Exam 2: Accounting

Deferred expenses have

not yet been recorded as expenses.

In the accounting cycle, the last step is

preparing a post-closing trial balance.

What does the first closing entry represent?

the net income or (loss) for the period.

Supplies are recorded as assets when purchased . Therefore , the credit to supplies in the adjusting entry is for the amount of supplies

used.

Once the adjusting entries are posted, the Adjusted Trial Balance is prepared to

verify that the debits and credits are in balance.

The balance in the office supplies account on June 1 was $7,500, supplies purchased during June were $3,100, and the supplies on hand at June 30 were $2,300. The amount to be used for the appropriate adjusting entry is

$8,300

Which of the following is not true about closing entries?

All real accounts are closed at the end of the period.

What is the last account that should be listed in the Post Closing Trial Balance?

Capital account

Which of the following is considered to be unearned revenue?

Concert tickets sold for next month's performance.

During the end-of-period processing which of the following best describes the logical order of this process?

Preparation of adjustments, adjusted trial balance, financial statements

Which of the following is not a characteristic of accrual basis of accounting?

Revenues and expenses are reported in the period in which cash is received or paid.

There are two closing entries. The first one is to close ______ the second one is to close _______

Revenues and expenses, drawing account

The Income Statement will include the following accounts

Revenues less Expenses (ordered largest to smallest amount) with Miscellaneous Expense listed last

The accounting cycle requires three trial balances be done. In what order should they be prepared

Unadjusted, adjusted, post-closing

Generall y accepted accounting principles requires that companies use the ____ of accounting

accrual basis

The general term employed to indicate an expense that has not been paid and has not yet been recognized in the accounts by a routine entry is

accrual.

The Statement of Owner's Equity should be prepared

after the income statement and before the balance sheet.

Accrued revenues would appear on the balance sheet as

assets

Unearned Fees appear on the

balance sheet as a current liability.

Accumulated Depreciation appears on the

balance sheet in the property, plant and equipment section.

Prepaid expenses are eventually expected to

become expenses when their future economic value expires .

Prior to the adjusting process accrued revenue has

been earned and not recorded as revenue.

Prior to the adjusting process, accrued expenses have

been incurred, not paid, and not recorded.

The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed

book value.

Prepaid insurance is reported on the balance sheet as a

current asset.

The adjusting entry to record the depreciation of equipment for the fiscal period is

debit Depreciation Expense; credit Accumulated Depreciation.

A company purchases a one - year insurance policy on June 1 for $ 2,760 The adjusting entry on December 31 is

debit Insurance Expense , $ 1,610 , and credit Prepaid Insurance , $ 1,610

Which of the following is the proper adjusting entry , based on a prepaid insurance account balance before adjustment of $14,000 and unexpired insurance of $3,000, for the fiscal year ending on April 30?

debit Insurance Expense, $11,000; credit Prepaid Insurance, $11,000

The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is

debit Rent Expense, $8,000; credit Prepaid Rent, $8,000.

A business pays weekly salaries of $25,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

debit Salary Expense, $10,000; credit Salaries Payable, $10,000.

The entry to adjust for the cost of supplies used during the accounting period is

debit Supplies Expense; credit Supplies.

The post-closing trial balance differs from the adjusted trial balance in that it

does not include income statement accounts.

When preparing the statement of owner's equity, the beginning capital balance can always be found

in the general ledger.

Adjusting entries are

needed to bring accounts up to date and match revenue and expense.