FNC1

Supplies has a 4,000 unajusted balance on your trial balance. At year end your cost supplies of $1000. What ajustment will appear on your worksheet?

Supplies Expenses 300 Supplies 300

What is book value?

The cost of the depreciable asset minus Accumulated Depreciation

Using the information from question 5, what is the adjusted balance in Prepaid Insurance on December 31, 2010?

$36,000

Employees work five days a week (Monday through Friday) and are paid $7,500 for the previous week of work each Friday. March 31, 2011, falls on a Thursday.

$7,500/5 days = $1,500 salary per day of work 4 × $1,500 = $6,000 Monday through Thursday = 4 days of work

Which situation indicates a net loss on the income statement?

Total debits exceed total credit

Adjusting journal entries are made at the end of the period.

True

Every adjusting journal entry affects one income statement account and one balance sheet account.

True

Revenue is recorded when it is earned, usually when a good or service has been delivered to the customer

True

The adjusted trial balance columns of a work sheet contain the account balances that appear on the financial statements.

True

The income statement is the first financial statement that should be prepared.

True

The time-period concept provides for periodic reporting at regular intervals.

True

When is revenue recorded under the cash-basis system of accounting?

When cash is received

Capital Power & Light has cash of 600, receivables of 800, and supplies of 700. Capital owes 300 on accounts payable and salary payable of 400. Capital current ratio is:

3.0 2100/700 = 3.0

The company has forgotten to record four months of interest expense ($80 per month) that has been incurred but not yet paid.

4 months × $80 per month = $320

A trial balance is which of the following?

A list of all the accounts with their balances

Which of the following entities would most likely have an Unearned Revenue account?

A magazine publisher

The final closing entry for a proprietorship is:

Capital xxx Withdrawals xxx

A business makes a cash payment of $12,000 to a creditor. Which of the following occurs?

Cash is credited for $12,000.

Which of the following accounts would Greg Moore close at the end of the year?

Cost of goods sold

Suppose, Greg's Groovy tones Inventory account showed a balance of $10,000 before the year end adjustment. the physical count of goods on hand totaled $9,700. To adjust the accounts, Greg Moore would make this entry:

Cost of goods sold 300 Inventory 300

Liabilities are which of the following?

Debts or obligations owed to creditors

What items should be matched according to the matching principle?

Expenses with revenues

Accumulated Depreciation is a liability account

False—Accumulated Depreciation is a contra asset account.

An accounting year that ends on a date other than December 31 is called an interim year

False—An accounting year that ends on a date other than December 31 is called a fiscal year.

An accrual is an expense that is recorded after it is paid.

False—An accrual is an expense that is recorded before it is paid

The last step in the accounting cycle is preparing the financial statements.

False—The last step in the accounting cycle is preparing the postclosing trial balance.

The revenue principle requires that a cash deposit for future construction be recorded as revenue.

False—The revenue principle requires that revenue be recorded when it has been earned. The cash received for future construction has not been earned yet.

Unearned Service Revenue appears on the income statement.

False—Unearned Service Revenue is a liability and appears on the balance sheet.

The Journal entry for the purchase of inventory on account is?

Inventory xxx Accounts Payable xxx

Which account does a merchandiser use that a service company does not use?

Inventory, cost of Goods Sold, & Sales Revenue

A business transaction is first recorded in which of the following?

Journal

Which sequence of actions correctly summarizes the accounting process?

Journalize transactions, post to the accounts, prepare a trial balance

Assets & liabilities are listed on the balance sheet in order of their?

Liquidity

What do adjusting entries properly measure?

Net income for the period and The assets, liabilities, and owner's equity on the balance sheet

Which of the following is not a closing entry?

Salary Payable xxx Income Summary xxx

Georgia Industries paid $48,000 for two years of insurance coverage on July 1, 2010. The company prepares financial statements on July 31, 2010. What is the amount of insurance expense on July 31?

$ 2,000

Central University received $840,000 in tuition from students in August 2010. The tuition is for the four-month semester, September-December 2010. What is the amount of revenue that should be recorded for the month of September?

$ 840,000 assuming the cash basis of accounting. $ 210,000 assuming the accrual basis of accounting.

The T-account for supplies shows an unadjusted balance of $1,000. However, there is only $350 of supplies on hand at March 31, 2011.

$1,000 - $350 = $650 of supplies used

Mason Company has a weekly payroll of $5,000. Wages are paid every Friday for the work performed Monday through Friday of that week. Assuming that the accounting period ends on a Tuesday, what amount of Wages Expense should be recorded on that date?

$2,000

Which account would normally have a debit balance?

Accounts Receivable

Which of the following accounts are not closed?

Accumulated depreciation

Which of the following accounts is depreciated?

Building

Which of the following accounts increase with a credit?

Owner's Capital & Accounts Payable

Two main Inventory accounting systems are?

Perpetual and Periodic