ACCT CH 3 QUIZ

A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year?

$175

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

The Retained earnings account has a credit balance of $37,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000, what is the ending balance in the Retained earnings account after all closing entries are made?

$43,400

At the beginning of the year, a company's balance sheet reported the following balances: Total Assets = $225,000; Total Liabilities = $25,000; Total Paid-in capital of $100,000; and Retained earnings = $100,000. During the year, the company reported revenues of $46,000 and expenses of $30,000. In addition, dividends for the year totaled $20,000. Assuming no other changes to Retained earnings, the balance in the Retained earnings account at the end of the year would be:

$96,000

Which of the following does not require an adjusting entry at year-end?

Cash invested by stockholders

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and dividends accounts for the upcoming period and to update the retained earnings account for the events of the period just finished are referred to as:

Closing entries

An account linked with another account that has an opposite normal balance and is subtracted from the balance of the related account is a(n):

Contra account

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the:

Income Summary account

Temporary accounts include all of the following except:

Prepaid rent

A trial balance prepared before any adjustments have been recorded is:

A trial balance prepared before any adjustments have been recorded is:

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees. If the company fails to make the end-of-period adjusting entry to move the portion of these fees that has been earned to a revenue account, one effect will be:

An understatement of equity

On January 1, Imlay Company purchases manufacturing equipment costing $95,000 that is expected to have a five-year life and an estimated salvage value of $5,000. Imlay uses the straight-line depreciation method to allocate costs, and only prepares adjustments at year-end. The adjusting entry needed on December 31 of the first year is:

Debit Depreciation Expense, $18,000; credit Accumulated Depreciation, $18,000

A company had revenues of $75,000 and expenses of $62,000 for the accounting period. Dividends of $8,000 were paid in cash during the same period. Which of the following entries could not be a closing entry?

Debit Income Summary $75,000; credit Revenues $75,000

On December 31, Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000. The insurance was purchased on July 1 of the same year for one year of insurance coverage, with coverage beginning on that date. The adjusting entry needed on December 31 is:

Debit Insurance Expense $3,000; credit Prepaid Insurance $3,000

The Retained earnings account has a credit balance of $37,000 before closing entries are made. Total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000. What is the correct closing entry for the revenue accounts?

Debit Revenue accounts $55,200; credit Income Summary $55,200

A company pays each of its two office employees each Friday at the rate of $100 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

Debit Salaries Expense $400 and credit Salaries Payable $400

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

All of the following are true regarding unearned revenues except:

The adjusting entry for unearned revenues increases assets and increases revenues