Question 1

ABC Co. leased a portion of its store to another company for eight months beginning on October 1, 2014, at a monthly rate of $800. This other company paid the entire $6,400 cash on October 1, which ABC Co. recorded as unearned revenue. The journal entry made by ABC Co. at year-end on December 31, 2014, would include:

Accepted Answer

A)   A debit to Rent Earned for $2,400.
B)   A credit to Unearned Rent for $2,400.
C)   A debit to Cash for $6,400.
D)   A credit to Rent Earned for $2,400.
E)   A debit to Unearned Rent for $4,000.F) C) and D)
G) B) and D)

Question 2

The Retained Earnings account has a credit balance of $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800 and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

Accepted Answer

A)   $8,000
B)   $15,400
C)   $23,400
D)   $17,000
E)   $32,400F) All of the above
G) B) and D)

Question 3

Adjusting entries are made after the preparation of financial statements.

Accepted Answer

A) True 
 B)False

Question 4

An adjusting entry was made on December 31, 2014 to accrue a salary expense of $1,200. Which of the following entries would be prepared to record the next payment of salaries on January, 2015 in the amount of $3,000?

Accepted Answer

A)     Salaries Expense 3,000 Salaries Payable 1,200 Cash 4,200\begin{array} { | c | r | r | } \hline 	ext { Salaries Expense } & 3,000 & \\hline 	ext { Salaries Payable } & 1,200 & \\hline 	ext { Cash } & & 4,200 \\hline\end{array} Salaries Expense  Salaries Payable  Cash ​3,0001,200​4,200​​ 
B)     Salaries Payable 3,000 Cash 3,000\begin{array} { | c | r | r | } \hline 	ext { Salaries Payable } & 3,000 & \\hline 	ext { Cash } & & 3,000 \\hline\end{array} Salaries Payable  Cash ​3,000​3,000​​ 
C)     Salaries Payable 1,200 Cash 1,200\begin{array} { | c | r | r | } \hline 	ext { Salaries Payable } & 1,200 & \\hline 	ext { Cash } & & 1,200 \\hline\end{array} Salaries Payable  Cash ​1,200​1,200​​ 
D)     Salaries Expense 1,200 Salaries Payable 1,200\begin{array} { | c | r | r | } \hline 	ext { Salaries Expense } & 1,200 & \\hline 	ext { Salaries Payable } & & 1,200 \\hline\end{array} Salaries Expense  Salaries Payable ​1,200​1,200​​ 
E)     Salaries Payable 1,200 Salaries Expense 1,800 Cash 3,000\begin{array} { | c | r | r | } \hline 	ext { Salaries Payable } & 1,200 & \\hline 	ext { Salaries Expense } & 1,800 & \\hline 	ext { Cash } & & \mathbf { 3 } , 000 \\hline\end{array} Salaries Payable  Salaries Expense  Cash ​1,2001,800​3,000​​F) A) and C)
G) B) and C)

Question 5

A company had revenue of $550,000, rent expense of $100,000, utility expense of $10,000, salary expense of $125,500, depreciation expense of $39,000, advertising expense of $40,200, dividends in the amount of $183,000, and an ending balance in retained earnings of $402,300. What is the beginning retained earnings for the period?

Accepted Answer

A)   $250,000
B)   $235,300
C)   $314,700
D)   $367,000
E)   $350,000F) A) and B)
G) A) and C)

Question 6

What is the difference between GAAP and IFRS presentations of the current assets section on the balance sheet?

Accepted Answer

A)   Under IFRS it is mandatory to present current assets first while under GAAP it is customary (but not required)  to present noncurrent assets first.
B)   Both IFRS and GAAP require that current assets are listed first.
C)   Under GAAP it is mandatory to present current assets first, while under IFRS it is customary (but not required)  to present noncurrent assets first.
D)   It is customary (but not required)  under both IFRS and GAAP to present noncurrent assets first.
E)   GAAP requires that current assets be presented first, while IFRS requires that current assets be presented last.F) A) and B)
G) C) and D)

Question 7

An asset that cost $50,000 was purchased on January 1. The asset has an estimated useful life of three years and an estimated salvage value of $3,200. Using the straight-line method, prepare the necessary adjusting journal entry for the end of the year.

Accepted Answer

Depreciation Expense...

Question 8

The cash basis of accounting requires that revenues be recognized when cash payments from customers are received.

Accepted Answer

A) True 
 B)False

Question 9

The current ratio is computed by dividing current liabilities by current assets.

Accepted Answer

A) True 
 B)False

Question 10

The Income Summary account is used:

Accepted Answer

A)   To adjust and update asset and liability accounts.
B)   To close the revenue and expense accounts.
C)   To determine the appropriate dividend amount.
D)   In some situations to replace the income statement.
E)   To replace the retained earnings account in some businesses.F) A) and C)
G) C) and D)

Question 11

Reebok'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.

Accepted Answer

$180,000/$...

Question 12

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.

Accepted Answer

The answer of On December 31, Connelly Company had performed...

Question 13

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

Accepted Answer

A)   Fiscal year
B)   Calendar year
C)   Natural business year
D)   Accounting period
E)   Interim periodF) B) and E)
G) B) and C)

Question 14

Statements that show the effects of proposed transactions as if the transactions had already occurred are called:

Accepted Answer

A)   Pro forma statements
B)   Professional statements
C)   Simplified statements
D)   Temporary statements
E)   Interim statementsF) A) and B)
G) B) and E)

Question 15

A trial balance prepared after adjustments have been recorded is called a(n) :

Accepted Answer

A)   Balance sheet
B)   Adjusted trial balance
C)   Unadjusted trial balance
D)   Classified balance sheet
E)   Unclassified balance sheetF) A) and B)
G) A) and C)

Question 16

For a corporation, the equity section is divided into two main accounts: Common Stock and Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 17

Show the December 31 adjusting entry to record $750 of earned but unpaid salaries of employees at the end of the current accounting period.

Accepted Answer

The answer of Show the December 31 adjusting entry to...

Question 18

All necessary numbers to prepare the income statement can be taken from the income statement columns of the work sheet, including the net income or net loss.

Accepted Answer

A) True 
 B)False

Question 19

The following information is available for the Travis Travel Agency. After the closing entries have been journalized and posted, what will be the balance in the Retained Earnings account?   Total reverues $125,000 Total expenses 60,000 Retairied earnirgs 80,000 Dividends 15,000\begin{array} { | l | r | } \hline 	ext { Total reverues } & \$ 125,000 \\hline 	ext { Total expenses } & 60,000 \\hline 	ext { Retairied earnirgs } & \mathbf { 8 0 , 0 0 0 } \\hline 	ext { Dividends } & 15,000 \\hline\end{array} Total reverues  Total expenses  Retairied earnirgs  Dividends ​$125,00060,00080,00015,000​​

Accepted Answer

A)   $65,000
B)   $80,000
C)   $130,000
D)   $145,000
E)   $280,000 F) D) and E)
G) A) and E)

Question 20

Based on the following information, what would be the total on the Credit side of a post- closing trial balance, assuming all accounts have a normal balance?

Accepted Answer

A)   $61,516
B)   $74,671
C)   $74,800
D)   $87,955
E)   $81,263F) C) and D)
G) A) and C)

Exam 3: Preparing Financial Statements

A trial balance prepared after adjustments have been recorded is called a(n) :

Correct Answer
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Based on the following information, what would be the total on the Credit side of a post- closing trial balance, assuming all accounts have a normal balance?

Correct Answer
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The current ratio is computed by dividing current liabilities by current assets.

Correct Answer
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Correct Answer
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For a corporation, the equity section is divided into two main accounts: Common Stock and Retained Earnings.

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

Correct Answer
verified

Reebok'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.

Correct Answer
verified
$180,000/$...
View Answer

The Income Summary account is used:

Correct Answer
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What is the difference between GAAP and IFRS presentations of the current assets section on the balance sheet?

Correct Answer
verified

The cash basis of accounting requires that revenues be recognized when cash payments from customers are received.

Correct Answer
verified

The Retained Earnings account has a credit balance of $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800 and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

Correct Answer
verified

All necessary numbers to prepare the income statement can be taken from the income statement columns of the work sheet, including the net income or net loss.

Correct Answer
verified

Show the December 31 adjusting entry to record $750 of earned but unpaid salaries of employees at the end of the current accounting period.

Correct Answer
verified

Correct Answer
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Correct Answer
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An asset that cost $50,000 was purchased on January 1. The asset has an estimated useful life of three years and an estimated salvage value of $3,200. Using the straight-line method, prepare the necessary adjusting journal entry for the end of the year.

Correct Answer
verified
Depreciation Expense...
View Answer

An adjusting entry was made on December 31, 2014 to accrue a salary expense of $1,200. Which of the following entries would be prepared to record the next payment of salaries on January, 2015 in the amount of $3,000?

Correct Answer
verified

Statements that show the effects of proposed transactions as if the transactions had already occurred are called:

Correct Answer
verified

Adjusting entries are made after the preparation of financial statements.

Correct Answer
verified

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.

Correct Answer
verified

Exam 3: Preparing Financial Statements

A trial balance prepared after adjustments have been recorded is called a(n) :

Correct AnswerverifiedShow Answer

Based on the following information, what would be the total on the Credit side of a post- closing trial balance, assuming all accounts have a normal balance?

Correct AnswerverifiedShow Answer

The current ratio is computed by dividing current liabilities by current assets.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a corporation, the equity section is divided into two main accounts: Common Stock and Retained Earnings.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Reebok'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.

Correct Answerverified$180,000/$...View AnswerShow Answer

The Income Summary account is used:

Correct AnswerverifiedShow Answer

What is the difference between GAAP and IFRS presentations of the current assets section on the balance sheet?

Correct AnswerverifiedShow Answer

The cash basis of accounting requires that revenues be recognized when cash payments from customers are received.

Correct AnswerverifiedShow Answer

The Retained Earnings account has a credit balance of $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800 and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

Correct AnswerverifiedShow Answer

All necessary numbers to prepare the income statement can be taken from the income statement columns of the work sheet, including the net income or net loss.

Correct AnswerverifiedShow Answer

Show the December 31 adjusting entry to record $750 of earned but unpaid salaries of employees at the end of the current accounting period.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An asset that cost $50,000 was purchased on January 1. The asset has an estimated useful life of three years and an estimated salvage value of $3,200. Using the straight-line method, prepare the necessary adjusting journal entry for the end of the year.

Correct AnswerverifiedDepreciation Expense...View AnswerShow Answer

An adjusting entry was made on December 31, 2014 to accrue a salary expense of $1,200. Which of the following entries would be prepared to record the next payment of salaries on January, 2015 in the amount of $3,000?

Correct AnswerverifiedShow Answer

Statements that show the effects of proposed transactions as if the transactions had already occurred are called:

Correct AnswerverifiedShow Answer

Adjusting entries are made after the preparation of financial statements.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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$180,000/$...
View Answer

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Depreciation Expense...
View Answer

Correct Answer
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Correct Answer
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