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Exam 3: Adjusting Accounts for Financial Statements

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Question 61

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Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:

A) Debit Office Supplies $105 and credit Office Supplies Expense $105.
B) Debit Office Supplies Expense $105 and credit Office Supplies $105.
C) Debit Office Supplies Expense $254 and credit Office Supplies $254.
D) Debit Office Supplies $254 and credit Office Supplies Expense $254.
E) Debit Office Supplies $105 and credit Supplies Expense $254.

F) A) and D)
G) B) and D)

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Question 62

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Complete the following by filling in the blanks: (1)The Prepaid Insurance account had a $545 debit balance at the beginning of the current year; $650 of insurance premiums were paid during the year; and the year-end balance sheet showed $420 of prepaid insurance; consequently,the income statement for the year must have shown $________ of insurance expense. (2)The Office Supplies account began the current year with a $235 debit balance; the income statement for the year showed $475 of office supplies expense; and the year-end balance sheet showed the current asset,office supplies,at $275; consequently,if all supplies were accounted for,$________ of office supplies must have been purchased during the year.

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(1)$775 = $545 + $65...

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Question 63

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Using the information presented below,prepare an income statement from the adjusted trial balance of Dodson Containers.

List the steps in the accounting cycle.

Which of the following statements is true?

On April 1,Griffith Publishing Company received $1,548 from Santa Fe,Inc.for 36-month subscriptions to several different magazines.The subscriptions started immediately.What is the amount of revenue that should be recorded by Griffith Publishing Company for the second year of the subscription assuming the company uses a calendar-year reporting period?

Classified balance sheets commonly include the following categories: A. Current assets B. Long-term investments C. Plant assets D. Intangible assets E. Current liabilities F. Long-term liabilities G. Equity. Match the typical classification of each item below with its correct balance sheet category (A through G) . -Equity

An ________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

Match the following terms with the appropriate definition. -Entries recorded at the end of each accounting period to transfer end-of-period balances in revenue,expense,and dividends accounts to the permanent retained earnings account.

Profit margin can also be called return on sales.

Assuming prepaid expenses are originally recorded in balance sheet accounts,the adjusting entry to record use of a prepaid expense is:

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

In accrual accounting,accrued revenues are recorded as liabilities.

Prepare general journal entries on December 31 to record the following unrelated year-end adjustments. a.Estimated depreciation on equipment for the year,$4,500. b.The Prepaid Insurance account has a $3,680 debit balance before adjustment.An examination of insurance policies shows $600 of insurance expired. c.The Prepaid Insurance account has a $2,400 debit balance before adjustment.An examination of insurance policies shows $950 of unexpired insurance. d.The company has three office employees who each earn $100 per day for a five-day workweek that ends on Friday.The employees were paid on Friday,December 26,and have worked full days on Monday,Tuesday,and Wednesday,December 29,30,and 31. e.On November 1,the company received 6 months' rent in advance from a tenant whose rent is $700 per month.The $4,200 was credited to the Unearned Rent account. f.The company collects rent monthly from its tenants.One tenant whose rent is $1,000 per month has not paid his rent for December.

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

On July 1 Plum Co.paid $7,500 cash for management services to be performed over a two-year period.Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.On July 1 Plum should record:

A company had no office supplies available at the beginning of the year.During the year,the company purchased $250 worth of office supplies.On December 31,$75 worth of office supplies remained.How much should the company report as office supplies expense for the year?

Which of the following is the usual final step in the accounting cycle?

Assets are often classified into current assets,long-term investments,plant assets,and intangible assets.

Recording expenses early overstates current-period income; recording expenses late understates current period income.