Ch. 3 Quiz – Flashcards
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The revenue recognition principle states that:
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Revenue should be recognized in the period earned.
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The matching principle is the principle that states:
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All costs that are used to generate revenue are recorded in the period the revenue is recognized.
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The following events pertain to Jasper Corporation:
May 1 Jasper purchased office supplies of $3,000 on account.
May 5 The office supplies were shipped to Jasper.
May 8 Jasper used these office supplies for a one-time event.
May 9 Jasper paid $3,000 cash for the office supplies purchased on May 1.
Using cash-basis accounting, on which date should Jasper record supplies expense?
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May 9.
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The following events pertain to Bills Company:
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Using accrual-basis accounting, on which date should Bills Company record revenue for the accounting and tax services?
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January 11, 2016.
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Adjusting entries are primarily needed for:
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Accrual-basis accounting.
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Prepayments occur when:
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Cash payment (or an obligation to pay cash) occurs before the expense recognition.
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Adjusting entries:
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Always involve at least one income statement account and one balance sheet account
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Yummy Foods purchased a one-year hazard insurance policy on August 1 and recorded the $4,200 premium to prepaid insurance. At its December 31 year-end, Yummy Foods would record which of the following adjusting entries?
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Option a.
insurance expense 1175,prepaid insurance 1750
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On September 1, 2015, Gold Magazine sold 400 one-year subscriptions for $90 each. The total amount received was credited to Unearned Revenue. What would be the required adjusting entry at December 31, 2015?
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Unearned Revenue $12,000/Service Revenue $12,000
36,000 x 4 /12
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During the year, Cheng Company paid salaries of $22,400. In addition, $9,900 in salaries has accrued by the end of the year but has not been paid. The year-end adjusting entry would include which one of the following?
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Credit to salaries payable for $9,900
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At the beginning of December, Global Corporation had $2,900 in supplies on hand. During the month, supplies purchased amounted to $4,000, but by the end of the month the supplies balance was only $3,200. What is the appropriate month-end adjusting entry?
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Debit supplies expense $3,700, credit supplies $3,700
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An adjusted trial balance:
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Is a list of all accounts and their balances after adjusting entries.
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What is the amount of current assets, assuming the accounts above reflect normal activity?
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$60,000.
Cash, Accounts Receivable , and Supplies .
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What is the amount of current liabilities?
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@28,000 unearned revenue + acct payable + interest payable
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What is Trumpeter's net income?
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$3,700
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What is the amount of Trumpeter's total assets?
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$88600
Assets include cash Supplies, Prepaid rent, and Equipment.
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When a company prepares closing entries, which one of the following is NOT a correct closing entry?
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Debit Retained Earnings; credit Salaries Expense.
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The closing entry for expenses includes:
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A debit to Retained Earnings and a credit to all expense accounts.
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Which of the following is a possible closing entry?
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Debit Service Revenue, credit Retained Earnings.
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The closing process includes which of the following?
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Closing the balances of revenue, expense and dividend accounts to zero.
