Chapter 3- Concepts
Given Net income: 500 Net sales: 3500 Accounts receivable: 2150
14.29% Profit Magin = net Income/Net Sales
Which of the statements below is correct regarding the difference between a temporary account and a permanent account? Multiple choice question. A permanent account will not appear on a post-closing trial balance. A temporary account will not appear on a post-closing trial balance. Permanent account balances will be transferred to the Retained Earnings account. Temporary account balances will be carried to the next accounting period.
A temporary account will not appear on a post-closing trial balance.
Which of the statements below is correct regarding the difference between a temporary account and a permanent account? Multiple choice question. A permanent account will not appear on a post-closing trial balance. Temporary account balances will be carried to the next accounting period. Permanent account balances will be transferred to the Retained Earnings account. A temporary account will not appear on a post-closing trial balance.
A temporary account will not appear on a post-closing trial balance.
Closing means to transfer account balances from (asset/liability/permanent/temporary) accounts so that they will start with a (contra/larger/zero) balance at the beginning of the next period.
Blank 1: temporary Blank 2: zero or 0
On December 28, I. Greasy Catering Company completed $600 of catering services. As of December 31, the customer had not been billed nor had the transaction been recorded. Demonstrate the required adjusting entry by choosing the correct statement below. Multiple choice question. Credit Accounts receivable for $600. Debit Catering revenue for $600. Debit Accounts receivable for $600. Debit Unearned revenue for $600.
Debit Accounts receivable for $600.
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? Multiple choice question. Debit Salaries payable for $500. Credit Unearned revenues for $500. Debit Salaries expense for $500. Credit Salaries expense for $500.
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 Service revenue for $400. Credit Unearned revenues for $400. Debit Unearned revenues for $600. Debit Unearned revenues for $400.
Debit Unearned revenues for $400.
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. Multiple choice question. Debit Unearned revenues for $600. Credit Unearned revenues for $400. Debit Service revenue for $400. Debit Unearned revenues for $400.
Debit Unearned revenues for $400.
Chimney Sweeps provided chimney cleaning services to several clients during the month of February. Chimney's customers have not yet been billed. Chimney's customers owe $2,000 to Chimney. How will Chimney Sweeps record this transaction? Multiple choice question. Debit cash and credit services revenue Debit accounts receivable and credit services revenue Debit accounts receivable and credit cash
Debit accounts receivable and credit services revenue
All of the following subtotals and totals are shown on an unclassified balance sheet: (Check all that apply.) Multiple select question. Total noncurrent assets Total liabilities Total assets Total noncurrent liabilities Total current assets Total current liabilities
Total liabilities Total assets
Current assets are:
cash and other resources that are expected to be sold, collected or used within one year
StoryBook Company provided services to several customers during the month of December. These services have not yet been paid by the customers. StoryBook should record the following adjusting entry at the end of December: (Check all that apply.) Multiple select question. credit accounts payable credit services revenue debit cash debit services revenue debit accounts receivable
credit services revenue debit accounts receivable
Brown Co. had current assets of $15,000, total assets of $30,000 and current liabilities of $9,000 at the end of the year. The current ratio for the period is:
current assets/ liabilities = 1.67 15000/ 9000
For the current year, Bubbles Office Supply had earned $600 of interest on investments. As of December 31, none of this interest had been received or recorded. Demonstrate the required half of the adjusting entry by choosing the correct statement below. Multiple choice question. Debit Interest revenue for $600. Debit Interest receivable for $600. Debit Cash for $600. Credit Interest receivable for $600
debit interest receivable 600
Plant asset
long term tangible asset, used to produce and sell products or services.
Categories of balance Sheet in order
1. Current Assets 2. Long-term Assets 3. Plant assets 4. Intangible assets 5. Current liabilities 6. Long term liabilities
Which of the following describes accrued revenue? (Check all that apply.) Multiple select question. Accounts receivable is usually increased when accruing revenues. Adjustments involve increasing both an expense account and a liability account. The adjustment causes an increase in an asset account and an increase in a revenue account. They refer to earnings which have been earned but not yet billed. They refer to revenues that are earned in a period, but have not been received and are unrecorded.
Accounts receivable is usually increased when accruing revenues. The adjustment causes an increase in an asset account and an increase in a revenue account. They refer to earnings which have been earned but not yet billed. They refer to revenues that are earned in a period, but have not been received and are unrecorded.
On December 27, a business completed a $400 service that had not yet been billed or recorded as of December 31. Demonstrate the required adjusting entry of the business by completing the following sentence. The required adjusting entry would be to debit the_________ (Unearned revenue/Accounts receivable/Cash/Service revenue) account and ___________(debit/credit) the________________ (Unearned revenue/Accounts receivable/Cash/Service revenue) account.
Accounts receivable, credit, service revenue
Which of the following statements is correct regarding a work sheet and the adjustment process? Multiple choice question. After keying adjustments in the work sheet, it is not necessary to journalize the adjustments in a journal. Adjusting journal entries are prepared from the Adjusted Trial Balance columns. Reason: They are prepared from the Adjustments columns. Adjusting journal entries are journalized in the work sheet. Reason: They are journalized in the journal. Adjusting journal entries are prepared from the Adjustments columns of a work sheet.
Adjusting journal entries are prepared from the Adjustments columns of a work sheet.
Describe an unclassified balance sheet. Multiple choice question. An unclassified balance sheet organizes assets and liabilities into important subgroups. An unclassified balance sheet is one where assets are separated into operating assets and non-operating assets. An unclassified balance sheet lists all operating expenses separate from its non-operating expenses. An unclassified balance sheet is one whose items are broadly grouped into assets, liabilities, and equity.
An unclassified balance sheet is one whose items are broadly grouped into assets, liabilities, and equity.
Describe an unclassified balance sheet. Multiple choice question. An unclassified balance sheet organizes assets and liabilities into important subgroups. An unclassified balance sheet lists all operating expenses separate from its non-operating expenses. An unclassified balance sheet is one whose items are broadly grouped into assets, liabilities, and equity. An unclassified balance sheet is one where assets are separated into operating assets and non-operating assets.
An unclassified balance sheet is one whose items are broadly grouped into assets, liabilities, and equity.
Rather than debiting an asset account, which of the following statements explains an alternate recording procedure to journalize prepaid expenses, such as prepaid rent or supplies. Multiple select question. Record all prepaid expenses with credits to liability accounts. Any unused prepaids existing at end of period are transferred to asset accounts. Record all prepaid expenses with credits to expense accounts Record all prepaid expenses with debits to expense accounts.
Any unused prepaids existing at end of period are transferred to asset accounts. Record all prepaid expenses with debits to expense accounts.
Before sorting/transferring amounts to the financial statement columns on a worksheet, the Trial Balance, (Income Statement, Adjustments) and Adjusted Trial Balance columns must (balance, clear).
Blank 1: adjustments Blank 2: balance
Summarize the closing process by listing the closing entries in the order in which they would occur at the end of the accounting period. Step 1: Close Income Statement (credit/debit) balance accounts. Step 2: Close Income Statement (credit/debit) balance accounts. Step 3: Close income (summary/dividends) . Step 4: Close (income summary/dividends) .
Blank 1: credit Blank 2: debit Blank 3: summary Blank 4: dividends
The closing process takes place at the __________(end/beginning) of an accounting period, after the ___________(adjusted/unadjusted) trial balance is prepared and _____________(after/before) the financial statements are prepared.
Blank 1: end Blank 2: adjusted Blank 3: after
By the end of the accounting period, employees have earned salaries of $650, but they will not be paid until the following pay period. Demonstrate the required adjusting entry by completing the following sentence. The required adjusting entry would be to debit the Salaries ________________(expense/payable) account and _______________(debit/credit) the Salaries___________________ (expense/payable/unearned) account.
Blank 1: expense Blank 2: credit Blank 3: payable
By the end of the accounting period, employees have earned salaries of $650, but they will not be paid until the following pay period. Demonstrate the required adjusting entry by completing the following sentence. The required adjusting entry would be to debit the Salaries _________(expense/payable) account and _____________(debit/credit) the Salaries ___________(expense/payable/unearned) account.
Blank 1: expense or expenses Blank 2: credit Blank 3: payable
By the end of the accounting period, employees have earned salaries of $650, but they will not be paid until the following pay period. Demonstrate the required adjusting entry by completing the following sentence. The required adjusting entry would be to debit the Salaries ____________(expense/payable) account and ____________ (debit/credit) the Salaries ____________(expense/payable/unearned) account.
Blank 1: expense or expenses Blank 2: credit Blank 3: payable
A company borrowed $10,000 from the bank at 5% interest. The loan has been outstanding for 45 days. Demonstrate the required adjusting entry for this company by completing the following sentence. The required adjusting entry would be to debit the Interest (expense/payable/receivable) ____________account and (debit/credit)_____________ the Interest (expense/payable/receivable) _____________account.
Blank 1: expense or expenses Blank 2: credit or credits Blank 3: payable
The formula to figure out the profit margin of a company is net (income/receivable/sales) divided by net (income/Cash/sales).
Blank 1: income Blank 2: sales
For the current year, a business has earned (but not recorded or received) $200 of interest from investments. Demonstrate the required adjusting entry by completing the following sentence. The required adjusting entry would be to debit the (Unearned revenue/Accounts receivable/Cash/Interest receivable) account and (debit/credit) the (Cash/Accounts receivable/Interest revenue/Interest receivable) account.
Blank 1: interest receivable Blank 2: credit Blank 3: interest revenue
For the current year, a business has earned (but not recorded or received) $200 of interest from investments. Demonstrate the required adjusting entry by completing the following sentence. The required adjusting entry would be to debit the _____________(Unearned revenue/Accounts receivable/Cash/Interest receivable) __________account and ___________(debit/credit) the (Cash/Accounts receivable/Interest revenue/Interest receivable) account.
Blank 1: interest receivable Blank 2: credit Blank 3: interest revenue
For the current year, a business has earned (but not recorded or received) $200 of interest from investments. Demonstrate the required adjusting entry by completing the following sentence. The required adjusting entry would be to debit the _____________(Unearned revenue/Accounts receivable/Cash/Interest receivable) account and ____________(debit/credit) the____________ (Cash/Accounts receivable/Interest revenue/Interest receivable) account.
Blank 1: interest receivable Blank 2: credit Blank 3: interest revenue
A post-closing trial balance is a list of (permanent/temporary) accounts and their balances (after/before) all (adjusting/closing) entries have been journalized and posted.
Blank 1: permanent Blank 2: after Blank 3: closing
Illustrate your understanding of how to use the adjusted trial balance to prepare a statement of retained earnings by completing the following sentence. In order to prepare the statement of retained earnings, the balance of the_____________ (Retained earnings/Cash) account as well as any debit balance in the_________________ (Dividends/Supplies) _____________account is transferred from the adjusted trial balance and is used along with the reported net income (loss) from the income statement.
Blank 1: retained earnings Blank 2: dividends
Illustrate your understanding of how to use the adjusted trial balance to prepare a statement of retained earnings by completing the following sentence. In order to prepare the statement of retained earnings, the balance of the_______________ (Retained earnings/Cash) ____________account as well as any debit balance in the ______________(Dividends/Supplies) account is transferred from the adjusted trial balance and is used along with the reported net income (loss) from the income statement.
Blank 1: retained earnings Blank 2: dividends
Which of the following accounts would be sorted from the Adjusted Trial Balance of a work sheet to the Balance Sheet & Statement of Owner's Equity columns on a work sheet? Multiple choice question. Cash; Accounts payable; Owner, Withdrawals Cash; Wages expense; Land Land; Unearned rent; Supplies expense Accounts receivable; Service revenue; Prepaid rent
Cash; Accounts payable; Owner, Withdrawals
Summarize the steps in the closing process by selecting the correct choice below. Multiple choice question. Close income statement credit balance accounts; close income summary; close income statement debit balance accounts; close dividends. Close income statement credit balance accounts; close income statement debit balance accounts; close income summary; close dividends. Close income statement debit balance accounts; close income statement credit balance accounts; close income summary; close dividends. Close income statement credit balance accounts; close income summary; close dividends; close income statement debit balance accounts.
Close income statement credit balance accounts; close income statement debit balance accounts; close income summary; close dividends.
Describe your understanding of the closing process by identifying the correct steps below. (Check all that apply.) Multiple select question. Close the Common Stock account Close the Dividends account. Close all revenue accounts. Close the Income Summary account. Close all expense accounts. Close all asset accounts.
Close the Dividends account. Close all revenue accounts. Close the Income Summary account. Close all expense accounts.
Choose the statement below that explains what "closing" means. Multiple choice question. Closing means to adjust an account's balance to its correct amount. Closing means to transfer the balance in an account to an asset account. Closing means to transfer an expense account's balance to the income statement. Closing means to bring an account balance to zero.
Closing means to bring an account balance to zero.
Choose the statement below that explains what "closing" means. Multiple choice question. Closing means to transfer an expense account's balance to the income statement. Closing means to transfer the balance in an account to an asset account. Closing means to adjust an account's balance to its correct amount. Closing means to bring an account balance to zero.
Closing means to bring an account balance to zero.
A classified balance sheet has several categories for assets and liabilities including: Multiple select question. Tangible current assets. Noncurrent equity. Current assets. Noncurrent (long-term) liabilities. Operating expenses. Plant assets. Long-term investments.
Current assets. Noncurrent (long-term) liabilities. Plant assets. Long-term investments.
What are current liabilities? (Check all that apply.) Multiple select question. Current liabilities are obligations that are not due to be settled within one year or the operating cycle, whichever is longer. Reason: This is the definition of a long-term liability. Current liabilities are property, plant and equipment that are tangible and depreciated. Current liabilities are obligations due to be paid within one year. Current liabilities are reported in the order of those to be settled first.
Current liabilities are obligations due to be paid within one year. Current liabilities are reported in the order of those to be settled first.
What are current liabilities? (Check all that apply.) Multiple select question. Current liabilities are property, plant and equipment that are tangible and depreciated. Current liabilities are reported in the order of those to be settled first. Current liabilities are obligations due to be paid within one year. Current liabilities are obligations that are not due to be settled within one year or the operating cycle, whichever is longer.
Current liabilities are reported in the order of those to be settled first. Current liabilities are obligations due to be paid within one year.
On December 28, I. Greasy Catering Company completed $600 of catering services. As of December 31, the customer had not been billed nor had the transaction been recorded. Demonstrate the required adjusting entry by choosing the correct statement below. Multiple choice question. Credit Accounts receivable for $600. Reason: Debit Accounts receivable. Debit Accounts receivable for $600. Debit Unearned revenue for $600. Reason: Unearned revenues is not involved. Debit Catering revenue for $600. Reason: Credit Catering revenue for $600.
Debit Accounts receivable for $600.
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. Multiple choice question. Debit Interest payable for $30. Credit Unearned revenues for $30. Debit Interest expense for $30. Credit Interest expense for $30.
Debit Interest expense for $30.
For the current year, Bubbles Office Supply had earned $600 of interest on investments. As of December 31, none of this interest had been received or recorded. Demonstrate the required half of the adjusting entry by choosing the correct statement below. Multiple choice question. Debit Cash for $600. Credit Interest receivable for $600. Debit Interest receivable for $600. Debit Interest revenue for $600.
Debit Interest receivable for $600.
For the current year, Bubbles Office Supply had earned $600 of interest on investments. As of December 31, none of this interest had been received or recorded. Demonstrate the required half of the adjusting entry by choosing the correct statement below. Multiple choice question. Debit Interest receivable for $600. Debit Cash for $600. Credit Interest receivable for $600. Debit Interest revenue for $600.
Debit Interest receivable for $600.
Mouse Inc. uses the alternative method of accounting for prepayments and purchased a $1,200, 6-month insurance policy. The company immediately debited the Insurance expense account. By the end of the period, $400 of the policy had expired. Demonstrate the required adjustment needed at the end of the period. Multiple choice question. Debit Prepaid insurance for $400. Debit Insurance expense $400. Credit Prepaid insurance $800. Debit Prepaid insurance $800.
Debit Prepaid insurance $800.
On December 31, AB Consulting recorded two days' wages of $100 in an adjusting entry which included a debit to Salaries Expense and a credit to Salaries Payable. On January 1, the accountant prepared a reversing entry which included which of the following? Multiple choice question. Debit Salaries Payable $100; credit Cash $100. Debit Salaries Payable $100; credit Salaries Expense $100. Debit Salaries Expense $100; credit Cash $100. Debit Salaries Expense $100; Credit Salaries Payable $100
Debit Salaries Payable $100; credit Salaries Expense $100.
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.
Review the following statements and select the ones that are correct regarding sorting accounts from the Adjusted Trial Balance columns of a work sheet to the Income Statement and Balance Sheet columns in order to prepare for our last step of completing the worksheet. (Check all that apply.) Multiple select question. Dividends go to the Balance Sheet Debit column. Liabilities go to the Balance Sheet Credit column. Dividends go to the Income Statement Debit column. Expense accounts go to the Income Statement Debit column.
Dividends go to the Balance Sheet Debit column. Liabilities go to the Balance Sheet Credit column. Expense accounts go to the Income Statement Debit column.
Which of the following is correct regarding a work sheet? Multiple choice question. Each set of column totals must balance on the Trial Balance columns, Adjustments columns and the Adjusted Trial Balance columns. The adjusted trial balance column totals will be off by the net income amount. Reason: These columns must be equal before transferring numbers to the Balance Sheet and the Income Statement columns. If an account requires more than one adjustment, the second adjustment is not entered. Reason: If an account requires more than one adjustment, the additional adjustment can be either added to a blank line or squeezed on one line. If a company reports net income, then this amount will be added to the Adjustments column. Reason: Any net income amount will be added to the debit column of the Income Statement and added to the credit column of the Balance Sheet columns.
Each set of column totals must balance on the Trial Balance columns, Adjustments columns and the Adjusted Trial Balance columns.
Explain your understanding of what an accrued expense is by selecting the statements below which are correct. multiple They are also called accounts receivable. Examples of accrued expenses are wages expense and interest expense. They refer to earnings which have been earned, but not yet billed. Adjustments involve increasing both an expense and a liability account. They are reported on an income statement. They refer to costs that are incurred in a period, but are both unpaid and unrecorded.
Examples of accrued expenses are wages expense and interest expense. Adjustments involve increasing both an expense and a liability account. They are reported on an income statement. They refer to costs that are incurred in a period, but are both unpaid and unrecorded.
What is a work sheet? Multiple choice question. It is a substitute for the general ledger. It can help with adjusting and closing accounts and with preparing financial statements. It is a substitute for the general journal. It is used by external decision makers to report accounting information.
It can help with adjusting and closing accounts and with preparing financial statements.
Select the statement below that describes a post-closing trial balance. Multiple choice question. It is a listing of all permanent accounts and their balances immediately after the adjusting process. It is a financial statement that describes all revenue and expense accounts after closing, It is a listing of all permanent accounts and their balances after closing. It is a listing of all temporary accounts and their balances after closing.
It is a listing of all permanent accounts and their balances after closing.
Select the statement below that describes a post-closing trial balance. Multiple choice question. It is a listing of all permanent accounts and their balances immediately after the adjusting process. It is a financial statement that describes all revenue and expense accounts after closing, It is a listing of all temporary accounts and their balances after closing. It is a listing of all permanent accounts and their balances after closing.
It is a listing of all permanent accounts and their balances after closing.
A plant asset can be defined by which of the following statements? (Check all that apply.) Multiple select question. It is a tangible long-term asset. It has a life within the business more than one year. Its original cost is expensed over its useful life. It is reported on the balance sheet. Its original cost is expensed in the period in which it was purchased
It is a tangible long-term asset. It has a life within the business more than one year. Its original cost is expensed over its useful life. It is reported on the balance sheet.
Select the statements below which correctly describe how to use the work sheet in the adjustment process. Multiple select question. Journalizing and posting adjusting entries are not mandatory when a work sheet is involved. A work sheet is a journal. Journalizing and posting adjusting entries is required after adjustments are entered in a work sheet. Information from the Adjustments columns are used for the adjusting journal entries.
Journalizing and posting adjusting entries is required after adjustments are entered in a work sheet. Information from the Adjustments columns are used for the adjusting journal entries.
Select all that apply Review the following statements and select the ones that are correct regarding sorting accounts from the Adjusted Trial Balance columns of a work sheet to the Income Statement and Balance Sheet columns in order to prepare for our last step of completing the worksheet. (Check all that apply.) Multiple select question. Dividends go to the Income Statement Debit column. Liabilities go to the Balance Sheet Credit column. Dividends go to the Balance Sheet Debit column. Expense accounts go to the Income Statement Debit column.
Liabilities go to the Balance Sheet Credit column. Dividends go to the Balance Sheet Debit column. Expense accounts go to the Income Statement Debit column.
Identify the accounts below that would be classified as current liabilities on a classified balance sheet. (Check all that apply.) Multiple select question. Notes payable (due in three months) Accounts receivable Unearned rent Notes payable (due in three years) Accounts payable Mortgage payable Taxes payable
Notes payable (due in three months) Unearned rent Accounts payable Taxes payable
Identify which of the accounts below would be classified as a current asset. (Check all that apply.) Multiple select question. Office supplies Prepaid rent Equipment Cash Land Accounts receivable
Office supplies Prepaid rent Cash Accounts receivable
Select the statements below that describe the purpose of a post-closing trial balance. (Check all that apply.) Multiple select question. One purpose is to verify that all temporary accounts have zero balances. One purpose is to verify that total debits equal total credit for permanent accounts. One purpose is to confirm that if debits equal credits then no errors in journalizing and positing occurred during the period. One purpose is to verify that total debits equal total credits for all temporary accounts. One purpose is to verify that all permanent accounts have zero balances.
One purpose is to verify that all temporary accounts have zero balances. One purpose is to verify that total debits equal total credit for permanent accounts.
Select the statements below that describe the purpose of a post-closing trial balance. (Check all that apply.) Multiple select question. One purpose is to verify that total debits equal total credit for permanent accounts. One purpose is to verify that total debits equal total credits for all temporary accounts. One purpose is to confirm that if debits equal credits then no errors in journalizing and positing occurred during the period. One purpose is to verify that all temporary accounts have zero balances. One purpose is to verify that all permanent accounts have zero balances.
One purpose is to verify that total debits equal total credit for permanent accounts. One purpose is to verify that all temporary accounts have zero balances.
Which of the following accounts would be considered a prepaid expense or prepaid asset account? (Check all that apply.) Multiple select question. Prepaid rent Accounts payable Supplies Prepaid insurance Common Stock
Prepaid rent Supplies Prepaid insurance
Which of the following statements correctly defines a profit margin? (Check all that apply.) Multiple select question. Profit margin is the ratio of a business's net income to its accounts receivables. Profit margin is the amount of revenue received on a sale. Profit margin is also called return on sales. Profit margin is the ratio of a business's net income to its net sales.
Profit margin is also called return on sales. Profit margin is the ratio of a business's net income to its net sales.
Which of the following statements correctly defines a profit margin? (Check all that apply.) Multiple select question. Profit margin is the ratio of a business's net income to its accounts receivables. Reason: Profit margin is the ratio of net income/net sales. Profit margin is also called return on sales. Profit margin is the amount of revenue received on a sale. Reason: Profit margin is the ratio of net income/net sales. Profit margin is the ratio of a business's net income to its net sales.
Profit margin is also called return on sales. Profit margin is the ratio of a business's net income to its net sales.
Vito Co. had current assets of $9,000 and current liabilities of $6,000 at the end of the year. Net income during the year was $21,000. The current ratio for the period is: Multiple choice question. 28% 2.33 1.5 67%
Reason: $9,000 / $6,000 = 1.5 1.5
Which of the accounts below would appear in the equity section of a classified balance sheet? Multiple choice question. Income Summary Reason: This does not appear on any financial statement. Retained Earnings Service Revenue Reason: This appears on the income statement.
Retained Earnings
Which of the accounts below would appear in the equity section of a classified balance sheet? Multiple choice question. Retained Earnings Service Revenue Income Summary
Retained Earnings
$1,000 of cash was received in advance of performing services. By the end of the period, $300 had not yet been earned. (The Unearned revenue account was increased at the time of the initial cash receipt.) Demonstrate the required adjusting journal entry by selecting from the choices below. (Check all that apply.) Service revenue would be credited for $700. Unearned revenue would be debited for $300. Accounts receivable would be debited for $700. Unearned revenue would be debited for $700. Service revenue would be credited for $300.
Service revenue would be credited for $700. Unearned revenue would be debited for $700.
Closing Process
Step #1 matches Choice Identify accounts to be closed. Step #2 matches Choice Journalize and post closing entries. Step #3 matches Choice Prepare a post closing trial balance.
How to Use a worksheet: Information from the Adjustments columns are used for the adjusting journal entries. Journalizing and posting adjusting entries are not mandatory when a work sheet is involved. A work sheet is a journal. Journalizing and posting adjusting entries is required after adjustments are entered in a work sheet.
Step 1: Enter unadjusted trial balance Step 2: Enter adjustments Step 3: prepare adjusted Trial balance Step 4: Sort Adjusted trial balance amounts to financial statements Step 5: total statement Columns, Compute income or loss, and balance columns. Information from the Adjustments columns are used for the adjusting journal entries. Journalizing and posting adjusting entries is required after adjustments are entered in a work sheet.
Which of the following accounts is considered a prepaid expense? Multiple choice question. Accounts payable Supplies Utility expense Wages expense
Supplies
Which statements below are true regarding permanent and temporary accounts? (Check all that apply.) Multiple select question. Temporary accounts are reported on the income statement. Permanent accounts are reported on the balance sheet. Temporary accounts will appear on a post-closing trial balance. Temporary accounts have a balance for one period only. Permanent accounts will appear on a post-closing trial balance. Retained Earnings is a permanent account, but Dividends is a temporary account.
Temporary accounts are reported on the income statement. Permanent accounts are reported on the balance sheet. Temporary accounts have a balance for one period only. Permanent accounts will appear on a post-closing trial balance. Retained Earnings is a permanent account, but Dividends is a temporary account.
Which of the statements below explains the accounting cycle? Multiple choice question. The accounting cycle refers to the work sheet used during the period to record adjustments and the post-closing trial balance. The accounting cycle is another name for the closing process at the end of the year. The accounting cycle is repeated each reporting period and refers to the steps taken in preparing financial statements. The accounting cycle is another name for the adjustment process at the end of the period.
The accounting cycle is repeated each reporting period and refers to the steps taken in preparing financial statements.
Which of the statements below explains the accounting cycle? Multiple choice question. The accounting cycle refers to the work sheet used during the period to record adjustments and the post-closing trial balance. The accounting cycle is repeated each reporting period and refers to the steps taken in preparing financial statements. The accounting cycle is another name for the adjustment process at the end of the period. The accounting cycle is another name for the closing process at the end of the year.
The accounting cycle is repeated each reporting period and refers to the steps taken in preparing financial statements.
Which of the statements below are correct regarding the accounting cycle? (Check all that apply.) Multiple select question. The accounting cycle refers to the steps that occur within a company to approve expenses for payment. The accounting cycle refers to steps followed by a company to prepare its financial statements. The accounting cycle is a series of steps repeated each reporting period. The cycle contains steps for adjusting and closing accounts. The accounting cycle takes place anytime the general ledger accounts need adjusting. The accounting cycle contains 10 steps (including an optional step).
The accounting cycle refers to steps followed by a company to prepare its financial statements. The accounting cycle is a series of steps repeated each reporting period. The cycle contains steps for adjusting and closing accounts. The accounting cycle contains 10 steps (including an optional step).
What is the difference between an adjusted trial balance and an unadjusted trial balance? (Check all that apply.) Multiple select question. The unadjusted trial balance is more up to date and should be used to prepare financial statements. Reason: The adjusted trial balance includes all adjustments made. The adjusted trial balance generally has more accounts listed than the unadjusted trial balance. The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. The adjusted trial balance is used to prepare financial statements.
The adjusted trial balance generally has more accounts listed than the unadjusted trial balance. The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. The adjusted trial balance is used to prepare financial statements.
What is the difference between an adjusted trial balance and an unadjusted trial balance? (Check all that apply.) Multiple select question. The adjusted trial balance generally has more accounts listed than the unadjusted trial balance. The adjusted trial balance is used to prepare financial statements. The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. The unadjusted trial balance is more up to date and should be used to prepare financial statements. Reason: The adjusted trial balance includes all adjustments made.
The adjusted trial balance generally has more accounts listed than the unadjusted trial balance. The adjusted trial balance is used to prepare financial statements. The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted.
Explain the difference between the unadjusted and the adjusted trial balance. Multiple choice question. The adjusted trial balance contains only the accounts which were adjusted. The unadjusted trial balance contains all of the remaining accounts. The unadjusted trial balance is more accurate and should be used to prepare financial statements. The unadjusted trial balance is more up to date than the adjusted trial balance. The adjusted trial balance is prepared after adjusting entries have been recorded and posted.
The adjusted trial balance is prepared after adjusting entries have been recorded and posted.
Explain the difference between the unadjusted and the adjusted trial balance. Multiple choice question. The adjusted trial balance is prepared after adjusting entries have been recorded and posted. The unadjusted trial balance is more accurate and should be used to prepare financial statements. The adjusted trial balance contains only the accounts which were adjusted. The unadjusted trial balance contains all of the remaining accounts. The unadjusted trial balance is more up to date than the adjusted trial balance.
The adjusted trial balance is prepared after adjusting entries have been recorded and posted.
Explain the difference between the unadjusted and the adjusted trial balance. Multiple choice question. The adjusted trial balance is prepared after adjusting entries have been recorded and posted. The unadjusted trial balance is more up to date than the adjusted trial balance. The adjusted trial balance contains only the accounts which were adjusted. The unadjusted trial balance contains all of the remaining accounts. The unadjusted trial balance is more accurate and should be used to prepare financial statements.
The adjusted trial balance is prepared after adjusting entries have been recorded and posted.
Explain the difference between the unadjusted and the adjusted trial balance. Multiple choice question. The unadjusted trial balance is more up to date than the adjusted trial balance. The unadjusted trial balance is more accurate and should be used to prepare financial statements. The adjusted trial balance is prepared after adjusting entries have been recorded and posted. The adjusted trial balance contains only the accounts which were adjusted. The unadjusted trial balance contains all of the remaining accounts.
The adjusted trial balance is prepared after adjusting entries have been recorded and posted.
What is the difference between an adjusted trial balance and an unadjusted trial balance? (Check all that apply.) Multiple select question. The adjusted trial balance is used to prepare financial statements. The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. The unadjusted trial balance is more up to date and should be used to prepare financial statements. The adjusted trial balance generally has more accounts listed than the unadjusted trial balance.
The adjusted trial balance is used to prepare financial statements. The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. The adjusted trial balance generally has more accounts listed than the unadjusted trial balance.
Recall the column headings of a work sheet used to prepare financial statements. Which of the following items are on a worksheet. (Check all that apply.) Multiple select question. Unadjusted Trial Balance columns Adjustment columns Adjusted Trial Balance columns Balance Sheet columns Income Statement columns Statement of Cash Flows columns
Unadjusted Trial Balance columns Adjustment columns Adjusted Trial Balance columns Balance Sheet columns Income Statement columns Need help? Review these concept resour
Identify which group of accounts may require adjustments at the end of the accounting period. Multiple choice question. Utilities expense; Cash; Common Stock Cash; Notes receivable; Land Unearned revenue; Supplies; Prepaid rent
Unearned revenue; Supplies; Prepaid rent
Which of the accounts below are considered accrued expenses? Multiple choice question. Common Stock, Dividends Wages expense, Interest expense Unearned revenue, Utility expense Cash, Building, Equipment
Wages expense, Interest expense
Determine which of the following transactions may require adjustments. Multiple select question. An employee was paid his weekly wages in full at the end of the week. a 24-month insurance policy was prepaid An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. a one-month premium on an insurance policy was paid Equipment was purchased in the middle of the year. Six months of rent were paid in advance. Rent was paid for the month. Supplies were purchased at the beginning of the year, but not all were used.
a 24-month insurance policy was prepaid An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. Equipment was purchased in the middle of the year. Six months of rent were paid in advance. Supplies were purchased at the beginning of the year, but not all were used.
A reversing entry can be described as a(n): (Check all that apply.) Multiple select question. optional entry. entry that reduces expenses reported on the income statement. entry that is used for adjusting entries involving accrued revenues and accrued expenses. entry whose purpose is to simplify a company's record keeping. entry that is the exact opposite of an accrual adjusting entry. required entry done at the end of an accounting period.
optional entry. entry that is used for adjusting entries involving accrued revenues and accrued expenses. entry whose purpose is to simplify a company's record keeping. entry that is the exact opposite of an accrual adjusting entry.
A classified balance sheet can be described as a balance sheet that: (Check all that apply.) Multiple select question. contains subgroups for expenses and revenues. organizes assets and liabilities into important subgroups. lists all assets according to the size of their balance with larger dollar amounts listed first. is more useful to decision makers. lists current assets in the order of how quickly they can be converted to cash.
organizes assets and liabilities into important subgroups. is more useful to decision makers. lists current assets in the order of how quickly they can be converted to cash.
Unearned Revenues
refer to cash received in advance of providing a service or product.
Accrued _______________are earned in a period that are both unrecorded and not yet received in cash.
revenue or revenues
