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Based on the following information,determine the current assets,assuming all accounts have a normal balance?  Cash $6,754 Dividends $2,000 Accounts receivable 13,733 Consulting fees earned 13,71 Office supplies 2,625 Rent expense 3,67 Land 37,153 Salaries expense 6,64 Office equipment 14,535 Telephone expense 560 Accounts payable 6,463 Miscellaneous expense 280 Common stock 54,490 Retained Earnings ?\begin{array}{lrlr}\text { Cash } & \$ 6,754 & \text { Dividends } & \$ 2,000 \\\text { Accounts receivable } & 13,733 & \text { Consulting fees earned } & 13,71 \\\text { Office supplies } & 2,625 & \text { Rent expense } & 3,67 \\\text { Land } & 37,153 & \text { Salaries expense } & 6,64 \\\text { Office equipment } & 14,535 & \text { Telephone expense } & 560 \\\text { Accounts payable } & 6,463 & \text { Miscellaneous expense } & 280 \\\text { Common stock } & 54,490 & \text { Retained Earnings } & ?\end{array}


A) $74,800
B) $37,647
C) $60,265
D) $23,112
E) $60,953

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A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)  Retained earnings $7,000 Dividends 9,600 Revenue 29,000 Rent expense 3,600 Salaries expense 7,200 Insurance expense 920 Depr. Expense - equipment 500 Accum depr. - equipment 1,500\begin{array}{|l|r|}\hline \text { Retained earnings } & \$ 7,000 \\\hline \text { Dividends } & 9,600 \\\hline \text { Revenue } & 29,000 \\\hline \text { Rent expense } & 3,600 \\\hline \text { Salaries expense } & 7,200 \\\hline \text { Insurance expense } & 920 \\\hline \text { Depr. Expense - equipment } & 500 \\\hline \text { Accum depr. - equipment } & 1,500\\\hline\end{array}


A) $16,780 debit
B) $7,180 credit
C) $16,780 credit
D) $18,280 credit
E) $23,780 credit

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A company earned $2,000 in net income for October.Its net sales for October were $10,000.Its profit margin is:


A) 2%
B) 20%
C) 200%
D) 500%
E) $8,000

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Match the following terms with the appropriate definition. -     Matching principle 


A)  The expense created by allocating the cost of plant and equipment to the periods in which they are used 
B)  The principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses 
C)  Items paid for in advance of receiving their benefits 
D)  Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life 
E)  The accounting system that recognizes revenues when earned and expenses when incurred 
F)  A principle that assumes that an organization's activities can be divided into specific time periods such as months, quarters or years 
G)  Revenues earned in a period that are both unrecorded and not yet received in cash or other assets 
H)  Net income divided by net sales 
I)  The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid 

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Match the following terms with the appropriate definition. -     Cash basis accounting 


A)  The expense created by allocating the cost of plant and equipment to the periods in which they are used 
B)  The principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses 
C)  Items paid for in advance of receiving their benefits 
D)  Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life 
E)  The accounting system that recognizes revenues when earned and expenses when incurred 
F)  A principle that assumes that an organization's activities can be divided into specific time periods such as months, quarters or years 
G)  Revenues earned in a period that are both unrecorded and not yet received in cash or other assets 
H)  Net income divided by net sales 
I)  The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid 

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Match the following terms with the appropriate definition.

Premises
Cash basis accounting
Profit margin
Prepaid expenses
Accrual basis accounting
Straight-line depreciation
Matching principle
Depreciation
Time period principle
Accrued revenues
Responses
Net income divided by net sales
The principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses
A principle that assumes that an organization's activities can be divided into specific time periods such as months, quarters or years
Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life
Items paid for in advance of receiving their benefits
The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid
The accounting system that recognizes revenues when earned and expenses when incurred
Revenues earned in a period that are both unrecorded and not yet received in cash or other assets
The expense created by allocating the cost of plant and equipment to the periods in which they are used

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Cash basis accounting
Profit margin
Prepaid expenses
Accrual basis accounting
Straight-line depreciation
Matching principle
Depreciation
Time period principle
Accrued revenues

Accrual accounting and the adjusting process rely on two principles: the ___________________ principle and the ________________________ principle.

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Revenue re...

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The current ratio:


A) Is used to measure a company's profitability
B) Is used to measure the relation between assets and long-term debt
C) Measures the effect of operating income on profit
D) Is used to help evaluate a company's ability to pay its short-term obligations
E) Is calculated by dividing current assets by equity

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The matching principle and the full closure principle are the two main accounting principles used in accrual accounting.

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Which of the following statements regarding financial statement preparation is false?


A) Financial statements can be prepared from information in the adjusted trial balance
B) The Sarbanes-Oxley Act requires that financial statements filed with the Securities and Exchange Commission include declarations by the CEO and CFO of the company
C) It makes sense to prepare the balance sheet first because it contains information needed on the income statement
D) When preparing financial statements an adjusted trial balance is easier to work with than the entire ledger
E) The income statement is prepared first.

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Which of the following identifies the proper order of the accounting cycle?


A) Analyze,Journalize,Unadjusted Trial Balance
B) Analyze,Post,Unadjusted Trial Balance
C) Journalize,Post,Adjusted Trial Balance
D) Unadjusted Trial Balance,Adjusted Trial Balance,Close
E) Adjusted Trial Balance,Adjustments,Financial Statements

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Complete the following by filling in the blanks: (1)The Prepaid Insurance account had a $455 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 $225; consequently,if all supplies were accounted for,$____________ of office supplies must have been purchased during the year.

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(1)$685 = $455 + $65...

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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 45,70045,700\begin{array}{c} \text {Thomas Company }\\ \text {Adjusted Trial Balance}\\ \text { December 31}\\\begin{array}{|l|r|r|}\hline &\text { Debit } & \text { Credit } \\\hline \text { Cash } & 8,000 \\\hline \text { Prepaid insurance } & 2,400 \\\hline \text { Equipment } & 18,000 \\\hline \text { Accumulated depreciation - Equipment } &&3,600 \\\hline \text { Salaries payable } &&2,000 \\\hline \text { Unearned repair fees } &&1,200 \\\hline \text { Common stock } &&4,000\\\hline\text { Retained earnings } &&7,400 \\\hline \text { Dividends } & 4,000 \\\hline \text { Repair fees earned } &&27,500 \\\hline \text { Salaries expense } & 10,000 \\\hline \text { Depreciation expense } & 1,800 \\\hline \text { Insurance expense } & \underline{1,500} \\\hline \text { Totals } & 45,700& 45,700\\\hline\end{array}\end{array} Prepare the closing entries for Thomas Company.

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None...

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The alternative method of accounting for prepayments


A) Initially records all prepaid expenses with debits to expense accounts
B) Initially records all prepaid expenses with credits to expense accounts
C) Requires an adjusting entry because expenses are understated
D) Requires an adjusting entry if the prepaid is consumed during the period
E) Requires an adjusting entry because net income is understated

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The ________________________________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

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During the year,Able Co.purchased $23,750 worth of supplies,at the end of the year,the supplies expense on the adjusted trial balance was $29,340 and the balance sheet showed a balance of $810 in the supplies account.What was the supplies balance at the beginning of the year?

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X+23,750-2...

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Prior to recording adjusting entries on December 31,a company's Store Supplies account had an $880 debit balance.A physical count of the supplies showed $325 of unused supplies available as of December 31.Prepare the required adjusting entry.

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None...

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If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be _______________ and equity would be __________.

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Overstated...

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A post-closing trial balance includes:


A) All ledger accounts with balances,none of which can be temporary accounts
B) All ledger accounts with balances,none of which can be permanent accounts
C) All ledger accounts with balances,which include some temporary and some permanent accounts
D) Only revenue and expense accounts
E) Only asset accounts

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If a company forgot to record depreciation on office equipment at the end of an accounting period,the financial statements prepared at that time would show:


A) Assets overstated and equity understated
B) Assets and equity both understated
C) Assets overstated,net income understated and equity overstated
D) Assets,net income and equity understated
E) Assets,net income and equity overstated

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