salaries earned but unpaid at the end of the accounting period is:

Explain why temporary accounts are closed each period.

After posting the entries to close all revenue and expense accounts,the Income Summary account of Cleaver Auto Services has a $4,000 debit balance.This result implies that Cleaver earned a net income of $4,000.

basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

The 12-month period that ends when a company's sales activities are at their lowest level is called the:

Closing entries are designed to transfer the end-of-period balances in the revenue accounts,the expense accounts,and the dividends account to retained earnings.

Reversing entries are recorded in response to external transactions that were created in error during the prior accounting period.

In accrual accounting,accrued revenues are recorded as liabilities.

All of the following regarding reversing entries are true except:

Werner Company had $1,300 of store supplies at the beginning of the current year.During this year,Werner purchased $6,250 worth of store supplies.On December 31,$1,125 worth of store supplies remained.Calculate the amount of Werner Company's store supplies expense for the current year.

Adjusting entries:

All of the following statements regarding the Income Statement columns on the worksheet are true except:

Which of the following is classified as a current asset?

Asset and liability balances are transferred from the adjusted trial balance to the income statement.

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Prepaid expenses,depreciation,accrued expenses,unearned revenues,and accrued revenues are all examples of:

The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750.The Adjustments columns shows a credit of $425 for supplies used during the period.The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:

Temporary accounts include all of the following except: