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Profit margin measures the relation of debt to assets.

A) True
B) False

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The last four steps in the accounting cycle include preparing the adjusted trial balance,preparing financial statements,and recording closing and adjusting entries.

A) True
B) False

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An ________ is a listing of all of the accounts in the ledger with their account balances after adjustments are made.

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adjusted t...

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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 classified balance sheet:


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) All of the above
G) C) and D)

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The time period assumption assumes that an organization's activities may be divided into specific reporting time periods including all of the following except:


A) Months.
B) Quarters.
C) Fiscal years.
D) Calendar years.
E) Days.

F) A) and E)
G) C) and D)

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Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:


A) Debit Office Supplies $105 and credit Office Supplies Expense $105.
B) Debit Office Supplies Expense $105 and credit Office Supplies $105.
C) Debit Office Supplies Expense $254 and credit Office Supplies $254.
D) Debit Office Supplies $254 and credit Office Supplies Expense $254.
E) Debit Office Supplies $105 and credit Supplies Expense $254.

F) A) and E)
G) C) and D)

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Juno Company had $500 of office supplies available at the beginning of the current year.During the year Juno Company purchased $2,750 worth of office supplies,which were debited to the office supplies account.On December 31 of this year,$375 worth of office supplies remained. a.Calculate the amount of Juno Company's office supplies expense for the current year.(Show your calculations.) b.Prepare the journal entry to adjust the supplies account.

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blured image b.12/31 Office Supplies Expen...

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After preparing and posting the closing entries for revenues and expenses,the income summary account has a debit balance of $33,000.The entry to close the income summary account will be:


A) Debit Dividends $33,000; credit Income Summary $33,000.
B) Debit Income Summary $33,000; credit Dividends $33,000.
C) Debit Income Summary $33,000; credit Retained earnings $33,000.
D) Debit Retained earnings $33,000; credit Income Summary $33,000.
E) Credit Retained earnings $33,000; debit Dividends $33,000.

F) A) and D)
G) A) and C)

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A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31.On February 9,it paid its employees $7,000 for these accrued salaries and for other salaries earned through February 9.Assuming the company does not prepare reversing entries,the January 31 and February 9 journal entries are:


A) 1/31 Salaries Expense 1,400 Salaries Payable 1,4002/9 Salaries Payable 7,000 Salaries Expense 1,400 Cash 8,400\begin{array} { | l | l | r | r | } \hline 1 / 31 & \text { Salaries Expense } & 1,400 & \\\hline & \text { Salaries Payable } & & 1,400 \\\hline 2 / 9 & \text { Salaries Payable } & 7,000 & \\\hline & \text { Salaries Expense } & 1,400 & \\\hline & \text { Cash } & & 8,400 \\\hline\end{array}
B) 1/31 Salaries Payable 1,400 Salaries Expense 1,4002/9 Salaries Expense 5,600 Salaries Payable 1,400 Cash 7,000\begin{array} { | l | l | r | r | } \hline 1 / 31 & \text { Salaries Payable } & 1,400 & \\\hline & \text { Salaries Expense } & & 1,400 \\\hline 2 / 9 & \text { Salaries Expense } & 5,600 & \\\hline & \text { Salaries Payable } & 1,400 & \\\hline & \text { Cash } & & 7,000 \\\hline\end{array}
C) 1/31 Salaries Expense 1,400 Cash 1,4002/9 Salaries Expense 7,000 Cash 7,000\begin{array} { | l | l | r | r | } \hline 1 / 31 & \text { Salaries Expense } & 1,400 & \\\hline & \text { Cash } & & 1,400 \\\hline 2 / 9 & \text { Salaries Expense } & 7,000 & \\\hline & \text { Cash } & & 7,000 \\\hline\end{array}
D) 1/31 Salaries Expense 1,400 Salaries Payable 1,4002/9 Salaries Expense 7,000 Cash 7,000\begin{array} { | l | l | r | r | } \hline 1 / 31 & \text { Salaries Expense } & 1,400 & \\\hline & \text { Salaries Payable } & & 1,400 \\\hline 2 / 9 & \text { Salaries Expense } & 7,000 & \\\hline & \text { Cash } & & 7,000 \\\hline\end{array}
E) 1/31 Salaries Expense 1,400 Salaries Payable 1,4002/9 Salaries Expense 5,600 Salaries Payable 1,400 Cash 7,000\begin{array} { | l | l | r | r | } \hline 1 / 31 & \text { Salaries Expense } & 1,400 & \\\hline & \text { Salaries Payable } & & 1,400 \\\hline 2 / 9 & \text { Salaries Expense } & 5,600 & \\\hline & \text { Salaries Payable } & 1,400 & \\\hline & \text { Cash } & & 7,000 \\\hline\end{array}

F) A) and E)
G) D) and E)

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A worksheet can be helpful in showing the effects of proposed or "what if" transactions but not in helping to prepare interim financial statements.

A) True
B) False

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If a company has current assets of $15,000 and current liabilities of $9,500,its current ratio is 1.6

A) True
B) False

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The accounting principle that requires revenue to be recorded when earned is the:


A) Expense recognition (matching) principle.
B) Revenue recognition principle.
C) Time period assumption.
D) Accrual reporting principle.
E) Going-concern assumption.

F) A) and B)
G) C) and E)

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On May 1,Sellers Marketing Company received $1,500 from Franco Marcelli for a marketing campaign effective from May 1 of the current year to April 30 of the following year.The Cash receipt was recorded as unearned fees and at year-end on December 31,$1,000 of the fees had been earned.Assuming adjustments are only made at year-end,the adjusting entry on December 31 would be:


A) A debit to Unearned Fees and a credit to Cash for $500.
B) A debit to Fees Earned and a credit to Unearned Fees for $500.
C) A debit to Unearned Fees and a credit to Fees Earned for $1,000.
D) A debit to Fees Earned and a credit to Cash for $1,000.
E) A debit to Fees Earned and a credit to Cash for $500.

F) A) and D)
G) B) and D)

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The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency.After closing entries are posted,what will be the balance in the Retained earnings account? The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency.After closing entries are posted,what will be the balance in the Retained earnings account? A) $65,000. B) $80,000. C) $130,000. D) $145,000. E) $280,000.


A) $65,000.
B) $80,000.
C) $130,000.
D) $145,000.
E) $280,000.

F) A) and D)
G) C) and D)

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Trapper Company's unadjusted and adjusted trial balances on December 31 of the current year are as follows: Trapper Company's unadjusted and adjusted trial balances on December 31 of the current year are as follows: Present the four adjusting journal entries that were recorded by Trapper Company. Present the four adjusting journal entries that were recorded by Trapper Company.

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Intangible assets are long-term resources that benefit business operations that usually lack physical form and have uncertain benefits.

A) True
B) False

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Which of the following statements is incorrect?


A) Adjustments to prepaid expenses and unearned revenues involve previously recorded assets and liabilities.
B) Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded.
C) Adjusting entries can be used to record both accrued expenses and accrued revenues.
D) Prepaid expenses,depreciation,and unearned revenues often require adjusting entries to record the effects of the passage of time.
E) Adjusting entries affect only balance sheet accounts.

F) B) and E)
G) None of the above

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Based on the unadjusted trial balance for Highlight Styling and the adjusting information given below,prepare the adjusting journal entries for Highlight Styling. Highlight Stylings' unadjusted trial balance for the current year follows: Based on the unadjusted trial balance for Highlight Styling and the adjusting information given below,prepare the adjusting journal entries for Highlight Styling. Highlight Stylings' unadjusted trial balance for the current year follows: Additional information: a.An insurance policy examination showed $1,040 of expired insurance. b.An inventory count showed $210 of unused shop supplies still available. c.Depreciation expense on shop equipment,$350. d.Depreciation expense on the building,$2,020. e.A beautician is behind on space rental payments,and this $200 of accrued revenues was unrecorded at the time the trial balance was prepared. f.$800 of the Unearned Rent account balance was still unearned by year-end. g.The one employee,a receptionist,works a five-day workweek at $50 per day.The employee was paid last week but has worked four days this week for which she has not been paid. h.Three months' property taxes,totaling $450,have accrued.This additional amount of property taxes expense has not been recorded. i.One month's interest on the note payable,$600,has accrued but is unrecorded. Additional information: a.An insurance policy examination showed $1,040 of expired insurance. b.An inventory count showed $210 of unused shop supplies still available. c.Depreciation expense on shop equipment,$350. d.Depreciation expense on the building,$2,020. e.A beautician is behind on space rental payments,and this $200 of accrued revenues was unrecorded at the time the trial balance was prepared. f.$800 of the Unearned Rent account balance was still unearned by year-end. g.The one employee,a receptionist,works a five-day workweek at $50 per day.The employee was paid last week but has worked four days this week for which she has not been paid. h.Three months' property taxes,totaling $450,have accrued.This additional amount of property taxes expense has not been recorded. i.One month's interest on the note payable,$600,has accrued but is unrecorded.

Correct Answer

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The current ratio is used to help assess a company's ability to pay its debts in the near future.

A) True
B) False

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