Accounting Chapter 3: Interactive Presentation

all accounts and their balances

An adjusted trial balance includes which of the following accounts: -income statement accounts only -balance sheet accounts only -income statement and balance sheet accounts only -all accounts and their balances

Broadly groups assets, liabilities and equity

An unclassified balance sheet: -Organizes assets into subgroups -Broadly groups assets, liabilities and equity -Includes subheadings such as "Current assets" and "Long-term liabilities" -Is not permitted according to GAAP

One or more balance sheet accounts and one or more income statement accounts.

Adjusting entries effect: ?

all of the above (annual reporting period is not always a calendar year ending on December 31.)

Annual reporting periods can cover: -a calendar year. -A 52-week period. -12 consecutive months. -all of the above.

credit balance of $140,000 (Accumulated depreciation account has a normal balance in credit. So 120,000 credit + 20,000 credit = 140,000)

Assume that the Accumulated Depreciation account has an unadjusted normal balance of $120,000. The company's list of adjusting entries includes one that debits Depreciation Expense and credits the Accumulated Depreciation account for $20,000. The adjusted balance in the Accumulated Depreciation account is a:

Understated; overstated.

Before the adjusting entry for a deferral of an expense, the expenses will be _____ (Understated/Overstated) and the assets will be _____ (Understated/Overstated).

Cash: Included Dividends: Not Included Depreciation Expense: Not Included Retained Earnings: Included Income Summary: Not Included

Identify the accounts that would appear on the post-closing trial balance. Included/Not Included Cash: Dividends: Depreciation Expense: Retained Earnings: Income Summary:

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

Interim financial statements: -are always prepared before any adjustments have been recorded. -show the assets above the liabilities and the liabilities above the equity. -cover less than one year, usually spanning one-, three-, or six-month periods. -report revenues when incurred and expenses when earned.

Debit Credit Dec. 31 Prepaid Insurance 11,000 Insurance Expense 11,000 ( I do not know why. My guess is that they are wanted the adjusted balance for the end of December 31. So a month has expired (12,000 x (1/12) = 1,000. 12,000 -1,000 = 11,000. I don't know?)

On December 1, the company paid $12,000 for 12 months of insurance coverage beginning on that date. The payment was recorded with a debit in that amount to the Insurance Expense account.

Debit Credit Dec. 31 Depreciation expense 1,800 Accumulated depreciation 1,800

On January 1, the company purchased equipment that cost $10,000. The equipment is expected to be worth about (or has a salvage value of) $1,000 at the end of its useful life in five years. The company uses straight-line depreciation. It has not recorded any adjustments relating to this equipment during the current year. Complete the necessary December 31 journal entry by selecting the account names from the pull-down menus and entering dollar amounts in the debit and credit columns.

Debit Credit Dec. 31 Rent Revenue 3,000 Unearned rent revenue 3,000 (All 9,000 went into Rent revenue, however only 2/3 or 6,000 has been earned from the renters. So we subtract what we did not earn (3,000) from rent revenue and add (3,000) to unearned rent revenue because we have yet earned it.)

On November 1, the company rented space to another tenant. A check in the amount of $9,000, representing three months' rent in advance, was received from the tenant on that date. The payment was recorded with a credit to the Rent Revenue account.

Debit Credit Dec. 31 Unearned rent revenue 6,000 Rent revenue 6,000

On November 1, the company rented space to another tenant. A check in the amount of $9,000, representing three months' rent in advance, was received from the tenant on that date. The payment was recorded with a credit to the Unearned Rent Revenue account. Complete the necessary December 31 adjusting journal entry by selecting the account names from the pull-down menus and entering dollar amounts in the debit and credit columns.

Debit Credit Dec. 31 Accounts Receivable 1,000 Service Revenue 1,000 (10 hrs x $100 per hour = 1,000)

On Saturday, December 31, the company's owner provided ten hours of service to a customer. The company bills $100 per hour for services provided on weekends. Payment has not yet been received. The owner did not stop in the office on Saturday; as such, on December 31, the services were unbilled and unrecorded.

Step 1: Close the revenue accounts Step 2: Close the expense accounts Step 3: Close the income summary account Step 4: Close the dividends account.

Place the steps in the four-step closing process in the correct order: Step 1: ? Step 2: ? Step 3: ? Step 4: ?

Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record an adjusting entry to get from step 1 to step 2.

Place the steps in the three-step adjusting process in the correct order: Step 1: ? Step 2: ? Step 3: ?

Before the related expense is recognized.

Prepaid expenses reflect transactions when cash is paid: ?

Step 1: Analyze transactions Step 2: Journalize Step 3: Post Step 4: Prepare unadjusted trial balance Step 5: Adjust accounts

The accounting cycle consists of 10 steps. Identify the order in which the first five steps will be performed by selecting from the drop down items. Step 1: ? Step 2: ? Step 3: ? Step 4: ? Step 5: ? Options are: Post, adjust accounts, prepare unadjusted trial balance, Journalize, analyze transactions

Debit Credit Dec. 31 Salaries Expense 4,000 Salaries Payable 4,000 (I got 4,000 by 800 x 5)

The company employs a single employee who works all five weekdays and is paid on the following Monday. The employee works the entire week ending on Friday, December 30. The employee earns $800 per day. Complete the necessary December 31 journal entry by selecting the account names from the pull-down menus and entering dollar amounts in the debit and credit columns.

Debit Credit Dec. 31 Fees Earned 56,000 Income Summary 56,000

The company's adjusted trial balance as follows includes the following accounts balances: Cash, $15,000; Equipment, $85,000; Accumulated Depreciation, $25,000; Accounts Payable, $10,000; Retained earnings, $59,000; Dividends, $2,000; Fees Earned, $56,000; Depreciation Expense, $25,000; and Salaries Expense, $23,000. All accounts have normal balances. Prepare the first closing entry by selecting the account names from the pull-down menus and entering dollar amounts in the debit and credit columns. Hint: You must first compute net income, which is based on the result of completing and posting the first two closing entries.

Debit Credit Dec. 31 Income Summary 8,000 Retained Earnings 8,000 (Revenues (56,000) - Expenses (25,000 + 23,000) = 8,000)

The company's adjusted trial balance as follows includes the following accounts balances: Cash, $15,000; Equipment, $85,000; Accumulated Depreciation, $25,000; Accounts Payable, $10,000; Retained earnings, $59,000; Dividends, $2,000; Fees Earned, $56,000; Depreciation Expense, $25,000; and Salaries Expense, $23,000. All accounts have normal balances. Prepare the third closing entry by selecting the account names from the pull-down menus and entering dollar amounts in the debit and credit columns.

$30,750 (Cash (12,000) + Merchandise inventory (6,000) + Notes receivable due in 30 days (1,000) + Prepaid insurance (1,500) + Short-term investments (10,000) + Supplies (250)= 30,750

The company's unclassified balance sheet reported the assets listed in the above table. The total current assets that would be reported on a classified balance sheet prepared for the company are: Cash $12,000: Land 30,000: Long-term investments 15,000: Merchandise inventory 6,000: Notes receivable (due in 30 days) 1,000: Notes receivable (due in 5 years) 5,000: Prepaid insurance 1,500: Short-term investments 10,000: Supplies 250: Total assets $80,750 -$20,750 -$24,750 -$30,750 -$80,750

Consulting Revenue: Revenue Rent Expense: Expense Dividends: Dividends

The following is a partial list of account names that appear on the company's adjusted trial balance. Classify the following accounts into the correct financial statement column using the drop-down list. Consulting Revenue: ? Rent Expense: ? Dividends: ?

Accounts Receivable: Asset Unearned Revenue: Liability Accounts Payable: Liability

The following is a partial list of account names that appear on the company's adjusted trial balance. Classify the following list of accounts into the correct financial statement column using the drop-down list. Accounts Receivable: ? Unearned Revenue: ? Accounts Payable: ?

-The accrual basis records revenues when services or products are delivered and records expenses when incurred. -The cash basis records revenues when cash is received and records expenses when cash is paid.

The primary difference between the accrual basis and the cash basis of accounting is: (Chose all that apply) -The accrual basis records revenues when services or products are delivered and records expenses when cash is paid. -The accrual basis records revenues when services or products are delivered and records expenses when incurred. -The cash basis records revenues when services or products are delivered and records expenses when paid. -The cash basis records revenues when cash is received and records expenses when cash is paid.

When the goods or services are provided to customers.

The revenue recognition principle requires that revenue be recorded: -In the same period as the expenses incurred. -When the goods or services are provided to customers. -When the cash is received for the goods or services provided to customers. -In whatever accounting period the company chooses. -When the company is assured that the customer will pay for the goods or services.