Combo with ;Acc 201 Ch 4 Completing Account Cycle; and 3 others – Flashcards
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On a worksheet, when the total of the income statement debit column exceeds the total of the income statement credit column: Net loss $30,000 Dividends 12,400 Salaries and Wages Payable 4,500
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the company experienced a net loss for the period.
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the company experienced a net loss for the period.
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debit of $120,000 for Equipment in the balance sheet column.
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Baxter Company's worksheet had the following balances: Income Statement columns, debit of $37,000 and credit of $49,000 and Balance Sheet columns, debit of $85,000 and credit of $73,000. The net income or net loss for the period is
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$12,000 net income.
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The worksheet for Booth Company shows the following in the financial statement columns: Net loss $30,000 Dividends 12,400 Salaries and Wages payable 4,500
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Debit Retained Earnings $30,000; credit Income Summary $30,000.
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Income Summary has a credit balance of $12,000 after closing revenues and expenses. The entry to close Income Summary is
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debit Income Summary $12,000, credit the Retained Earnings account $12,000.
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Q 4.6: Rider Company is in the process of preparing it closing entries. It first closes its revenue accounts by crediting the Income Summary account for $68,000 and then, closes its expense accounts by debiting the Income Summary account for $45,000. The entry to then close the Income Summary account is
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debit Income Summary, $23,000, and credit Retained Earnings, $23,000.
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Q 4.8: On September 23, Reese Company received a $350 check from Mike Moluf for services to be performed in the future. The bookkeeper for Reese Company incorrectly debited Cash for $350 and credited Accounts Receivable for $350. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should
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debit Accounts Receivable $350 and credit Unearned Service Revenue $350.
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Q 4.9: When Alexander Company purchased supplies for $500, it incorrectly recorded a credit to Supplies for $5,000 and a debit to Cash for $5,000. Before correcting this error
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Cash is overstated and Supplies is understated.
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Q 4.10: Which of the following represents a correct ordering of the steps in the accounting cycle?
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Post to ledger accounts, prepare an adjusted trial balance, prepare reversing entries.
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Q 4.11: Cash of $100 received at the time the service was provided was journalized and posted as a debit to Cash $100 and a credit to Accounts Receivable $100. Assuming the incorrect entry is NOT reversed, the correcting entry is
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debit Accounts Receivable $100 and credit Service Revenue $100.
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Q 4.12: On May 10, Wagon Company journalized and posted a $50 cash payment on account to a creditor as a debit to Accounts Payable and a credit to Prepaid Insurance. The error is discovered on May 20. Which of the following entries will Wagon prepare on May 20 to correct the error?
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Debit Prepaid Insurance $50, credit Cash $50.
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Q 4.13: On May 18, Wagon Company purchased inventory costing $125 on account. The transaction was journalized and posted as a $125 debit to Accounts Payable and a $125 credit to Cash. The error is discovered on May 28. Which of the following entries will Wagon prepare on May 28 to correct the error?
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Debit Cash $125, debit Inventory $125, credit Accounts Payable $250.
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Q 4.14: Which of the following represents the correct ordering of sections on a classified balance sheet?
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long-term investments; current liabilities; stockholders' equity
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Q 4.15: Maxim Company had the following partial listing of accounts and balances at year-end: Cash, $7,000; Accounts Receivable, $6,000; Accounts Payable, $15,000; Equipment, $23,000; Inventories, $5,000; Supplies, $1,000; Land, $75,000; Unearned Service Revenue, $13,000; and Prepaid Rent, $4,000. The total current assets for Maxim Company is
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$23,000.
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Q 4.17: On December 31, Frank Voris Company correctly made an adjusting entry to recognize $2,000 of accrued salaries and wages payable. On January 8 of the next year, total salaries and wages of $3,400 were paid. Assuming the correct reversing entry was made on January 1, the entry on January 8 will result in a credit to Cash $3,400 and debit(s) to
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Salaries and Wages Expense $3,400.
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Q 4.18: The relationship between current assets and current liabilities is important in evaluating a company's
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liquidity.
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Q 4.19: Moon Company prepares reversing entries. At the end of the period, Moon Company accrued salaries and wages earned but not yet paid to employees. Which of the following would be the correct reversing entry prepared at the beginning of the subsequent period?
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Debit Salaries and Wages Payable; credit Salaries and Wages Expense.
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Q 4.20: On November 30, Mountain View Company prepared an adjusting entry with a debit to Salaries and Wages Expense for $100 and a credit to Salaries and Wages Payable for $100 for wages that were earned and will be paid on December 4. A reversing entry was prepared at the beginning of December. On December 4, which of the following is the correct journal entry for Mountain View to record the total amount paid for payroll of $600?
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Debit Salaries and Wages Expense $600, credit Cash $600.
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On June 9, Lanai Company journalized and posted a $450 purchase of equipment on account as a debit to Cash for $450 and a credit to Equipment. To correct the error a ____ will be made to the Equipment account as part of the correcting entry.
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Debit
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Q 4.29: What is the main difference between intangible assets and property, plant, and equipment?
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Intangible assets have no physical substance.
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Q 4.30: Philippe posts transactions to ledger accounts and then journalizes and posts adjusting entries. Philippe overlooked which of the following steps?
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preparation of a trial balance
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Q 4.31: Which liability is commonly classified as current and long-term on a classified balance sheet?
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Long-term liabilities
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Q 4.31: On a balance sheet, trademarks would appear under
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intangible assets.
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In post closing trial balance,
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there are no balances in the temporary accounts.
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To ascertain the accumulated undistributed earnings of the corporation at the end of an accounting period, Pioneer must prepare the _________ trial Balance
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post-closing
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Q 4.21: Reggie thinks he is done preparing his company's post-closing trial balance—until he notices that the company's credits and debits do not equal each other. When searching for the source of this error, Reggie should check to see whether he
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transposed numbers when copying entries from the journal to the ledger.
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Q 4.22: A post closing trial balance prepared by a company includes the following accounts: Interest Payable and Interest Expense. Which of the following statements is correct?
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Only Interest Payable should be included.
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Q 4.23: The primary purpose of preparing a(n) ________ is to prove the accounting equation and journalize and post adjusting entries to ledger accounts.
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trial balance
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Q 4.24: At what point during the accounting cycle is the post-closing trial balance prepared?
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after posting closing entries
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Q 4.25: When making entries in Shiloh Corporations' general ledger, Michelle mistakenly posts a single transaction two times. How will Michelle's mistake affect Shiloh's post-closing trial balance, assuming this is the only bookkeeping error made during Shiloh's fiscal year?
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The post-closing trial balance will balance, although debits and credits will be overstated.
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Q 4.26: Which adjustment is an example of an accrual?
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Wages Expense
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Q 4.27: Although a post-closing trial balance proves the accounting equation is in balance, what may go undetected?
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unposted transactions
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The account balances for the permanent accounts, Cash and Equipment, will ________ from the adjusted trial balance through the post-closing trial balance.
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remain constant
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At the end of each quarter, accountants should prepare a trial balance, journalize and post adjusting entries, and then do which of the following?
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prepare an adjusted trial balance
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Merriweather Post Pavilion received an $820 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash of $280 and a credit to Service Revenue of $280. What should be the correcting entry?
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debit Cash, $540 and Service Revenue, $280; credit Accounts Receivable, $820.
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Q 4.38: Which of the following is a worksheet used to prepare?
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adjusting entries and financial statements
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Q 4.39: At every financial year-end, only revenues are closed to the Income Summary Account.
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False
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Q 4.40: When preparing a worksheet, in which column will the amount of Accumulated Depreciation appear?
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Credit column of the balance sheet columns
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Q 4.41: Which of the following statements concerning a worksheet are true? Select all that apply.
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It is not used as a basis for posting to ledger accounts. ; It is not a journal.
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________ accounts will not appear in post-closing trial balance
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Temporary
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A worksheet is a ________ accounting record.
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Temporary
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Q 4.44: Which of the following is performed last when preparing a worksheet?
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Compute the net income or net loss.
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Q 3.1: According to the Revenue Recognition Principle, revenues are recognized
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when a company provides a service.
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The expense recognition principle requires that expenses be recognized in the period when they are
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matched with revenues.
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Q 3.3: Adjusting entries are used to
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recognize revenues and expenses properly under accrual accounting.
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Q 3.4: The time period assumption divides the life of a business entity into
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into months, quarters or years, defined for convenience.
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For each adjusting entry,
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an income statement account is debited or credited and a balance sheet account is either debited or credited.
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Deferrals occur when
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cash is received before revenue is earned.
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Q 3.7: Accruals occur when
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cash is received before revenues are earned.
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Q 3.8: Which of the following is an example of a deferral?
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expensing a part of the cost of a building
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Q 3.9: Which of the following is an example of an accrual?
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Record Revenues that will be paid for in a subsequent period.
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Q 3.10: On March 1 Supplies balance was $70. During March, $440 in supplies were purchased. On March 31, a count of supplies showed $50 in supplies remained. The required adjusting entry on March 31 would include a debit to Supplies Expense of
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$420.
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Q 3.11: On February 28, six months of insurance was purchased for $2,400 for March through September coverage. The monthly adjusting entry for July would include a debit to
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Insurance Expense for $400 and a credit to Prepaid Insurance of $400.
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Q 3.12: In April, a customer paid $40,000 for services; $5,000 of the services were provided to the customer in March; $18,000 will be provided to the customer in May; and the remainder were provided in April. Sales Revenue that will be recorded in April related to this customer equals
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$17,000.
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Q 3.13: A company forgot to prepare the adjusting entry to record the current month's portion of Prepaid Rent. What is the resulting impact on the financial statements?
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Assets will be overstated and net income will be overstated.
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Q 3.14: To record depreciation on a building, debit
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depreciation expense.
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Q 3.15: Equipment was depreciated $50 in August. This means that
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$50 of the cost of the equipment was allocated to August.
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Q 3.16: Dana bought Chris a $40 gift card to a popular restaurant for $40 on July 27. Dana gave it to Chris on August 20. Chris used the gift card as partial payment for a meal at the restaurant on September 2. In what month should the $40 be recorded as revenue by the restaurant?
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September
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Q 3.17: On March 1, Kalka Company borrowed $5,000 in the form of a three-month note payable with an annual interest rate of 6 percent. The interest will be paid on May 31 at the same time the note is repaid. The Accrued Interest Expense on March 31 will be
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25
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Q 3.18: Wage expenses should have been accrued on December 31, but the entry was not made. The result of this oversight is that
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liabilities are understated.
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Q 3.19: An adjusted trial balance is created after
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preparing all adjusting entries.
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Q 3.20: A journal entry includes a debit to Wage and Salary Expense of $5,000; a debit to Wages Payable of $3,000; and a credit to Cash for $8,000. Which explains this entry?
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The entry reflects $5,000 payment of wages and salaries for the current period and $3,000 for wages and salaries accrued previously.
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An adjusting entry always affects
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an income statement account and a balance sheet account.
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an income statement account and a balance sheet account.
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The revenue recognition principle dictates that revenue should be recognized in the accounting records
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The revenue recognition principle dictates that revenue should be recognized in the accounting records
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when services are performed.
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Adjusting entries are made to ensure that
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expenses are recognized in the period in which they are incurred. revenues are recorded in the period in which services are performed. balance sheet and income statement accounts have correct balances at the end of an accounting period.
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The principle or assumption dictating that expenses be matched with revenues is the
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expense recognition principle.
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The accumulated depreciation account
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is a contra asset account with a credit balance.
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What is the impact on the financial statements if the adjusting entries for prepaid expenses are omitted?
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Balance sheet accounts are overstated and income statement accounts are understated.
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The adjusting entry for accrued expenses affects
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expenses and liabilities.
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An adjusting entry that debits an asset and credits a revenue is necessary for
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accrued revenues.
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The adjusted trial balance is prepared
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after the adjusting entries are prepared and posted to the ledger.
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(3-3) Primo Industries collected $104,327 from customers in 2015. Of the amount collected, $25,480 was from services performed in 2014. In addition, Primo performed services worth $40,781 in 2015, which will not be collected until 2016. Primo Industries also paid $70,148 for expenses in 2015. Of the amount paid, $29,388 was for expenses incurred on account in 2014. In addition, Primo incurred $42,391 of expenses in 2015, which will not be paid until 2016.
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Cash Basis Net INcome:34,179 Accrual-Basis: 36477
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A debit is
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an entry on the left side.
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Q 2.2: Accounts that are increased with a debit include:
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assets.
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Q 2.3: Accounts that are decreased with a debit include:
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Accounts payable.
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dividend is
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an equity account.
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The first step in the recording process is to
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analyze the transaction.
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Q 2.6: When journalizing a transaction, a short explanation is written
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on the line following each journal entry.
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In journalizing a transaction,
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indent the title of the credit account.
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Q 2.8: The journal helps prevent and locate errors in recording by
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providing easy comparison of debit and credit amounts.
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Q 2.9: Which of the following activities require a journal entry?
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paying for a service in advance
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A chart of accounts
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lists all accounts used by a company.
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If Cash had a beginning balance of $3,000 and the only transactions affecting Cash are Common Stock that is issued for $5,000, and cash is used to purchase equipment for $4,000, then the ending balance in the Cash account is
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$4,000.
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Q 2.12: If the trial balance has total debits equal to total credits, then
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it is possible the wrong accounts were used in the journal entry.
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Q 2.13: A journal entry to record issuing and paying a cash dividend would reflect that the company
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decreased the number of shares outstanding.
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A credit will increase
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Service Revenue.
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Q 2.15: A T-account
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is balanced by taking the difference between the total credits and total debits.
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Q 2.16: The journal
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is called the book of original entry.
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Irregular entries represent
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an unethical misstatement of an entry.
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On the trial balance, accounts are listed
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in the order they appear in the ledger.
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Q 2.19: For a firm that pays rent each month, the posting entry would be
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credit Cash, debit Rent Expense.
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Q 2.20: When writing the title of an account, how is it formatted? Why?
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The title is capitalized to indicate that it is a specific account name.
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Q 2.22: Transactions are entered in the ________ and then transferred to ledger accounts.
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journal
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Q 2.23: A company just purchased raw materials for production. They paid for the materials at the time they placed the order. Which of the following would be a correct description of the post for this transaction?
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It would decrease the Cash account as a credit and increase the Supplies account as a debit.
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Q 2.24: An individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items is
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an account.
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Q 2.25: In the ledger, Accounts Receivable shows a debit balance of $12,500, indicating
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that customers owe $12,500 to the company.
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Q 2.27: What is a T-account?
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a way of depicting the basic form of an account
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Which of the following statements about an account is true?
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An account is an individual accounting record of increases and decreases in specific asset, liability, and owner's equity items.
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Accounts that normally have debit balances are
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assets, dividends, and expenses.
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Which of the following is not part of the recording process?
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preparing a trial balance.
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Entering transaction data in the journal is known as
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journalizing.
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A complete journal entry includes all of the following except
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the balance of the accounts in the entry.
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The order of the accounts in the ledger is
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assets, liabilities, common stock, dividends, revenues, expenses.
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A ledger
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is a collection of the entire group of accounts maintained by a company.
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The Cash account had a normal balance of $48,000 at the beginning of the month. During the month, Langdon Company received cash payments from its customers of $22,000 and made cash payments of $8,000 for expenses incurred and $6,000 on account. The balance in the Cash account after posting these transactions is
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$56,000 debit balance. ;This assumes that the Cash account starts with a normal debit balance ($48,000) and includes the cash receipts ($22,000) on the debit side of the account, thus increasing the account balance, and then including the cash payments (total of $14,000) on the credit side of the account, thus decreasing the account balance.
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The total debit column totals $131,000; $131,000 = $5,000 (Cash) + $40,000 (Salaries and Wages Expense) + $10,000 (Rent Expense) + $15,000 (Dividends) + $61,000 (Equipment). The normal balance for Assets, Expenses, and Dividends, is a debit.
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131,000 ; The total debit column totals $131,000; $131,000 = $5,000 (Cash) + $40,000 (Salaries and Wages Expense) + $10,000 (Rent Expense) + $15,000 (Dividends) + $61,000 (Equipment). The normal balance for Assets, Expenses, and Dividends, is a debit.
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Kim Leppard invested $7,274 cash in the business in exchange for common stock.
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A= + Stockh= +
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Paid office rent of $1,382.
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A= - S= -
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Performed consulting services and billed a client $6,838.
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A= + S= +
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Declared and paid a $873 cash dividend.
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A= - S= -
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Which of the following is not a step in the accounting process?
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verification.
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Internal users of accounting information include all of the following except
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investors.
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The intent of the Sarbanes Oxley Act of 2002 is to reduce unethical corporate behavior, to decrease likelihood of future corporate scandals, and to increase severity of penalties for fraudulent financial activity. The intent of the Sarbanes Oxley Act of 2002 is to
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reduce unethical corporate behavior;decrease likelihood of future corporate scandals;increase severity of penalties for fraudulent financial activity
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The historical cost principle states that
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assets should be recorded at their cost.
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A business organized as a separate legal entity under state corporation law having ownership divided into transferable shares of stock is a
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corporation.
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Combining the activities of Kellogg and General Mills would violate the
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economic entity assumption.
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Patterson Company reported stockholders' equity of $75,000 at the beginning of the year. During the year, the company recognized net income of $15,000. Stockholders made an additional investment of $10,000 at midyear and received a $5,000 dividend at year-end. The stockholders' equity at the end of the year is
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Ending stockholders' equity = beginning stockholders' equity ($75,000) + investments ($10,000) + net income ($15,000) - dividends ($5,000).; $95,000.
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Which of the following events is not recorded in the accounting records?
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An employee is terminated.
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Which of the following statements is false?
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An income statement represents the revenues, expenses, changes in stockholders' equity, and resulting net income or net loss for a specific period of time.
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Which of the following is not one of the career opportunities in accounting?
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personal accounting
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Which of the following is not one of the career opportunities in accounting?
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personal accounting
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Which of the following is not one of the career opportunities in accounting?
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personal accounting
