FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 3: Adjusting Accounts and Preparing Financial Statements

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

True/False

Review LaterAdd Note

Review Later

Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

A) True
B) False

Correct Answer

verified

Show Answer

Question 2

Essay

Review LaterAdd Note

Review Later

Shown below are selected data taken from the unadjusted and adjusted trial balances for the Simonson Company for the current year ended December 31.Determine the items A through H below.

Correct Answer

verified

a. No adjustments to cash
b. $700 - Off...

View Answer

Show Answer

Question 3

Essay

Review LaterAdd Note

How is the profit margin calculated? Discuss its use in analyzing a company's performance.

__________________________ is the process of allocating the cost of plant assets to their expected useful lives.

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 appropriate journal entry to close income summary?

On the work sheet,net income is entered in the Income Statement Credit column as well as the Balance Sheet Debit column.

Under the alternative method for accounting for unearned revenues,which of the following pairs of journal entry formats is correct? $\begin{array} { | c | c } \hline \text { Initial Entry } & \text { Adjusting Entry } \\\hline\end{array}$ A. $\begin{array}{|c|c|}\hline \text { Cash } & \text { Unearned Consulting Revenue } \\\hline \text { Unearned Consulting Revenue } & \text { Consulting Revenue }\\\hline\end{array}$ B. $\begin{array}{|c|c|}\hline \text { Cash } & \text { Consulting Revenue } \\\hline \text { Consulting Revenue } & \text { Unearned Revenue }\\\hline\end{array}$ C. $\begin{array}{|c|c|}\hline\text { Cash } & \text { Unearned Revenue } \\\hline \text { Unearned Revenue } & \text { Cash }\\\hline\end{array}$ D. $\begin{array}{|c|c|}\hline \text { Consulting Revenue } & \text { Unearned Revenue } \\\hline \text { Cash } & \text { Consulting Revenue }\\\hline \end{array}$ E. $\begin{array}{|c|c|}\hline\text { Cash } & \text { Consulting Revenue } \\\hline \text { Unearned Revenue } & \text { Unearned Revenue }\\\hline\end{array}$

A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue.If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned,one effect will be:

Match each definition to its term

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used,representing the expense of using the assets is called:

Due to an oversight,a company made no adjusting entry for accrued and unpaid employee wages of $24,000 on December 31.This oversight would:

A balance sheet that places the assets above the liabilities and equity is called a(n) :

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

What is an adjusted trial balance? Why is it prepared?

Given the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" followed by the amount for overstatements,a "-" followed by the amount for understatements and a "0" for no effect.The first one is done as an example. Ex.Failed to recognize that $600 of unearned revenues,previously recorded as liabilities,had been earned by year-end. 1.Failed to accrue salaries expense of $1,200. 2.Forgot to record $2,700 of depreciation on office equipment. 3.Failed to accrue $300 of interest on a note receivable. $\begin{array}{|c|c|c|c|c|c|}\hline \text { Error } & \text { Revenues } & \text { Expenses } & \text { Assets } & \text { Liabilites } & \text { Equity } \\\hline \text { Ex. } & -\$ 600 & 0 & 0 & \$ 600 & -\$ 600 \\\hline 1 . & & & & & \\\hline 2 . & & & & & \\\hline 3 . & & & & & \\\hline\end{array}$

Financial statements are typically prepared in the following order:

The following information is available for the Wooden Company: $\begin{array} { | l | r | r | r | } \hline & 2010 & 2009 & { 2008 } \\\hline \text { Net income } & 2 , 6 3 0 & 2 , 1 0 0 & 1 , 8 5 0 \\\hline \text { Net Sales } & 3 6 , 5 0 0 &3 2 , 8 5 0 & 3 1 , 2 0 0 \\\hline \text { Total assets } & 400,000 & 3 8 5 , 0 0 0&3 5 0 , 0 0 0 \\\hline\end{array}$ From the information provided,calculate Wooden's profit margin ratio for each of the three years.Comment on the results,assuming that the industry average for the profit margin ratio is 6% for each of the three years.

On April 1,2011,a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date.What will be the insurance expense on the annual income statement for the year ended December 31,2011?

Manning,Co.collected 6-months' rent in advance from a tenant on November 1 of the current year.When cash was collected,the following entry was made: $\begin{array} { | l | l | l | l | } \hline \text { Nov. 01 } & \text { Cash } & 15,000 & \\\hline & \text { Rent Revenue Earned } & & 15,000 \\\hline\end{array}$ Prepare the required adjusting entry at December 31 of the current year.

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: