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Exam 3: Accrual Accounting Income

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Question 91

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The Prepaid Rent account has a $20,000 debit balance in the unadjusted trial balance. There is a $1,000 credit adjustment to Prepaid Rent. The adjusted trial balance will show Prepaid Rent as a:

A) $19,000 credit balance.
B) $21,000 credit balance.
C) $19,000 debit balance.
D) $21,000 debit balance.

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Question 92

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Complete the following chart summarizing adjusting entries. The first category of adjusting entries has been completed for you.

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Question 93

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The ABC Company has the following adjusted trial balance as of December 31, 2012: Prepare the Closing Entries for The ABC Company.

Factory Supplies had a balance of $14,873 on January 1, 2012. During 2012, supplies were purchased on July 15 for $7,510 and on October 9, for $3,679. Requisition sheets completed during the year indicated that $9,458 of supplies had been used by the workers during the year. Determine the ending balance in the Factory Supplies account.

Which of the following accounts are considered permanent accounts?

HG Enterprises paid $105,000 for office furniture. The furniture is depreciated using the straight-line method and has an estimated service life of 7 years. After three years of use, the book value of the furniture will be:

Indicate if the following transactions adjust a Prepaid Expense (PE), an Accrued Expense (AE), an Unearned Revenue (UR), or an Accrued Revenue (AR): _____ 1. Paid the yearly insurance policy. _____ 2. Received payment for a yearly magazine subscription. _____ 3. Services provided by an accountant that have not yet been billed or recorded. _____ 4. Received the telephone bill which will be paid next month. _____ 5. Received payment for computer consulting services which will be performed next year

Certain accounts do not need to be adjusted at the end of the period, since the day-to-day transactions provide all the data for these accounts.

Accounts Receivable and Common Stock are accounts that need to be adjusted at the end of the period.

Which of the following is correct regarding transactions and their effect on ratios?

A defect of cash-basis accounting is:

The adjusting entry to recognize unpaid salaries increases net income and increases liabilities.

Sam's Fancy Foods has the following Trial Balance as of March 31, 2012. Determine the current ratio.

On October 1 of the current year, a company received $4,800 for services to be performed evenly over the next four months. If no adjusting entry was made on December 31 of the current year:

All of the following accounts will be closed except for:

GAAP requires the use of cash-basis accounting.

Which account is debited in the adjusting entry to record salaries owed to employees, but not paid until next accounting period?

The matching principle matches cash receipts and cash disbursements.

Prepaid expenses will:

Adjusting entries: