ACC 111 - Chp 3

For a service company, its operating cycle is the time span between

(1) paying the employees to (2) receiving cash from customers

a unclassified balance sheet

Broadly groups assets, liabilities and equity

the four-step closing process in correct order

Close the revenue, expense, income summary, and dividend accounts

A company borrowed $4,000 from the bank at an interest rate of 9%. By the end of the accounting period, the loan had been outstanding for 30 days. Demonstrate the required adjusting entry by choosing the correct statement below.

Debit Interest expense for $30.

accrued expenses are reported on the

Income statement

What are the final four steps in the accounting cycle?

Prepare financial statements, close accounts, prepare post-closing trial balance, reverse and post

What are the 4-6 steps in the accounting cycle?

Prepare unadjusted trial balance, adjust accounts, prepare adjusted trial balance

What type of accounts are not included in a post-closing trial balance?

Temporary accounts

operating cycle

The time span during which cash is paid for goods and services, which are then sold and the business collects the cash.

Before the adjusting entry for a deferral of an expense, the expenses will be _________blank and the assets will be _________blank.

Understated; overstated.

Unearned revenues

Unearned revenues refer to cash received in advance of providing a service or product.

Current ratio =

current assets / current liabilities

In a balance sheet are dividends included under equity

no

Supplies are a

prepaid expense

For a merchandiser selling products, its operating cycle is the time span between

(1) Paying for merchandise/goods to (2) receiving cash from customers

Carlin Company has current assets of $100,000, total assets of $1,000,000, current liabilities of $50,000, total liabilities of $250,000 and total equity of $750,000. What is the current ratio (rounded to the nearest decimal point)?

2.0

What is a plant asset?

A plant asset refers to a long-term tangible asset used to produce and sell products or services.

What are the first three steps in the accounting cycle?

Analyze transactions, journalize, post

By the end of the accounting period, employees have earned salaries of $500, but they will not be paid until the following pay period. Which of the following is the proper adjusting entry?

Debit Salaries expense for $500.

An advance payment of $1,000 for services was received on December 1 and was recorded as a liability. By the end of the year, $400 had been earned. Demonstrate the December 31 adjusting entry by choosing the correct statement below.

Debit Unearned revenues for $400.

the steps in the adjusting process in the correct order in which they would be performed.

Determine what the current account balance is, Determine what the correct account balance should be, Record an adjusting entry.

Which of the accounts below are considered accrued expenses?

Wages expense, Interest expense

Every adjusting entry affects

an income statement account and a balance sheet account

Interim financial statements:

cover less than one year, usually spanning one-, three-, or six-month periods.

Accrued revenues are

earned in a period that are both unrecorded and not yet received in cash.

accrued expenses

expenses incurred but not yet paid in cash or recorded

Current ratio is for

measuring a company's ability to pay its short-term obligations

Profit Margin =

net income/net sales

What are temporary accounts

revenues, expenses, dividends, income summary