Accounting Exam #2

A deferred expense could also be called

an asset

A doctor performed surgery in March and did not receive cash from the patient until July. Under accrual accounting, the doctor recognizes revenue:

in March

What type of account is Accounts Receivable and on which financial statement is it reported?

Account: Asset Reported On: Balance Sheet

Cash Basis Accounting

Accounting basis in which a company records revenue only when it receives cash and an expense only when it pays cash.

Which account is credited in the adjusting entry to allocate the cost of equipment?

Accumulated Depreciation -Equipment

Which of the following accounts would have balances on a post closing trial balance?

Accumulated depreciation

Which of the following accounts would not have have a balance on the post closing trial balance?

Dividends

Which one of the following is an example of a deferred expense?

Equipment that has a useful life of ten years has been purchased.

Which of the following would be items that would be subtracted from balance per bank in a bank reconciliation

Outstanding checks and a deposit of $1,100 that was recorded as $11,000 by the bank.

Wolverine, Inc. has the following account balances related to its 2016 operations: Repair Revenues $840,000 Insurance Expense $85,000 Wages and Salaries $240,000 Advertising $1,500 Depreciation Expense $13,000 Unearned Revenue $120,000 Equipment Rentals Revenues $56,000 Accum. Depreciation $25,000 In the closing process, which of these accounts would be debited?

Repair Revenues and Equipment Rental Revenues only

Interest payable, income tax payable and salary payable are all examples of:

accrued liabilities.

Adjusting entries:

adjust Unearned Revenue

An accrued liability could also be called

an accrued expense.

An accrued asset could also be called

an accrued revenue

Given the following activity for Caprock Company during the month of February, how much total expense would Caprock Company recognize on the February income statement using accrual accounting? Feb. 1 Caprock paid a total of $3,000 for 3 months of automobile insurance. The coverage on the insurance policy included the months of February, March, and April. Feb. 1 Caprock paid $5,000 to its landlord for February rent. Feb. 10 Caprock paid $4,000 on an accounts payable that had been recorded in January. Feb. 28 Caprock received the bill for the February utilities, and recorded $5,000 in accounts payable on that date. The bill will be paid in March.

$11,000

The Marjan Company's bank statement showed a balance of $14,087 on March 31, 2017. In searching its records and the bank statement, Marjan found the following: Outstanding checks $856 Bank service charges $80 Non-sufficient funds checks $907 Deposits in transit $1,640 Customer note collected by the bank $1,020 Based on this financial information, what should be the adjusted bank balance on the bank reconciliation?

$14,871

Andy, Inc. is in the process of reconciling its bank balance with the company records (i.e. books). The inputs used in the process include: an unadjusted book balance of $17,120; total outstanding checks of $2,065; total non-sufficient funds (NSF) checks of $508; total deposits in transit of $1,650; a bank service charge of $75; a customer note receivable collected by the bank of $3,000; and collection of interest on the note receivable of $40. The adjusted book balance on the bank reconciliation should be?

$19,577

On October 31, 2016, Siri Studios, Inc. had a balance per their records of $15,015. In reconciling their October 31, 2016 bank statement, Siri found outstanding checks of $4,500, a deposit in transit of $8,300, NSF checks of $1,400, and bank service charges of $88. Additionally, the October 23rd deposit of $8,100 was incorrectly recorded as $1,800 in the records of Siri. The adjusted cash balance should be?

$19,827

On September 1, 2018, Tucker Inc. received $30,000 from a customer who would like Tucker to provide services evenly over the next five months. Using the revenue recognition principle, how much revenue from this job would Tucker recognize in its year-end December 31, 2018 Income Statement?

$24,000

Movie 16 Theaters, Inc. has the following information for March 31, 2016: balance per the company records (i.e. books) of $8,684; outstanding checks of $14,400; a deposit in transit of $5,220; a bank service charge of $310; and total NSF checks of $4,225. What is the adjusted cash balance?

$4,149

Using the following information determine the amount that Pearson will report as Cash and Cash Equivalents on the Balance Sheet at the end of December. Cash is checking account $10,000 Petty cash $580 Postage Stamps $654 Unrecorded check from customer dated Jan 20, next year $321 3-month certificate of deposit $35,000 12- month certificate of deposit $35,000 Unrecorded check from customer dated Dec 15, this year $175 Unrecorded Cashier's Checks from customer $729 IOU from customer $500 6-month U.S. Treasury bill purchased 4 months ago $2,500 2-month high-grade Canada government security purchased 1 month ago $1,000 Cash in savings account $100 Accounts Receivable $3,700 1-month U.S. Treasury bill purchased 2 weeks ago $2,000 Time Deposits $1,600

$51,184

Use the following data to answer the question presented below for Linda Company's preparation of a bank reconciliation on October 31, 2015: Cash balance (per books $??? Bank Statement balance $12,800 Outstanding checks $8,400 NSF checks $5,200 Service charges $400 Deposits in transit $3,500 Interest earned on checking account $100 Assuming the adjusted bank balance equals the adjusted book balance, what is the adjusted cash balance on October 31, 2015?

$7900

During the month of October, Labrador, Inc. provided $300,000 of services for cash and $500,000 of services on account. Also during October, Labrador's customer paid $400,000 on their accounts. How much should Labrador report as revenues for October?

$800,000

What type of account is Dividends and on which financial statement is it reported?

Account Type: Contra Equity; Contra Owner's Equity Reported On: Statement of Retained Earnings

In preparing a bank reconciliation, all of the following would be used to adjust the balance per books, EXCEPT:

Deposits in transit

In September, Bagel Corp. billed a customer $125,000 for service performed during the month of September. The journal entry to reflect this billing would be:

Debit: Accounts Receivable Credit: Service Revenue

On September 19, Beagle Corp. received payment of $40,000 for services provided to a customer in August. The September 19 journal entry would be: Use the following abbreviations for accounts to fill in the blanks: CA = Cash AR = Accounts Receivable AP = Accounts Payable SR = Service Revenue UR = Unearned Revenue A debit to [a] and a credit to [b].

Debit: CA Credit: AR

Big Daddy Auto Parts, Inc. has an office supplies account that had a January 1st balance of $13,450. During the year, Big Daddy Auto purchased $24,360 in office supplies. On December 31st, a count of the office supplies revealed that there were $7,500 remaining on hand. On December 31st, Big Daddy's adjusting entry for office supplies should be:

Debit: Office Supplies Expense Credit: Office Supplies Inventory $: $30,310

On November 1, NASA rented some office space in Houston for twelve months paying $30,000 in advance for the 12-month rental. NASA adjusts accounts annually on December 31st for its financial report. The appropriate adjusting entry for NASA's office rent on December 31st would be:

Debit: Rent Expense Credit: PrePaid Rent $: $5,000

On September 1, 2017, Kian Co. recorded an Unearned Revenues account, a liability, for $66,000. This amount represents an amount that a customer paid in advance and the amount will be recognized in Service Fees evenly over a six-month period. The adjusting entry needed on December 31, 2017, would be:

Debit: Unearned Revenue Credit: Service Fees Revenues $: 44,000

On March 5th, its first day of operations, Ladybug Inc. purchased $1,200 of office supplies on account. On March 31st, Ladybug had $800 of office supplies on hand. On April 5th, Ladybug paid for the supplies it had purchased on account on March 5th. Under accrual accounting which of the following statements about recognizing supplies expense is correct?

Ladybug should recognize $400 of supplies expense in March.

Which of the following accounts are considered permanent accounts?

Land and Accounts Receivable

On a classified balance sheet:

Notes Payable due in one year is a current liability.

In preparing a bank reconciliation, all of the following would be used to adjust the balance per books, EXCEPT:

Outstanding checks

The closing entry for the Salaries Expense account includes a debit to:

Retained Earnings and a credit to Salaries Expense.

Expense Recognition Principle

The principle that matches expenses with revenues in the period when the company makes efforts to generate those revenues.

________ will be increased when a company receives cash before performing the services.

Unearned Service Revenue

Badger, Inc. has the following account balances related to its 2016 operations: Repair Revenues $840,000 Prepaid Expenses $85,000 Wages and Salaries $240,000 Dividends $1,500 Depreciation Expense $13,000 Unearned Revenue $120,000 Interest Revenue $6,000 Accum. Depreciation $25,000 In the closing process, which of these accounts would be credited?

Wages and Salaries, Depreciation Expense, and Dividends only

A type of liability resulting from the receipt of cash before the recognition of revenue is

a deferred revenue

Depreciation

a lessening in value

A deferred revenue could also be called

a liability

The entry to close expense account(s) includes a:

credit to the expense accounts

When preparing the financial statements of a company:

current assets are the most liquid assets

Prepaid expenses (e.g. prepaid rent) will become ________ when their future benefits expire.

expenses

Accrual Basis Accounting

reporting income when it is earned and expenses when they are incurred

Accounts that relate to a limited period of time are called:

temporary accounts

After the closing entries are prepared and posted:

the Retained Earnings account will have the correct ending balance.

revenue principle

the basis for recording revenues; tells accountants when to record revenue and the amount of revenue to record

With an accrual of revenue:

the cash is received after the revenue is recorded

Under accrual accounting, revenue is recorded:

when the services are performed, regardless of when the cash is received.