Accounting
Anthropology
Archaeology
Art History
Banking
Biology & Life Science
Business
Business Communication
Business Development
Business Ethics
Business Law
Chemistry
Communication
Computer Science
Counseling
Criminal Law
Curriculum & Instruction
Design
Earth Science
Economic
Education
Engineering
Finance
History & Theory
Humanities
Human Resource
International Business
Investments & Securities
Journalism
Law
Management
Marketing
Medicine
Medicine & Health Science
Nursing
Philosophy
Physic
Psychology
Real Estate
Science
Social Science
Sociology
Special Education
Speech
Visual Arts
Accounting
Q:
An unadjusted trial balance is a listing of accounts and their balances prepared before adjustments are recorded.
Q:
Net income for a period will be overstated if accrued salaries are not recorded at the end of the accounting period.
Q:
Earned but uncollected revenues that are recorded during the adjusting process with a credit to a revenue account and a debit to an expense account are referred to as accrued expenses.
Q:
Depreciation expense is an example of an accrued expense.
Q:
In accrual accounting, accrued revenues are recorded as liabilities.
Q:
Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of an asset.
Q:
A contra account is an account linked with another account; it is added to that account to show the proper net amount for that particular item.
Q:
The current ratio is computed by dividing current liabilities by current assets.
Q:
Profit margin is calculated by dividing net sales by net income.
Q:
Failure to record depreciation expense will overstate the asset and understate the expense.
Q:
Before an adjusting entry is made to accrue employee salaries, Salaries Expense and Salaries Payable are both understated.
Q:
Before an adjusting entry is made to recognize expired insurance, Prepaid Insurance and Insurance Expense are both overstated.
Q:
For a corporation, the equity section is divided into two main accounts: Common Stock and Retained Earnings.
Q:
Plant assets and intangible assets are usually long-term assets that are used to produce or sell products and services.
Q:
Intangible assets are long-term resources that benefit business operations, usually lack physical form, and have uncertain benefits.
Q:
Current assets and current liabilities are expected to be used up or come due within one year or the company's operating cycle whichever is longer.
Q:
A classified balance sheet organizes assets and liabilities into important subgroups that are not found on an unclassified balance sheet.
Q:
The last four steps in the accounting cycle include preparing the adjusted trial balance, preparing financial statements, and recording closing and adjusting entries.
Q:
The first five steps in the accounting cycle include analyzing transactions, journalizing, posting, preparing an unadjusted trial balance, and recording adjusting entries.
Q:
The accrual basis of accounting is a system of accounting in which the adjustments are needed to assign revenues to periods in which they are earned and to match expenses with revenues.
Q:
On October 15, a company received $15,000 cash as a down payment on a consulting contract. The amount was credited to Unearned Consulting Revenue. By October 31, 10% of the services required by the contract were completed. The company will record consulting revenue of $1,500 from this contract for October.
Q:
A company paid $6,000 for a six-month insurance policy. The policy coverage began on February 1. On February 28, $100 of insurance expense must be recorded.
Q:
Prior to recording adjusting entries at the end of an accounting period, some accounts may not show proper financial statement amounts even though all transactions were correctly recorded.
Q:
Recording revenues before they are earned overstates current-period income; recording revenues in periods after they have been earned understates the recording periods income.
Q:
The accrual basis of accounting is an accounting system in which revenues are reported as earned when cash is received.
Q:
The cash basis of accounting requires that revenues be recognized when cash payments from customers are received.
Q:
The cash basis of accounting is an accounting system in which revenues are reported when cash is received and expenses are reported when cash is paid.
Q:
The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses, not when cash is paid.
Q:
Since the revenue recognition principle requires that revenues be earned, there are no unearned revenues in accrual accounting.
Q:
Under the cash basis of accounting, no adjustments are made for prepaid, unearned, and accrued items.
Q:
The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.
Q:
The matching principle requires that revenue not be assigned to the accounting period in which it is earned.
Q:
Adjusting entries are used to record the effects of internal economic (financial) transactions and events.
Q:
The matching principle and the full disclosure principle are the two main accounting principles used in accrual accounting.
Q:
Adjusting entries result in a better matching of revenues and expenses.
Q:
Interim statements report a company's business activities for a one-year period.
Q:
The time period assumption presumes that an organization's activities can be divided into specific time periods.
Q:
A ____________________ is useful in preparing interim statements and in showing the effects of proposed transactions.
Q:
A(n) _______________________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.
Q:
__________________ expenses are those costs that are incurred in a period but are both unpaid and unrecorded.
Q:
A _____________ account is an account linked with another account, having an opposite normal balance and reported as a subtraction from that other account's balance.
Q:
__________________________ is the process of allocating the cost of plant assets to their expected useful lives.
Q:
Profit margin equals ___________________ divided by net sales.
Q:
If a prepaid expense account were not adjusted for the amount used, on the balance sheet assets would be _______________ and equity would be __________.
Q:
The current portion of long-term debt is classified with the _________________________.
Q:
Intangible assets are long-term resources used to produce or sell products and services; they generally lack ______________ and their benefits are highly ____________.
Q:
The ______________ refers to the steps in preparing financial statements for users.
Q:
______________________ 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.
Q:
______________________ are required at the end of the accounting period because certain internal transactions and events remain unrecorded.
Q:
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. SIMONSON COMPANY Trial Balances December 31 Account
Unadjusted Trial Balance
Adjusted Trial Balance Debit
Credit
Debit
Credit Cash
10,000 (A) Accounts receivable
88,270 90,770 Office supplies
700 (B) Prepaid insurance
(C) 2,500 Office equipment
49,600 (D) Accumulated depreciation Office equipment (E) 10,260 Accounts payable 36,400 36,400 Salaries payable 0 2,700 Common stock (F) 40,000 Retained earnings 36,370 Revenue earned (G) 542,500 Advertising expense
15,000 15,000 Depreciation expense Office equipment
0 2,160 Insurance expense
0 4,300 Office supplies expense
0 480 Rent expense
28,500 28,500 Salaries expense
462,000 (H)
Q:
A partially completed worksheet is shown below. The unadjusted trial balance columns are complete. Complete the adjustments, adjusted trial balance, income statement, and balance sheet columns. PLATEN COMPANY Work Sheet For the year ended December 31 Account
Unadjusted Trial Balance
Adjustments
Adjusted Trial Balance
Income Statement
Balance Sheet Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit Cash
40 Accounts receivable Prepaid insurance
25 Supplies
14 8 Office equipment
340 340 Accum.depr. Office equip. 45 Accounts payable 57 57 Rent payable Common stock 100 100 Retained earnings 32 32 Dividends
35 35 Fees earned 300 380 Rent expense
60 90 Utilities expense
20 Insurance expense 10 Supplies expense Deprec. exp Office equip. 45 Totals
534
534 Net income Totals
Q:
The adjusted trial balance of E. Pace, Consultant, is entered on the partial work sheet below. Complete the worksheet using the following information:
a. Salaries earned by employees that are Unpaid and unrecorded, $500.
b. An inventory of supplies showed $800 of Unused supplies still on hand.
c. Depreciation on equipment, $1,300. E. PACE, CONSULTING Work Sheet For the year ended December 31 Account
Unadjusted Trial Balance
Adjustments
Adjusted Trial Balance
Income Statement Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit Cash
$14,000 Supplies
1,000 Equipment
11,000 Accum. Depr. Equip. $2,000 Accounts payable 500 Salaries payable Common stock 2,000 Retained earnings 4,500 Dividends
1,500 Fees earned 30,000 Salary expense
7,500 Rent expense
4,000 Supplies expense Depreciation expense Totals
$39,000
$39,000
Q:
Use the following partial work sheet from Matthews Lanes to prepare its income statement, statement of changes in retained earnings, and a balance sheet MATTHEWS LANES Work Sheet For Year Ended June 30 Account
Income Statement
Balance Sheet Dr
Cr
Dr
Cr Cash 11,275 Accounts receivable 1,750 Office supplies 800 Prepaid insurance 3,400 Scoring equipment 130,000 Accumulated depreciation scoring equipment 21,700 Salaries payable 200 Common stock 20,000 Retained earnings 30,000 Dividends 46,425 Bowling revenue 137,675 Depreciation expense scoring equipment
10,825 Salaries expense
1,800 Insurance expense
200 Rent expense
1,600 Office supplies expense
400 Repairs expense
350 Telephone expense
750 Totals
15,925
137,675
193,650
71,900 Net income
121,750 121,750 Totals
137,675
137,675
193,650
193,650
Q:
On October 1 of the current year, Morton Company paid $9,600 cash for a one-year insurance policy that took effect on that day. On the date of the payment, Morton recorded the following entry: Oct. 01
Insurance Expense
9,600 Cash 9,600 Prepare the required adjusting entry at December 31 of the current year.
Q:
Manning, Co. collected six-months' rent in advance from a tenant on November 1 of the current year. When cash was collected, the following entry was made: Nov. 01
Cash
15,000 Rent Revenue Earned 15,000 Prepare the required adjusting entry at December 31 of the current year.
Q:
Below is Adventure Travel's adjusted trial balance as of the end of its annual accounting period: ADVENTURE TRAVEL Adjusted Trial Balance December 31 Dr.
Cr. Cash
$ 25,000 Accounts receivable
15,000 Office supplies
4,300 Office equipment
29,600 Accumulated depreciation Office equipment $ 5,000 Long-term notes payable 25,000 Common stock 10,000 Retained earnings 20,260 Dividends
1,000 Fees earned 75,000 Salaries expense
32,800 Rent expense
16,800 Depreciation expense Office equipment
3,960 Advertising expense
4,000 Office supplies expense
2,800 Totals
$135,260
$135,260 a. Prepare the necessary closing entries.
b. Prepare a post-closing trial balance.
Q:
Presented below are the year-end balances at December 31 of Laura's Laundry Service. (All accounts have normal balances.) Accounts receivable
$ 12,000 Accounts payable
25,000 Accumulated depreciation Catering equipment
30,000 Advertising expense
4,000 Cash
42,000 Depreciation expense Catering equipment
12,000 Insurance expense
3,000 Catering equipment
125,000 Catering service revenue
200,000 Notes payable
65,000 Common stock
3,000 Retained earnings
14,000 Dividends
18,000 Prepaid insurance
1,500 Salaries payable
4,000 Salary expense
97,000 Supplies
1,500 Supplies expense
9,000 Repair expense
7,000 Unearned catering service revenues
500 Utilities expense
9,500 a. Prepare the necessary closing entries at December 31.
b. Prepare a post-closing trial balance at December 31.
Q:
The items that follow appeared in the Income Statement columns of the work sheet prepared for Armstrong Delivery Service at current year-end. In addition, retained earnings had a credit balance of $117,000 and dividends had a debit balance of $30,000 at year-end. Prepare closing journal entries for this company. Income Statement Dr.
Cr. Delivery revenue $98,900 Office salaries expense
$28,100 Rent expense
14,400 Insurance expense
1,200 Office supplies expense
1,900 Depreciation expense Office equipment
6,000 Totals
$51,600
$98,900 Net income
47,300 Totals
$98,900
$98,900
Q:
The adjusted trial balance of the Thomas Company follows: THOMAS COMPANY Adjusted Trial Balance December 31 Debit
Credit Cash
8,000 Prepaid insurance
2,400 Equipment
18,000 Accumulated depreciation Equipment 3,600 Salaries payable 2,000 Unearned repair fees 1,200 Common stock 4,000 Retained earnings 7,400 Dividends
4,000 Repair fees earned 27,500 Salaries expense
10,000 Depreciation expense
1,800 Insurance expense
1,500 Totals
45,700
45,700 Prepare the closing entries for Thomas Company.
Q:
Following are selected accounts and their balances for a company after the adjustments as of May 31, the end of its fiscal year. (All accounts have normal balances.) Retained earnings
$30,000 Dividends
6,000 Fees earned
20,000 Salaries expense
7,000 Insurance expense
350 Utilities expense
75 Supplies expense
500 Supplies
400 Salaries payable
300 Depreciation expense
425 Prepare all the necessary closing entries for this company.
Q:
The adjusted trial balance of Sara's Web Services follows: SARAS WEB SERVICES Adjusted Trial Balance December 31 Cash
$ 1,170 Supplies
1,930 Prepaid insurance
600 Computer equipment
20,600 Accumulated depreciation Computer equipment $ 5,400 Accounts payable 325 Common stock 3,000 Retained earnings 10,925 Dividends
4,800 Services revenue 21,720 Salaries expense
6,920 Depreciation expense
2,000 Rent expense
1,200 Supplies expense
800 Utilities expense
950 Insurance expense
400 Totals
$41,370
$41,370 a. Prepare the closing entries for Sara's Web Services.
b. What is the balance of the retained earnings account after the closing entries are posted?
Q:
The summary amounts below appear in the Income Statement and Balance Sheet columns of a company's December 31 work sheet. Prepare the necessary closing entries. Income Statement
Balance Sheet Debit
Credit
Debit
Credit Assets 12,000 Liabilities 3,000 Common stock 1,000 Retained earnings 6,500 Dividends 1,500 Revenue 19,500 Salaries expense
11,250 Other operating expenses
5,250 Totals
16,500
19,500
13,500
10,500 Net income
3,000 3,000 Totals
19,500
19,500
13,500
13,500
Q:
The balances for the accounts of Lances Consulting Firm, Inc. for the year ended December 31 are shown below. Each account shown had a normal balance.
Accounts payable $ 6,400 Wages expense $35,000
Accounts receivable 7,000 Rent expense 5,000
Cash 10,000 Retained earnings 68,700
Office supplies 1,000 Land 53,000
Building 99,000 Unearned revenue 7,000
Supplies expense 15,000 Dividends 20,000
Consulting revenue 150,000 Common stock 12,900
Calculate the debt ratio.
Q:
The balances for the accounts of Lances Consulting Firm, Inc. for the year ended December 31 are shown below. Each account shown had a normal balance.
Accounts payable $ 6,400 Wages expense $35,000
Accounts receivable 7,000 Rent expense 5,000
Cash 10,000 Retained earnings 68,700
Office supplies 1,000 Land 53,000
Building 99,000 Unearned revenue 7,000
Supplies expense 15,000 Dividends 20,000
Consulting revenue 150,000 Common stock 12,900
Calculate total assets.
Q:
The balances for the accounts of Lances Consulting Firm, Inc. for the year ended December 31 are shown below. Each account shown had a normal balance.
Accounts payable $ 6,400 Wages expense $35,000
Accounts receivable 7,000 Rent expense 5,000
Cash 10,000 Retained earnings 68,700
Office supplies 1,000 Land 53,000
Building 99,000 Unearned revenue 7,000
Supplies expense 15,000 Dividends 20,000
Consulting revenue 150,000 Common stock 12,900
Calculate ending retained earnings.
Q:
The balances for the accounts of Lances Consulting Firm, Inc. for the year ended December 31 are shown below. Each account shown had a normal balance.
Accounts payable $ 6,400 Wages expense $35,000
Accounts receivable 7,000 Rent expense 5,000
Cash 10,000 Retained earnings 68,700
Office supplies 1,000 Land 53,000
Building 99,000 Unearned revenue 7,000
Supplies expense 15,000 Dividends 20,000
Consulting revenue 150,000 Common stock 12,900
Calculate net income.
Q:
The balances for the accounts of Mike's Maintenance, Inc. for the year ended December 31 are shown below. Each account shown had a normal balance. Accounts payable $ 6,500 Wages expense $36,000 Accounts receivable 7,000 Rent expense 6,000 Cash ? Retained earnings 68,700 Maintenance supplies 1,200 Building 125,000 Land 50,000 Supplies expense 21,500 Unearned maintenance fees 4,000 Common stock 50,000 Maintenance revenue 175,000 Dividends 48,000 Calculate the correct balance for Cash and prepare a trial balance.
Q:
For each of the following errors, indicate on the table below the amount by which the trial balance will be out of balance and which trial balance column (debit or credit) will have the larger total as a result of the error.
a. $100 debit to Cash was debited to the Cash account twice.
b. $1,900 credit to Sales was posted as a $190 credit.
c. $5,000 debit to Office Equipment was debited to Office Supplies.
d. $625 debit to Prepaid Insurance was posted as a $62.50 debit.
e. $520 credit to Accounts Payable was not posted. Error
Amount Out of Balance
Column Having Larger Total a. b. c. d. e.
Q:
List all the necessary steps for recording transactions.
Q:
Montgomery Marketing Co. had assets of $475,000; liabilities of $275,500; and equity of $199,500. Calculate its debt ratio.
Q:
A company had total assets of $350,000; total liabilities of $101,500; and total equity of $248,500. Calculate its debt ratio.
Q:
Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: Assets
Liabilities Beginning of the year
$114,000
$68,000 End of the year
135,000
73,000 If the owners invested an additional $12,000 in the business and dividends of $5,000 were paid during the year, what was the amount of net income earned by Josephine's Bakery during the current year?
Q:
Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: Assets
Liabilities Beginning of the year
$114,000
$68,000 End of the year
135,000
73,000 If the owners made no investments and dividends of $5,000 were paid during the year, what was the amount of net income earned by Josephine's Bakery during the current year?
Q:
Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: Assets
Liabilities Beginning of the year
$114,000
$68,000 End of the year
135,000
73,000 If the owners invested an additional $12,000 in the business during the year, but no dividends were paid, what was the amount of net income earned by Josephine's Bakery during the current year?
Q:
Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: Assets
Liabilities Beginning of the year
$114,000
$68,000 End of the year
135,000
73,000 If the owners made no investments in the business and no dividends were paid during the year, what was the amount of net income earned by Josephine's Bakery during the current year?
Q:
Maria Sanchez began business as Sanchez Law Firm on November 1. Record the following November transactions by making entries directly to the T-accounts provided. Then, prepare a trial balance, as of November 30.
a. Sanchez invested $15,000 cash and a law library valued at $6,000 in exchange for common stock.
b. Purchased $7,500 of office equipment from Johnson Bros. on credit.
c. Completed legal work for a client and received $1,500 cash in full payment.
d. Paid Johnson Bros. $3,500 cash in partial settlement of the amount owed.
e. Completed $4,000 of legal work for a client on credit.
f. Paid a $2,000 cash dividend.
g. Received $2,500 cash as partial payment for the legal work completed for the client in (e).
h. Paid $2,500 cash for the legal secretary's salary. Cash
Office Equipment Dividends Accounts Receivable
Accounts Payable Legal Fees Earned Law Library
Common Stock Salaries Expense
Q:
Leonard Matson completed these transactions during December of the current year: Dec
1
Began a financial services practice by investing $15,000 cash and office equipment having a $5,000 value in exchange for common stock. 2
Purchased $1,200 of office equipment on credit. 3
Purchased $300 of office supplies on credit. 4
Completed work for a client and immediately received a payment of $900 cash. 8
Completed work for Acme Loan Co. on credit. $1,700 10
Paid for the supplies purchased on December 3. 14
Paid for the annual $960 premium on an insurance policy. 18
Received payment in full from Acme Loan Co. for the work completed on December 8. 27
Paid a $650 cash dividend. 30
Paid $175 cash for the December utility bills. 30
Received $2,000 from a client for financial services to be rendered next year. Prepare general journal entries to record these transactions.
Q:
Flora Accounting Services completed these transactions in February:
a. Purchased office supplies on account, $300.
b. Completed work for a client on credit, $500.
c. Paid cash for the office supplies purchased in (a).
d. Completed work for a client and received $800 cash.
e. Received $500 cash for the work described in (b).
f. Received $1,000 from a client for accounting services to be performed in March.
Prepare journal entries to record the above transactions. Explanations are not necessary.
Q:
Krenz Car Care, which is owned and operated by Karl Krenz, began business as a corporation in September of the current year. Karl, a master mechanic, had no experience with keeping a set of books. As a result, Karl entered all of September's transactions directly to the ledger accounts. When he tried to locate a particular entry he found it to be confusing and time consuming. He has hired you to improve his accounting procedures. The accounts in his general ledger are as follows: Accounts Receivable
Repair Revenue 9/9
(c) 275
9/15 (c)
190 9/9 (c)
275 9/11 (e)
150 Prepare the general journal entries, in chronological order (a) through (e), from the T-account entries shown. Include a brief description of the probable nature of each transaction.
Q:
On October 1, 2011, Smith invested $20,000 cash, office equipment costing $15,000, and drafting equipment costing $12,000 into the company in exchange for common stock. Show the general journal entry to record this transaction.