Financial Accounting - Chapter 4 Quiz

Which account will have a zero balance on a post-closing trial balance?

Dividends.

Which is the first financial statement that should be prepared after the adjusted trial balance has been prepared

Income Statement

Amortization is the expensing of

Long-term assets that lack physical substance

After the adjustments have been completed, the adjusted balance in the Supplies account represents the cost of supplies:

On hand at the end of the accounting period.

Angela is a tenant of Bruce. On March 1, Angela paid Bruce $2400 for 3 months of rent. On March 31, Angela's adjusting entry will include one with a debit to

Rent expense for $800 and credit to Prepaid Rent for $800

Bird Company INCURRED $10,000 in salaries and wages for employees for the year, $9,000 of these salaries and wages HAD BEEN PAID by the end of the year.

Salaries and Wages Payable on the balance sheet will be $1000

At the end of the month the adjusting journal entry to record the USE OF SUPPLIES would include a DEBIT to

Supplies Expense and a credit to Supplies

The process of allocating the cost of buildings, vehicles, and equipment to the accounting periods in which they are used is called

depreciation

Adjustments to EXPENSE ACCOUNTS at the end of the accounting period are made to adhere to accrual accounting principles, specifically the ___________________ principle.

expense recognition "matching"

The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to

interest expense and credit to interest payable

At the end of the accounting period

temporary accounts are closed; permanent accounts are not

Closing Journal entries

transfer net income or loss and dividends to retained earnings

The book value of equipment is equal to

cost of equipment less the related accumulated depreciation

Closing entries

cause the revenue and expense accounts to have zero balances

Ridge Crest Co has beginning Retained Earnings of $11,000, and ending Retained Earnings of $16,000, and net income of $7,500. What was the amount of dividends declared during the year?

$2,500

Parker, Inc. had a beginning balance in its Retained Earnings account of $192,800. During the year, the company declared and paid $2,350 dividend and, at the end of the year, it reported Retained Earnings of $199,930. The company's net income for the year was

$9480

On December 31, 2018, interest of $700 is owed on a bank loan that will not be paid until June 30, 2019. What is the necessary adjusting journal entry on December 31, 2018?

Debit Interest Expense and Interest Payable for $700

Freshly Co purchased an INVESTMENT SECURITY on September 1 that WILL PAY $1200 INTEREST on November 30. Which of the following adjusting entries would be made on September 30?

Debit Interest Receivable and credit Interest Revenue for $400

A company started the year with $3750 of supplies on hand. During the year the company purchased additional supplies of $2000 and recorded them as an increase to the supplies asset. At the end of the year the company determined that only $750 of supplies are still on hand. What is the adjusting journal entry to be made at the end of the period?

Debit Supplies Expense and credit Supplies $5000

What are the effects on the accounting equation from the adjustment for income tax expense accrued, but not paid, at the end of the accounting period?

Total liabilities will increase and total stockholder's equity will decrease.

If an EXPENSE HAS BEEN INCURRED but will be paid later, then

a liability account is created or increased and an expense is recorded

A company reports Equipment on its classified balance sheet. The balance of Accumulated Depreciation account appears on a classified balance sheet as

a subtraction to arrive at the amount of Equipment, Net

After the adjustments have been completed, the adjusted balance in the Deferred Revenue account represents the

amount of sales revenue or services still owed.

The balance in the Prepaid Insurance account after the adjusting entries have been recorded represents the

amount of the insurance prepayment that remains to benefit future periods

When existing assets ARE USED UP in the ordinary course of business

an expense is recorded.

Before the closing entries are prepared, the Retained Earnings balance in the adjusted trial balance is equal to the balance of that account

at the beginning of the period.

Adjusting entries are typically prepared

at the end of the period.

Accumulated Depreciation appears on the

balance sheer as a contra-asset account.

Adjusting entries affect

both income statement and balance sheet accounts