Accounting Chapter 4

Ridge Crest Co. has beginning Retained Earnings of $11,000, 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 $192800. During the year, the company declared and paid a $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:

$9,480

The book value of equipment is equal to which of the following?

Cost of equipment less the related accumulated depreciation

Which of the following entries records the adjustment for revenue earned, but not yet collected?

Debit Accounts Receivable and credit Sales Revenue

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 credit 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

On January 1, the Sleepy Monk Coffee Shop paid $24000 for a full year of rent beginning on January 1. The rent payment was appropriately recorded in the Cash and Prepaid Rent accounts. If financial statements are prepared on January 31, the journal entry to record the adjustment would be

Debit Rent Expense and credit Prepaid Rent for $2000

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 still on hand. What is the adjusting journal entry to be made at the end of the period?

Debit Supplies Expense and credit Supplies for $5000

Angela is a tenant for Bruce. On July 1, Angela paid Bruce $3600 for 3 months of rent. On July 31, Bruce's adjusting entries will include a debit to:

Deferred Revenues for $1200 and a credit to Rent Revenue for 1200

Which of the following accounts will have a zero balance on a post-closing trail balance?

Dividends

Which is the first financial statement that should be prepared after the adjusted trail balance had been prepared?

Income Statement

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

Angela is a tenant of Bruce. On July 1, Angela paid Bruce $2,400 for 3 months rent. On March 31, Angela's adjusting entries will include one with a debit to:

Rent Expense for $800 and a credit to Prepaid Rent for $800

Bird Company incurred $10000 in salaries and wages for employees for the year; $9000 of these salaries and wages bad been paid by the end of the year. Which of the following statements about this situation is correct?

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

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 stockholders' equity will decrease

If an expense has been incurred

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

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

a subtraction to arrive at the amount of Equipment, Net

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 trail balance is equal tot eh balance of the account:

at the beginning of the period

Adjusting entries are typically prepared:

at the end of the accounting period

Accumulated Depreciation appears on the:

balance sheet as a contra-asset account

Adjusting entries affect

both income statement and balance sheet accounts

Closing entries:

cause the revenue and expense accounts to have zero balance

The process of allocating the cost of building, 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 ________ principles

expense recognition ("matching")

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

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

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

amount of the sales or services still owed to the customer