Accounting Ch. 3 Quiz – Flashcards
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On October 1, Hovey Apartments received $4,000 from a tenant for four months rent. The receipt was credited to Unearned Rent Revenue. What adjusting entry is needed on December 31?
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Unearned Revenue 3,000 Rent Revenue 3,000
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The following normal balances appear on the adjusted trial balance of Bangor Company Equipment......$110,000 Accumulated depreciation...$22,000 Depreciation expense... $11,000 The book value of the equipment is?
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$88,000
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Surette, Inc., purchased supplies for $1,100 during 2014. At the year- end, Surette had $550 0f supplies left. The adjusting entry should
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debit Supplies Expense $450
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The accountant for Max Corp. failed to make the adjusting entry to record depreciation for the current year. The effect of this error is which of the following?
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Assets, net income, and stockholders equity are all overstated.
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Interest earned on a not receivable at December 31 equals $375. What adjusting entry is required to accrue this interest?
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Interest Receivable 375 Interest Revenue 375
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If a real estate company fails to accrue commission revenue,
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assets are understated, and net income is understated
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All of the following statements are true except one. Which statement is false?
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Adjusting entries are required for a business that uses the cash basis
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The account unearned Revenue is a
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liability
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Adjusting entries
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all the above
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An adjusting entry that debits an expense and credits a liability is which type?
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Accrued expenses
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Total asses....$ 7,000 Current liabilities..... 500 Bonds payable (long term)... 1,400 Common stock.... 1,000 Retained earnings.... 4,100 Total liabilities & stockholders equity.... 7,000 Dublin current ratio at the end of 2014 is
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7.00
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Here are key figures from the balance sheet of Sicily, Inc., at the end of 2014 Total assets.....4,000 Current liabilities... 700 Bonds payable (long term).... 1,300 Common stock... 300 Retained earnings... 1,700 total liabilities and se... 4,000
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50%
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On a trial balance, which of the following would indicate that an error has been made?
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Service Revenue has a debit balance
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The entry to close Management Free Revenue would be which of the following?
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Management Fee Revenue Retained Earnings
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Which of the following accounts is not closed?
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Accumulated Depreciation
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FedEx earns service revenue of $750,000. How does this transaction affect FedEx's current and debt ratios?
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Improve both ratios
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Suppose Rose Corporation borrows $10 million on a 10 year note payable. How does this transaction affect Rose's current ratio and debt ratio?
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Improves the current ratio and hurts the debt ratio
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Beryl Strauss began a music business in July 2014. Jul 14 (Bought music on account for $25, with payment to the supplier due in 90 days) Aug 3 (Performed a job on account for Jimmy Jones, for $40, collectible from Jones in 30 days. Used up all the music purchased on July 14.) Sep 16 (Collected the $40 receivable from Jones) Oct 22 (Paid the $25 owed to the supplier from the July 14 transaction) In which month should Strauss record the cost of the music as an expense?
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August
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In which month Strauss report the $40 revenue on its income statement?
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August
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If strauss Company uses the cash basis of accounting instead of the accrual basis, in what month will Strauss report revenue and in what month will it report expense?
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Revenue: September Expense: October
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In which month should revenue be recorded?
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In the month that goods are shipped to the customer
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On January 1 of the current year, Bambi Company paid $2,100 in rent to cover six months (January- June). Bambi recorded this transaction as follows: Prepaid Rent 2,100 Cash 2,100
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a credit to prepaid rent for $350
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On january 1 of the current year, Jiminee Company aid $1,200 in rent to cover six months (January- June). Jamie recorded this transaction as follows Prepaid Rent 1,200 Cash 1,200 Jamie adjusts the accounts at the end of each month. Jimmies adjusting entry at the end of February should include a debit to Rent Expenses in the amount of
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$200
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Jeep Company paid $2,100 in rent to cover six months Prepaid Rent 2,100 Cash 2,100 Jepettos adjsuting entr at the end of february included a debit to Rent Expenses in the amount of $350.
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Decreased by $350
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An adjusting entry recorded June salary expense that will be paid in July. Which statement best describes the effect of this adjusting entry on the company accounting equation?
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Assets are not affected, liabilities are increased, and stockholders equity is decreased
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Jamie insurance Company sold a one year insurance policy covering the year ended March 31, 2015. Jamie collected the full $2,100 on April 1, 2014. Cash 2,100 Unearned Revenue 2,1000 The adjusting entry needed by Jiminee at December 31, 2014, is
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Unearned Revenue 1,575 Insurance Revenue 1,575
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the Unearned Revenue account of Headmaster Incorporated began 2014 with a normal balance of $3,000 and ended 2014 with a normal balance of $15,000. During 2014, the Unearned Revenue account was credited for $24,000 that Headmaster will earn later Based on these facts, how much revenue did Headmaster earn in 2014?
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12,000
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What is the effect on the financial statements of recording depreciation on equipment?
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Net inom, assets, and stockholders equity are all decreased
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For 2014, Wyndham Company had revenues in excess of expenses. Which statement describes Wyndhams closing entries at the end of 2014 (assume there is only one closing entry for both revenue and expenses)?
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Revenues will be debited, expenses will be credited, and retained earnings will be credited
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Which of the following accounts would not be included in the closing entries?
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Accumulated depreciation
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A major purpose of preparing closing entries is to
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update the Retained Earnings account
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Current assets....$43,500 Long-term assets....$175,000 Total revenues....$194,000 Current liabilities...$29,000 Long- term liabilities... $108,000 Total expenses... $178,000
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Current ratio: 1.5 debt ratio: .627
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unadjusted net income: 6,500 Salaries payable to employees: 550 Interest due on note payable at the bank: 140 Unearned revenue that has been earned: 750 Supplies used: 200
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Adjusted net income $6,360
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Salary Payable at the beginning of the month total $28,000. During the month salaries of $127,000 were accrued as expenses. If ending Salary Payable is $5,000, what amount of cash did the company pay for salaries during the month?
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$150,000
