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Exam 3: Adjusting Accounts for Financial Statements

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Question 211

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Match the following terms with the appropriate definition. -Cash and other resources that are expected to be sold,collected,or used within one year or the company's operating cycle,whichever is longer.

A) Stockholders' equity
B) Unclassified balance sheet
C) Long-term investments
D) Current liabilities
E) Closing entries
F) Current ratio
G) Plant assets
H) Current assets
I) Intangible assets
J) Classified balance sheet

K) F) and H)
L) C) and J)

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Question 212

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Which of the following statements is incorrect?

A) Working papers are useful aids in the accounting process.
B) On the work sheet, the effects of the accounting adjustments are shown on the account balances.
C) After the work sheet is completed, it can be used to help prepare the financial statements.
D) On the work sheet, the adjusted amounts are sorted into columns according to whether the accounts are used in preparing the unadjusted trial balance or the adjusted trial balance.
E) A worksheet is not a substitute for financial statements.

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

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Question 213

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Accrued expenses at the end of one accounting period are expected to result in cash payments in a future period.

Prior to recording adjusting entries on December 31,a company's Office Supplies account had an $780 debit balance.A physical count of the supplies showed $425 of unused supplies available as of December 31.Prepare the required adjusting entry.

The balances in Sanchez Accounting Services' office supplies account on February 1 and February 28 were $1,200 and $375,respectively.If the office supplies expense for the month is $1,900,what amount of office supplies was purchased during February?

A physical count of supplies on hand at the end of May for Masters,Inc.indicated $1,250 of supplies on hand.The general ledger balance before any adjustment is $2,100.What is the adjusting entry for office supplies that should be recorded on May 31?

A company pays its employees $4,000 each Friday,which amounts to $800 per day for the five-day workweek that begins on Monday.If the monthly accounting period ends on Thursday and the employees worked through Thursday,the amount of salaries earned but unpaid at the end of the accounting period is:

On April 1,Griffith Publishing Company received $1,548 from Santa Fe,Inc.for 36-month subscriptions to several different magazines.The company credited Unearned Fees for the amount received and the subscriptions started immediately.Assuming adjustments are only made at year-end,What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the second year?

The trial balance prepared after all closing entries have been journalized and posted is called the:

Match the following terms with the appropriate definition. -A listing of accounts and balances prepared after external transactions are recorded but before adjustments are recorded.

Each adjusting entry affects one or more income statement account,one or more balance sheet account,and never cash.

Closing entries are designed to transfer the end-of-period balances in the revenue accounts,the expense accounts,and the dividends account to retained earnings.

Match the following terms with the appropriate definition. -The accounting system that uses the adjusting process to recognize revenues when earned and expenses when incurred.

Since the revenue recognition principle requires that revenues be recorded when earned,there are no unearned revenues in accrual accounting.

All necessary amounts to prepare the balance sheet,including ending ending retained earnings,can be found in the Balance Sheet columns of the work sheet.

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) . -Accounts Receivable

A company purchased new furniture at a cost of $16,000 on January 1.The furniture is estimated to have a useful life of 6 years and a $1,000 salvage value.The company uses the straight-line method of depreciation.What is the book value of the furniture on December 31 of the first year?

A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period?

During the current year ended December 31,clients paid fees in advance for accounting services amounting to $15,000.These fees were recorded in an account called Unearned Accounting Fees.If $3,500 of these fees remains unearned on December 31 of this year,prepare the required December 31 adjusting entry to bring the accounts up to date.

Match the following terms with the appropriate definition. -Long-term resources that benefit business operations,usually lack physical form,and have uncertain benefits.