Acc Chapter 3

n 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 what the correct adjusting entry should include by choosing the correct statement

Debit Unearned revenues for $400.

Sheldon Company had $500 for one day of accrued salaries on December 31 of the prior year. On January 4 of the current year, total salaries for the five-day week are paid. The journal entry to record the payment of salaries on January 4 includes:

Debit to Salaries Payable for $500; Debit to Salaries Expense for $2,000

A classified balance sheet has several categories for assets and liabilities including: (Check all that apply.) Long-term investments. Noncurrent (long-term) liabilities. Current assets. Plant assets. Tangible current assets. Rationale: A classified balance sheet will separate assets into Current and Plant assets. Operating expenses. Rationale: This appears on the income statement. Noncurrent equity.

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

$1,000 of supplies were purchased at the beginning of the month. $300 were used during the month. (The Supplies account was increased at the time of the initial purchase.) Demonstrate the required adjusting journal entry by selecting from the choices below. (Check all that apply.)

Supplies expense would be debited for $300. Supplies would be credited for $300.

Which of the following is (are) true regarding timeliness and the importance of periodic reporting? (Check all that apply.)

The value of information is often linked to its timeliness. Businesses report financial information at regular intervals to ensure timeliness of data. Useful information must reach decision makers frequently and promptly.

Which of the accounts below are considered accrued expenses? Unearned revenue, Utility expense Common Stock, Dividends Cash, Building, Equipment Wages expense, Interest expense

Wages expense, Interest expense

A classified balance sheet can be described as a balance sheet that: (Check all that apply.) is more useful to decision makers. lists all assets according to the size of their balance with larger dollar amounts listed first. organizes assets and liabilities into important subgroups. lists current assets in the order of how quickly they can be converted to cash. contains subgroups for expenses and revenues.

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

$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.

Unearned revenue would be debited for $700. Service revenue would be credited for $700.

A classified balance sheet can be described as a balance sheet that: (Check all that apply.) lists all assets according to the size of their balance with larger dollar amounts listed first. lists current assets in the order of how quickly they can be converted to cash. contains subgroups for expenses and revenues. is more useful to decision makers. organizes assets and liabilities into important subgroups.

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

McDarrel's records $500 of accrued salaries on December 31. Three days later, on January 3, total salaries of $4,000 (including the $500 accrued at year end) are paid. Demonstrate the required journal entry on January 3 by selecting from the choices below. (Check all that apply.) Cash would be credited for $4,000. Rationale: On January 3, cash will be credited for entire weekly pay period of 5 days. Wages expense will be debited for $4,000. Rationale: $500 was recorded last period, so only $3500 of Salaries expense should be recorded this period. Salaries payable will be credited for $500. Rationale: You want to reduce the account so, debit it. Salaries expense would be debited for $3,500. Salaries payable will be debited for $500.

Cash would be credited for $4,000. Salaries expense would be debited for $3,500. Salaries payable will be debited for $500.

Explain your understanding of what an accrued expense is by selecting the statements below which are correct

Examples of accrued expenses are wages expense and interest expense. They refer to costs that are incurred in a period, but are both unpaid and unrecorded. They are reported on an income statement. Adjustments involve increasing both an expense and a liability account.

Explain what unearned revenues are by selecting the statements below which are correct They are also called accounts receivable. They refer to earnings which have been earned, but not yet billed. They refer to cash received in advance of performing a service or product. They are reported on a balance sheet. They are also called deferred revenues. They are a liability.

They are a liability. They are also called deferred revenues. They are reported on a balance sheet. They refer to cash received in advance of performing a service or product.

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. (Check all that apply.) Any unused prepaids existing at end of period are transferred to asset accounts. Record all prepaid expenses with credits to expense accounts Rationale: We want to debit expense accounts. Record all prepaid expenses with credits to liability accounts. Rationale: The alternative is to debit 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.

A plant asset can be defined by which of the following statements?

Its original cost (minus any salvage value) is expensed over its useful life. It is a tangible long-term asset. It is reported on the balance sheet. It has a life within the business greater than one year.

Which statements below are true regarding permanent and temporary accounts? (Check all that apply.) Temporary accounts are reported on the income statement. Permanent accounts will appear on a post-closing trial balance. Retained Earnings is a permanent account, but Dividends is a temporary account. Permanent accounts are reported on the balance sheet. Temporary accounts have a balance for one period only. Temporary accounts will appear on a post-closing trial balance.

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

Which of the following describes accrued revenue? They refer to revenues that are earned in a period, but have not been received and are unrecorded. They refer to earnings which have been earned but not yet billed. Accounts receivable is usually increased when accruing revenues. The adjustment causes an increase in an asset account and an increase in a revenue account. Adjustments involve increasing both an expense account and a liability account.

They refer to revenues that are earned in a period, but have not been received and are unrecorded. They refer to earnings which have been earned but not yet billed. Accounts receivable is usually increased when accruing revenues. The adjustment causes an increase in an asset account and an increase in a revenue account.