Question 1

Classified balance sheets commonly include the following categories:
A. Current assets
B. Long-term investments
C. Plant assets
D. Intangible assets
E. Current liabilities
F. Long-term liabilities
G. Equity.
Match the typical classification of each item below with its correct balance sheet category (A through G) .
-Wages Payable

Accepted Answer

A)  G
B)  B
C)  A
D)  C
E)  FF) DG) EH) A) and D)
I) C) and D)

Question 2

A company had revenues of $75,000 and expenses of $62,000 for the accounting period.Dividends of $8,000 were paid in cash during the same period.Which of the following entries could not be a closing entry?

Accepted Answer

A)   Debit Income Summary $13,000; credit Retained earnings $13,000.
B)   Debit Income Summary $75,000; credit Revenues $75,000.
C)   Debit Revenues $75,000; credit Income Summary $75,000.
D)   Debit Income Summary $62,000, credit Expenses $62,000.
E)   Debit Retained earnings $8,000, credit Dividends $8,000.F) A) and E)
G) A) and D)

Question 3

Reversing entries overcome the disadvantage of more complex entries to pay accrued liabilities from the previous accounting period.

Accepted Answer

A) True 
 B)False

Question 4

On December 1,Casualty Insurance Company borrowed $50,000 at a 6.0% interest rate from One Mutual Bank.The note payable plus interest will not be paid until April 1 of the following year.The company's annual accounting period ends on December 31 and adjustments are only made at year-end.The adjusting entry needed on December 31 is:

Accepted Answer

A)   No entry required.
B)   Debit Interest Expense, $250; credit Interest Payable, $250.
C)   Debit Interest Expense, $250; credit Note Payable, $250.
D)   Debit Interest Payable, $1,000; credit Interest Expense, $1,000.
E)   Debit Interest Expense, $1,000; credit Interest Payable, $1,000.F) A) and D)
G) B) and C)

Question 5

Profit margin is calculated by dividing net sales by net income.

Accepted Answer

A) True 
 B)False

Question 6

Match the following terms with the appropriate definition.
-Any length of time that an organization's activities are divided into and reported by financial statements.

Accepted Answer

A)  Adjusting entry
B)  Unadjusted trial balance
C)  Prepaid expenses
D)  Natural business year
E)  Accrued expensesF) Adjusted trial balanceG) Report form balance sheetH) Accounting periodI) Profit marginJ) Contra accountK) A) and B)
L) E) and F)

Question 7

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

Accepted Answer

Profit margin is calculated by dividing ...

Question 8

The following information is available for Zephyr Company before closing the accounts.After all of the closing entries are made,what will be the balance in the Retained earnings account?
  Net income $115,000 Retained earnings 110,000 Dividends 39,000\begin{array} { l r } 	ext { Net income } & \$ 115,000 \	ext { Retained earnings } & 110,000 \	ext { Dividends } & 39,000\end{array} Net income  Retained earnings  Dividends ​$115,000110,00039,000​

Accepted Answer

A)   $115,000.
B)   $225,000.
C)   $264,000.
D)   $186,000.
E)   $956,000. F) C) and E)
G) A) and B)

Question 9

On April 1,Santa Fe,Inc.paid Griffith Publishing Company $1,548 for 36-month subscriptions to several different magazines.Santa Fe debited the prepayment to a Prepaid Subscriptions account,and the subscriptions started immediately.What amount should appear in the Prepaid Subscription account for Santa Fe,Inc.after adjustments on December 31 of the first year assuming the company is using a calendar-year reporting period and no previous adjustment has been made?

Accepted Answer

A)   $1,548.
B)   $387.
C)   $516.
D)   $1,161.
E)   $0.F) None of the above
G) B) and E)

Question 10

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation.
-What is the book value of the furniture on December 31 of the first year?

Accepted Answer

A)   $13,562.50
B)   $12,250.00
C)   $12,500.00
D)   $13,500.00
E)   $13,625.00F) C) and D)
G) A) and C)

Question 11

The adjusted trial balance must be prepared before the adjusting entries are made.

Accepted Answer

A) True 
 B)False

Question 12

The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750.The Adjustments columns shows a credit of $425 for supplies used during the period.The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:

Accepted Answer

A)   $325 debit.
B)   $325 credit.
C)   $425 debit.
D)   $750 debit.
E)   $425 credit.F) A) and E)
G) C) and D)

Question 13

The recurring steps performed each reporting period in preparing financial statements,starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance,is referred to as the:

Accepted Answer

A)   Accounting period.
B)   Operating cycle.
C)   Accounting cycle.
D)   Closing cycle.
E)   Natural business year.F) C) and D)
G) B) and D)

Question 14

Statements that show the financial statements as if proposed transactions had already occurred are called:

Accepted Answer

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

Question 15

Closing entries are required:

Accepted Answer

A)   If management has decided to cease operating the business.
B)   Only if the company adheres to the accrual method of accounting.
C)   If a company's bookkeeper does not choose to prepare reversing entries.
D)   If the temporary accounts are to reflect correct amounts for each accounting period.
E)   In order to satisfy the Internal Revenue Service guidelines.F) A) and E)
G) A) and D)

Question 16

On April 1,Santa Fe,Inc.paid Griffith Publishing Company $1,548 for 36-month subscriptions to several different magazines.Santa Fe debited the prepayment to a Prepaid Subscriptions account,and the subscriptions started immediately.What amount should appear in the Prepaid Subscription account for Santa Fe,Inc.after adjustments on December 31 of the second year assuming the company is using a calendar-year reporting period and the previous year adjustment had been made?

Accepted Answer

A)   $1,548.
B)   $387.
C)   $516.
D)   $645.
E)   $0.F) A) and D)
G) D) and E)

Question 17

Explain the purpose of adjusting entries at the end of a period and provide an example of an adjusting entry.

Accepted Answer

Adjusting entries are necessary for tran...

Question 18

The aim of a post-closing trial balance is to verify that (1)total debits equal total credits for temporary accounts,and (2)all temporary accounts have zero balances.

Accepted Answer

A) True 
 B)False

Question 19

In the process of completing a work sheet,the accountant determines that the Income Statement debit column totals $83,000,while the Income Statement credit column totals $65,000.To enter net income (or net loss) for the period into the work sheet would require an entry to

Accepted Answer

A)   the Adjustments debit column and the Adjustments credit column.
B)   the Unadjusted Trial Balance debit column and the Adjustments credit column.
C)   it is not practical to enter Net Income (or Net Loss)  on the work sheet.
D)   the Balance Sheet & Statement of Retained Earnings debit column and the Income Statement credit column.
E)   the Income Statement debit column and the Balance Sheet & Statement of Retained Earnings credit column.F) A) and B)
G) A) and C)

Question 20

A classified balance sheet:

Accepted Answer

A)   Measures a company's ability to pay its bills on time.
B)   Organizes assets and liabilities into important subgroups that provide more information.
C)   Broadly groups items into assets, liabilities and equity.
D)   Reports operating, investing, and financing activities.
E)   Reports the effect of profit and dividends on retained earnings.F) C) and D)
G) B) and E)

Exam 3: Adjusting Accounts for Financial Statements

Profit margin is calculated by dividing net sales by net income.

Correct Answer
verified

In the process of completing a work sheet,the accountant determines that the Income Statement debit column totals $83,000,while the Income Statement credit column totals $65,000.To enter net income (or net loss) for the period into the work sheet would require an entry to

Correct Answer
verified

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

Correct Answer
verified
Profit margin is calculated by dividing ...
View Answer

Correct Answer
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Correct Answer
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A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation. -What is the book value of the furniture on December 31 of the first year?

Correct Answer
verified

A classified balance sheet:

Correct Answer
verified

The aim of a post-closing trial balance is to verify that (1)total debits equal total credits for temporary accounts,and (2)all temporary accounts have zero balances.

Correct Answer
verified

Reversing entries overcome the disadvantage of more complex entries to pay accrued liabilities from the previous accounting period.

Correct Answer
verified

Correct Answer
verified

The adjusted trial balance must be prepared before the adjusting entries are made.

Correct Answer
verified

Statements that show the financial statements as if proposed transactions had already occurred are called:

Correct Answer
verified

Explain the purpose of adjusting entries at the end of a period and provide an example of an adjusting entry.

Correct Answer
verified
Adjusting entries are necessary for tran...
View Answer

Match the following terms with the appropriate definition. -Any length of time that an organization's activities are divided into and reported by financial statements.

Correct Answer
verified

Closing entries are required:

Correct Answer
verified

Correct Answer
verified

A company had revenues of $75,000 and expenses of $62,000 for the accounting period.Dividends of $8,000 were paid in cash during the same period.Which of the following entries could not be a closing entry?

Correct Answer
verified

The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750.The Adjustments columns shows a credit of $425 for supplies used during the period.The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:

Correct Answer
verified

Correct Answer
verified

The recurring steps performed each reporting period in preparing financial statements,starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance,is referred to as the:

Correct Answer
verified

Exam 3: Adjusting Accounts for Financial Statements

Profit margin is calculated by dividing net sales by net income.

Correct AnswerverifiedShow Answer

In the process of completing a work sheet,the accountant determines that the Income Statement debit column totals $83,000,while the Income Statement credit column totals $65,000.To enter net income (or net loss) for the period into the work sheet would require an entry to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedProfit margin is calculated by dividing ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation. -What is the book value of the furniture on December 31 of the first year?

Correct AnswerverifiedShow Answer

A classified balance sheet:

Correct AnswerverifiedShow Answer

The aim of a post-closing trial balance is to verify that (1)total debits equal total credits for temporary accounts,and (2)all temporary accounts have zero balances.

Correct AnswerverifiedShow Answer

Reversing entries overcome the disadvantage of more complex entries to pay accrued liabilities from the previous accounting period.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The adjusted trial balance must be prepared before the adjusting entries are made.

Correct AnswerverifiedShow Answer

Statements that show the financial statements as if proposed transactions had already occurred are called:

Correct AnswerverifiedShow Answer

Explain the purpose of adjusting entries at the end of a period and provide an example of an adjusting entry.

Correct AnswerverifiedAdjusting entries are necessary for tran...View AnswerShow Answer

Match the following terms with the appropriate definition. -Any length of time that an organization's activities are divided into and reported by financial statements.

Correct AnswerverifiedShow Answer

Closing entries are required:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A company had revenues of $75,000 and expenses of $62,000 for the accounting period.Dividends of $8,000 were paid in cash during the same period.Which of the following entries could not be a closing entry?

Correct AnswerverifiedShow Answer

The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750.The Adjustments columns shows a credit of $425 for supplies used during the period.The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The recurring steps performed each reporting period in preparing financial statements,starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance,is referred to as the:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Profit margin is calculated by dividing ...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Adjusting entries are necessary for tran...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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