ACCT 203 TYK: Ch. 3 Review Pt. 2

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.

Days.

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called:

Depreciation expense.

The balances in Labeille 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?

$1,075

On April 1, Otisco, Inc. paid Garcia Publishing Company $1,548 for 36-month subscriptions to several different magazines. Otisco debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Otisco, Inc. after adjustments on December 31 of the first year assuming the company is using a calendar-year reporting period and no previous adjustment has been made?

$1,161.

A company purchased new furniture at a cost of $14,000 on September 30. The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000. The company uses the straight-line method of depreciation. What is the book value of the furniture on December 31 of the first year?

$13,625.00

A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period?

$2,900.

A company purchased a new delivery van at a cost of $45,000 on July 1. The delivery van is estimated to have a useful life of 6 years and a salvage value of $3,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the van during the first year ended December 31?

$3,500.

On April 1, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What amount of the insurance expense will be reported on the annual income statement for the first year ended December 31?

$337.50.

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:

01/31: - Debit Salaries Expense 1,400 - Credit Salaries Payable 1,400 02/09: - Debit Salaries Expense 5,600 - Debit Salaries Payable 1,400 - Credit Cash 7,000

A balance sheet that places the liabilities and equity to the right of the assets is a(n):

Account form balance sheet.

The length of time covered by a set of periodic financial statements, primarily a year for most companies, is referred to as the:

Accounting period.

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

Accrual basis accounting.

Which of the following statements is INCORRECT? a. An income statement reports revenues earned less expenses incurred. b. An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments. c. Interim financial reports can be based on one-month or three-month accounting periods. d. The fiscal year is any 12 consecutive months (or 52 weeks) used by a business as its annual accounting period. e. Property, plant, and equipment are referred to as plant assets.

An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments.

The difference between the cost of an asset and the accumulated depreciation for that asset is called

Book Value.

Chase Company has 10 employees, who earn a total of $1,800 in salaries each working day. They are paid on Monday for the five-day workweek ending on the previous Friday. Assume that year ended on December 31, which is a Wednesday, and all employees will be paid salaries for five full days on the following Monday. The adjusting entry needed on December 31 is:

Debit Salaries Expense, $5,400; credit Salaries Payable, $5,400.

On December 31, Carmack Company received a $215 utility bill for December that it will not pay until January 15. The adjusting entry needed on December 31 to accrue this expense is:

Debit Utilities Expense $215; credit Accounts Payable $215.

An annual reporting period consisting of any twelve consecutive months is known as:

Fiscal year.

The adjusting entry to record an accrued expense is:

Increase an expense; increase a liability.

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31. Which of the following statements is true?

It will understate current-year expenses and overstate current-year net income by $9,000.

Which of the following assets is NOT depreciated? a. Store fixtures. b. Computers. c. Land. d. Buildings. e. Equipment.

Land.

The main purpose of adjusting entries is to:

Record internal transactions and events.

A balance sheet that places the assets above the liabilities and equity is called a(n):

Report form balance sheet.

If a company records prepayment of expenses in an asset account, the adjusting entry when all or part of the prepaid asset is used or expired would:

Result in a debit to an expense and a credit to an asset account.

It is obvious that an error occurred in the preparation and/or posting of closing entries IF: a. all revenue and expense accounts have zero balances. b. the Retained earnings account is debited for the amount of the net loss for the period. c. the income summary account is debited for the amount of net income for the period. d. all balance sheet accounts have zero balances. e. only permanent accounts appear on the post-closing trial balance.

all balance sheet accounts have zero balances.

On April 1, Garcia Publishing Company received $1,548 from Otisco, 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 Garcia Publishing Company on December 31 of the first year?

debit Unearned Fees, $387; credit Fees Earned, $387.

On April 1, Garcia Publishing Company received $1,548 from Otisco, 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 Garcia Publishing Company on December 31 of the second year?

debit Unearned Fees, $516; credit Fees Earned, $516.