accounting week 3

ABC, Inc.'s income statement shows Service revenue of $40,000, Wages expense of $25,000 and Net income of $1,000. The other expenses on ABC's income statement must equal Blank______.

$40,000 - 25,000 - other expenses =$1,000; other expenses =$14,000.

The statement of stockholders' equity includes these amounts:

-NET INCONE -DIVIDENDS FOR THE PERIOD -ENDING BALANCE RETAINED EARNINGS

How do adjusting entries for accrued expenses affect liabilities and expenses?

Adjusting entries for accrued expenses can increase liabilities and increase expenses.

Closing entries move the balances from the Blank______ accounts into the Retained Earnings account.

TEMPORARY

The adjusting entry for an accrued revenue always includes:

a credit to a revenue account a debit to an asset account

A classified balance sheet shows subtotals for current ___ and current ___

asset and liability

Norbert Inc. delivered goods and services during December. Payment is expected during the first week of January. The related adjusting entry should consist of a debit to a(n) Blank______ account and a credit to a(n) Blank______ account. Multiple choice question. revenue; asset liability; revenue liability; asset asset; revenue

asset and revenue

The entries that transfer the balances of all temporary accounts to retained earnings are referred to as

closing entries

The post-closing trial balance checks that total ___ equal total ___ at the end of the period.

debit; credit

During December, Mainzel Interior Design Corporation redecorated the reception areas of a local hotel. The project was completed on December 31 with payment due in 30 days. Payment was received on January 21 of the following year. When should Mainzel recognize the related revenue using accrual accounting?

december 31

If an adjusting entry's credit is to a liability account, then the debit must be to

expense

The primary components of net income are:

expense and revenue

A classified balance sheet

groups asset and liabilities into current and long-term categories

The expense that relates to a formal note payable and accumulates or accrues throughout the accounting period is referred to as _____ expense.

interest

If an adjusting entry's debit is to an expense account, then the credit must be to which of the following?

liability prepaid expense

If a company incorrectly records cash received for services to be provided in the future with a debit to Cash and a credit to Sales Revenue, how will this error affect net income for the current period?

net income will be too HIGH

How do temporary accounts differ from permanent accounts?

only temporary accounts are cleared out at the end of the accounting period.

At year-end, companies that utilize accrual-based accounting systems complete the measurement process through

recording of adjusting entries

On April 1, Katie Inc. collected $2,400 from a customer for a 12-month membership starting on that date. On December 31, Katie Inc. should credit:

service revenue for 1,800

Which financial statement would report all of the following information: beginning balances for common stock and retained earnings; current period net income or loss; current period dividends; common stock issued during the year; ending balances of common stock and retained earnings?

statement of stockholder's equity

Which financial statement would report all of the following information: beginning balances for common stock and retained earnings; current period net income or loss; current period dividends; common stock issued during the year; ending balances of common stock and retained earnings?

statement of stockholders equity

The post-closing trial balance helps to verify

the accounts are ready for next periods transactions -we prepared and posted closing entries correctly