Chapter 3 pt 2 ACCT

Which of the statements below describe(s) a temporary account? (Check all that apply.)

A temporary account has a balance for only one period. A temporary account is closed at the end of an accounting period.

Which of the statements below is correct regarding the difference between a temporary account and a permanent account?

A temporary account will not appear on a post-closing trial balance.

Describe an unclassified balance sheet.

An unclassified balance sheet is one whose items are broadly grouped into assets, liabilities, and equity.

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.

Blank 1: Accounts receivable Blank 2: credit Blank 3: Service 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

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 balance 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

Complete the following statement. The purpose of the closing process is to reset ______________ (temporary/permanent) account balances to zero and to transfer the changes in all of these accounts to the Retained ____________ (Earnings/Summary/Withdrawal) account.

Blank 1: temporary Blank 2: earnings

Current items can be described as those expected to come due within one _____________(month/year) and are listed in the order of how _____________(quickly/slowly) they could be converted to or paid in cash.

Blank 1: year Blank 2: quickly

Define "current" as it applies to assets and liabilities on a classified balance sheet.

Current items are those expected to come due within one year or the company's operating cycle, whichever is longer.

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.

Debit Accounts 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.

Debit Interest receivable for $600.

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?

Debit accounts receivable and credit services revenue

All of the following are part of the FASB conceptual framework: (Select all that apply).

Elements Qualitative characteristics Objectives Recognition and measurement

Which statement below defines accounting?

It identifies, records, and communicates business transactions.

Select the statement below that describes a post-closing trial balance.

It is a listing of all permanent accounts and their balances after closing.

A classified balance sheet has several categories for assets and liabilities including: (Check all that apply.)

Long-term investments. Current assets. Plant assets. Noncurrent (long-term) liabilities.

Select the statements below that describe the purpose of a post-closing trial balance. (Check all that apply.)

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.

Identify which of the accounts below would be classified as a current asset. (Check all that apply.)

Prepaid rent Cash Office supplies Accounts receivable

An employee that is having trouble paying his personal bills might exhibit the following fraud factor:

Pressure

Which of the accounts below would appear in the equity section of a classified balance sheet?

Retained Earnings

Determine which of the following transactions may require adjustments. (Check all that apply.)

Six months of rent were paid in advance. a 24-month insurance policy was prepaid Supplies were purchased at the beginning of the year, but not all were used. 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.

Which statements below are true regarding permanent and temporary accounts? (Check all that apply.)

Temporary accounts are reported on the income statement. Temporary accounts have a balance for one period only. Retained Earnings is a permanent account, but Dividends is a temporary account. Permanent accounts are reported on the balance sheet. Permanent accounts will appear on a post-closing trial balance.

Which of the statements below is (are) correct regarding the accounting cycle? (Check all that apply.)

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. The accounting cycle refers to steps followed by a company to prepare its financial statements.

Which of the statements below explains the accounting cycle?

The accounting cycle is repeated each reporting period and refers to the steps taken in preparing financial statements.

What is the difference between an adjusted trial balance and an unadjusted trial balance? (Check all that apply.)

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.

The adjusted trial balance is prepared after adjusting entries have been recorded and posted.

What are Generally Accepted Accounting Principles?

The concepts and rules that govern financial accounting practice.

Identify which group of accounts may require adjustments at the end of the accounting period.

Unearned revenue; Supplies; Prepaid rent

Which of the following lists contains only temporary accounts?

Wages Expense; Income Summary; Dividends

Current assets are:

cash and other resources that are expected to be sold, collected or used within one year

The FASB conceptual framework consists of all of the following except:

concepts

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: (Select all that apply).

credit services revenue debit accounts receivable

Users of accounting information can be divided into two main groups. These groups include:

internal and external

A classified balance sheet can be described as a balance sheet that: (Check all that apply.)

lists current assets in the order of how quickly they can be converted to cash. organizes assets and liabilities into important subgroups.

Generally accepted accounting principles (GAAP) wants information to have: (Check all that apply).

relevance faithful representation

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

revenues

Explain your understanding of the closing process by choosing the correct statements below. (Check all that apply.)

the closing process resets the balances in temporary accounts to zero. the closing process helps to summarize a period's revenues and expenses.