Accounting ch 3

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

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

Which of the accounts below are considered accrued expenses?

Wages expense, Interest expense

Service Revenue $10,000 _______ Income summary __________ $10,000 Income summary $2,900 _________ Wage Expense. _________ $2,900

A credit to the Retained Earnings account for $7,100. A debit to Income Summary for $7,100.

Demonstrate your knowledge of preparing an adjusted trial balance by selecting the correct statement below.

An adjusted trial balance is prepared after adjustments are posted, so new accounts may need to be added.

The journal entry to close all of a company's expense accounts would include a (debit/credit) _______ to each of the expense accounts and a corresponding (debit/credit) _______ to the Income (statement/summary) ________ account.

Blank 1: credit Blank 2: debit Blank 3: summary

A post-closing trial balance is a list of (permanent/temporary)______ accounts and their balances from the (journal/ledger) _______ (after/before) ______ all (adjusting/closing) _____ entries have been journalized and posted.

Blank 1: permanent Blank 2: ledger Blank 3: after Blank 4: closing

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

Retained Earnings

Which of the following accounts is considered a prepaid expense? Multiple choice question. Utility expense Wages expense Accounts payable Supplies

Supplies

What is the purpose of the Accumulated Depreciation account?

The account allows both the original cost of plant assets and the total depreciation taken to be shown simultaneously.

Describe the final step in the adjusting process.

The final step is to create an adjusting journal entry to get from step 1 to step 2.

A contra account is an account that is linked with another (report/account/statement)___________. It has a(n) (similar/opposite)_________ balance and is (added/subtracted) __________ to/from the other account's balance.

account opposite subtracted

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.

Identify the accounts below that would be classified as current liabilities on a classified balance sheet. (Check all that apply.) Multiple select question. Mortgage payable Accounts payable Taxes payable Notes payable (due in three months) Unearned rent Notes payable (due in three years) Accounts receivable

Accounts payable Taxes payable Notes payable (due in three months) Unearned rent

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.

Accounts receivable credit Service revenue

Choose the statement below which is true regarding adjusting journal entries.

At least one income statement account and one balance sheet account are always involved.

Summarize the steps in the closing process by selecting the correct choice below.

Close income statement credit balance accounts; close income statement debit balance accounts; close income summary; close withdrawals.

A classified balance sheet has several categories for assets and liabilities including: (Check all that apply.) Multiple select question. Noncurrent equity. Current assets. Noncurrent (long-term) liabilities. Plant assets. Long-term investments. Operating expenses. Tangible current assets.

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

Able Company owes interest on a note for a loan. The note is dated December 1 and is due on February 1. On December 31, interest expense should be accrued for the following period:

December 1 to December 31

Which of the following defines long-term liabilities?

Long-term liabilities are debts of a business that are not due to be settled within one year.

Identify which of the accounts below would be classified as a plant asset account. (Check all that apply.) Multiple select question. Machinery Building Cash Land currently being used Equipment Notes receivable due in two years Supplies Patent

Machinery Building Land currently being used Equipment

Identify the accounts below that would be classified as long-term liabilities on a classified balance sheet. (Check all that apply.) Multiple select question. Mortgage payable Bonds payable (due in five years) Accounts payable Notes payable (due in five months) Notes receivable (due in three years) Unearned rent

Mortgage payable Bonds payable (due in five years)

At the end of the previous year, a customer owed Chocolates R US $500. On January 31 of the current year, the customer paid $900 total, which included the $500 owed plus $400 owed for the current month of January. What would be the journal entry on January 31 that reflects this? Service revenue would be credited for $400. Cash will be debited for $900. Accounts receivable will be credited for $500. Service revenue will be credited for $900. Accounts receivable will be debited for $500.

Service revenue would be credited for $400. Cash will be debited for $900. Accounts receivable will be credited for $500.

Select the statement below that explains how to use the Income Summary account. Multiple choice question.

The Income Summary account is used during the closing process to facilitate the closing of revenue and expense accounts.

The time span from when cash is used to purchase goods until cash is received from the sale of goods is called the _______ cycle.

operating

Show your understanding of the steps involved in adjusting entries by placing the following steps in the correct order of preparation

prepare an unadjusted trial balance journalize and post adjusting entries prepare an adjusting trial balance prepare financial statements

Cash basis accounting recognizes (equity/revenues/expenses)______ when cash is received and records (revenues/expenses/liabilities)_______ when cash is paid.

revenues expenses

Accrual basis accounting recognizes (equity/revenues/expenses)____ when earned and records (revenues/expenses/liabilities)____ when (incurred/paid) _____ in order to adhere to the matching principle.

revenues expenses incurred

Which of the following statements about the Accumulated depreciation account is (are) correct? Accumulated depreciation is subtracted from its plant asset on the balance sheet. Accumulated depreciation is a contra account. Accumulated depreciation is an expense account. Accumulated depreciation is added to its plant asset on the income statement. Accumulated depreciation accumulates the total depreciation taken on an asset since its purchase. The Accumulated depreciation account allows the original cost of the asset to remain in the plant asset account.

Accumulated depreciation is subtracted from its plant asset on the balance sheet. Accumulated depreciation is a contra account. Accumulated depreciation accumulates the total depreciation taken on an asset since its purchase. The Accumulated depreciation account allows the original cost of the asset to remain in the plant asset account.

In preparing a post-closing trial balance, which of the following statements are correct? (Check all that apply.) The total of all debit balances will equal the total of all credit balances. The retained earnings account on the post-closing trial balance will include the net income or net loss for the period. All permanent accounts with a balance in the general ledger will be included. All revenues and all expenses will be included. All temporary accounts with a balance in the general ledger will be included.

All permanent accounts with a balance in the general ledger will be included. The retained earnings account on the post-closing trial balance will include the net income or net loss for the period. The total of all debit balances will equal the total of all credit balances.

The Income Summary account can be defined as which of the following? A permanent account An account whose balance equals net income or net loss An account that contains a credit for the sum of all expenses A temporary account An account that contains a credit for the sum of all revenues An account used during the closing process

An account whose balance equals net income or net loss A temporary account An account that contains a credit for the sum of all revenues An account used during the closing process

Which of the following refers to the preparation of an adjusted trial balance? (Check all that apply.) Multiple select question. An adjusted trial balance has one debit column and one credit column. An adjusted trial balance is a list of accounts and balances prepared before adjustments are posted. New accounts may need to be added because of the adjusting process. Accounts are generally listed in the same order as listed in the chart of accounts. An adjusted trial balance is prepared after adjustments have been posted. The debit and credit column totals must balance. The debit and credit column totals don't have to equal each other on an adjusted trial balance.

An adjusted trial balance has one debit column and one credit column. New accounts may need to be added because of the adjusting process. Accounts are generally listed in the same order as listed in the chart of accounts. An adjusted trial balance is prepared after adjustments have been posted. The debit and credit column totals must balance.

What is the book value of an asset?

Book value is the original cost of an asset minus its accumulated depreciation.

At the end of the previous year, a customer owed Days Company $400. On February 1 of the current year, the customer paid $600 total, which included the $400 owed plus $200 owed through February 1st. The journal entry on February 1 is? (Check all that apply.) Multiple select question. Cash will be debited for $600. Service revenue will be credited for $600. Accounts receivable will be debited for $400. Accounts receivable will be credited for $400. Service revenue would be credited for $200.

Cash will be debited for $600. Accounts receivable will be credited for $400. Service revenue would be credited for $200.

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.) Multiple select question. Salaries payable will be credited for $500. Cash would be credited for $4,000. Salaries expense would be debited for $3,500. Salaries payable will be debited for $500. Wages expense will be debited for $4,000.

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

Service Fees. _______ $10,000 Consulting Revenue ________ $2,000 Supplies Expense $700 _________ Insurance Expense. 9100 _________ Dividends. $120 __________ A credit to Income Summary for $1,600. Credit Insurance Expense for $900. Credit to Supplies Expense for $700. Debit Insurance Expense for $900. Debit Supplies Expense $700 Credit to Dividends for $120. A debit to Income Summary for $1,600.

Credit Insurance Expense for $900. Credit to Supplies Expense for $700. A debit to Income Summary for $1,600.

Regarding the order of assets and liabilities on a classified balance sheet, select the statements which are correct. (Check all that apply.) Multiple select question. Current assets are listed, followed by current liabilities. All noncurrent assets and liabilities are listed next. Current assets are listed before noncurrent assets. The order of assets and liabilities is not important on a classified balance sheet. Current liabilities are listed before noncurrent liabilities.

Current assets are listed, followed by current liabilities. All noncurrent assets and liabilities are listed next. Current assets are listed before noncurrent assets. Current liabilities are listed before noncurrent liabilities.

Choose the statement below that demonstrates the correct adjusting entry to recognize depreciation expense on a building.

Debit Depreciation expense; credit Accumulated depreciation.

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. Multiple choice question. Credit

Debit Interest receivable for $600.

At year-end, ABC Company is completing its closing process. Use the following account balances to demonstrate the closing of the Dividends account. Consulting Fees _______ $5,000 Rental Revenue ________ $2,000 Wages Expense $700 _________ Rent Expense. $1,900 _________ Dividends. $500 __________ Debit Dividends for $500. Credit Retained Earnings $500 A credit Income Summary for $500. Debit Retained Earnings $500. A debit Income Summary for $500. Credit Dividends for $500.

Debit Retained Earnings $500. Credit Dividends for $500.

Service Revenue _______ $4,000 Rental Revenue ________ $2,000 Wages Expense $500 _________ Utilities Expense. $100 _________ Dividends. $80 __________ Demonstrate the last closing journal entry to close the Dividends account by selecting the correct answer below.

Debit Retained Earnings $80; Credit Dividends $80

By the end of the accounting period, employees have earned salaries of $500, but they will not be paid until the following pay period. Which of the following is the proper adjusting entry?

Debit Salaries expense for $500.

An 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 the December 31 adjusting entry by choosing the correct statement below.

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

Explain your understanding of what an accrued expense is by selecting the statements below which are correct. (Check all that apply.) Multiple select question. Examples of accrued expenses are wages expense and interest expense. They are also called accounts receivable. They are reported on an income statement. They refer to earnings which have been earned, but not yet billed. They refer to costs that are incurred in a period, but are both unpaid and unrecorded. Adjustments involve increasing both an expense and a liability account.

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

What is the effect of an accrued expense (such as salaries expense) adjustment on the income statement and the balance sheet? Expenses are increased. Net income is reduced. Total liabilities are reduced. Net income is increased. A liability (such as salaries payable) will be increased.

Expenses are increased. Net income is reduced. A liability (such as salaries payable) will be increased.

Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. The ending Retained Earnings account balance on the balance sheet is transferred from the statement of retained earnings. Financial statements are easier to prepare using the adjusted trial balance than the general ledger. The ending Retained Earnings account balance on the balance sheet is taken directly from the adjusted trial balance. The adjusted trial balance includes all accounts and balances appearing in financial statements. The income statement is the first financial statement prepared after preparing the adjusted trial balance The balance sheet is the first financial statement prepared.

Financial statements are easier to prepare using the adjusted trial balance than the general ledger. The ending Retained Earnings account balance on the balance sheet is taken directly from the adjusted trial balance. The income statement is the first financial statement prepared after preparing the adjusted trial balance

A plant asset can be defined by which of the following statements? It is a tangible long-term asset. It is reported on the balance sheet. Its original cost (minus any salvage value) is expensed over its useful life. It has a life within the business greater than one year or the current operating cycle, whichever is longer. Its original cost is expensed in the period in which it was purchased.

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

$500 of supplies were purchased at the beginning of the period. By the end of the period, only $100 remains. The adjustment to show the $400 of supplies used would have the following effect(s). It would increase expenses, so net income would be reduced. It would reduce expenses, so net income would be increased. It would reduce assets, so total assets would be lower.

It would increase expenses, so net income would be reduced. It would reduce assets, so total assets would be lower.

Demonstrate your knowledge of preparing a post-closing trial balance by selecting the accounts below that would be included on it. Income Summary account Liability accounts Temporary accounts Asset accounts Expense accounts Permanent accounts Revenue accounts

Liability accounts Asset accounts Permanent accounts

Which of the following statements describes the expense recognition (matching) principle? Expenses are recorded when they are paid and revenues are recorded when payment is received. Matching of expenses with revenues is a major part of the adjusting process. Revenues are recorded when they are earned or services are performed. Expenses should be matched in the same accounting period as the revenues that are recognized as a result of those expenses.

Matching of expenses with revenues is a major part of the adjusting process. Expenses should be matched in the same accounting period as the revenues that are recognized as a result of those expenses.

Identify which of the accounts below would be classified as a current asset. (Check all that apply.) Multiple select question. Office supplies Equipment Prepaid rent Accounts receivable Cash Land

Office supplies Prepaid rent Accounts receivable Cash

Select the statements below that describe the purpose of a post-closing trial balance. One purpose is to confirm that if debits equal credits then no errors in journalizing and positing occurred during the period. One purpose is to verify that all permanent accounts have zero balances. One purpose is to verify that total debits equal total credit for permanent accounts. One purpose is to verify that total debits equal total credits for all temporary accounts. One purpose is to verify that all temporary accounts have zero balances.

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.

Determine which of the following transactions may require adjustments. (Check all that apply.) Multiple select question. Six months of rent were paid in advance. An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. An employee was paid his weekly wages in full at the end of the week. Rent was paid for the month. Supplies were purchased at the beginning of the year, but not all were used. Equipment was purchased in the middle of the year. a 24-month insurance policy was prepaid a one-month premium on an insurance policy was paid

Six months of rent were paid in advance. An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. Supplies were purchased at the beginning of the year, but not all were used. Equipment was purchased in the middle of the year. a 24-month insurance policy was prepaid

The steps in the closing process are listed on the right. Match them to the correct order in which they would be performed (on the left).

Step #1 matches Choice, Identify accounts to be closed. Identify accounts to be closed. Step #2 matches Choice, Journalize and post closing entries. Journalize and post closing entries. Step #3 matches Choice, Prepare a post closing trial balance. Prepare a post closing trial balance.

$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. Supplies would be debited for $300. Supplies expense would be debited for $300. Supplies expense would be credited for $300. Supplies would be credited for $300. Supplies expense would be debited for $700.

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

Which statements below are true regarding permanent and temporary accounts? Temporary accounts will appear on a post-closing trial balance. 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. 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. Temporary accounts are reported on the income statement.

Describe the general ledger after adjusting and closing entries have been posted. The Income Summary account will show three closing entries. The Retained Earnings account will have a $0 balance after closing. All asset accounts will show a $0 balance after closing. The abbreviations "adj." and "clos." have been entered in the explanation columns of the ledger. The Dividends account will have a $0 balance after closing. All expense accounts will show a $0 balance after closing.

The Income Summary account will show three closing entries. The abbreviations "adj." and "clos." have been entered in the explanation columns of the ledger. The Dividends account will have a $0 balance after closing. All expense accounts will show a $0 balance after closing.

Which of the following statements accurately explains how to use a worksheet to enter adjustments? The adjustments column totals must balance before moving on to the Adjusted Trial Balance columns. Adjustments are entered in a middle column titled Adjustments. As new accounts are added, they are added to the bottom of the worksheet below the other accounts. Each adjustment is identified by a letter in parentheses that serves as a cross-reference to the debit and credit side of the adjustment. Only the debited or credited account of each adjustment needs to be shown--not both accounts.

The adjustments column totals must balance before moving on to the Adjusted Trial Balance columns. Adjustments are entered in a middle column titled Adjustments. As new accounts are added, they are added to the bottom of the worksheet below the other accounts. Each adjustment is identified by a letter in parentheses that serves as a cross-reference to the debit and credit side of the adjustment.

Review the statements below and select the items that are correct regarding the operating cycle for a business The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods or services. The length of a company's operating cycle depends on its activities. Most operating cycles are greater than one year. Most companies use a one-year period or operating cycle in deciding which assets and liabilities are current. Most operating cycles are less than one year. Most companies use a one-month period or operating cycle in deciding which assets and liabilities are current.

The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods or services. The length of a company's operating cycle depends on its activities. Most companies use a one-year period or operating cycle in deciding which assets and liabilities are current. Most operating cycles are less than one year.

What is an intangible asset? (Check all that apply.) Multiple select question. Intangible assets can easily be converted to cash. The value of intangible assets comes from the privileges or rights granted to or held by the owner. Intangible assets are used to produce or sell products and services and are usually depreciated. Intangible assets are long-term resources that benefit business operations, but lack physical form.

The value of intangible assets comes from the privileges or rights granted to or held by the owner. Intangible assets are long-term resources that benefit business operations, but lack physical form.

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

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

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

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

$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. (Check all that apply.) Multiple select question. Unearned revenue would be debited for $700. Unearned revenue would be debited for $300. Service revenue would be credited for $300. Service revenue would be credited for $700. Accounts receivable would be debited for $700.

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

Identify which group of accounts may require adjustments at the end of the accounting period. Multiple choice question. Utilities expense; Cash; Common Stock Unearned revenue; Supplies; Prepaid rent Cash; Notes receivable; Land

Unearned revenue; Supplies; Prepaid rent

The revenue recognition principle states that revenue:

should be recorded when goods or services are provided to customers at an amount expected to be received

All of the following are types of adjustments except: Multiple choice question. accrued revenue accrued expense accrued cash deferral of expense deferral of revenue

accrued cash

On December 1, a company pays $3,600 for a 36-month insurance policy. After one month, accrual accounting requires $ (100/3,600)________ of insurance expense be reported on the income statement ending December 31. However, if cash basis accounting is used, $ (100/3,600)_________ of insurance expense would be reported at the time of purchase.

100 3600

$21,000 of equipment is purchased on December 1. It is estimated that it will have a life of 5 years and zero salvage value. Calculate depreciation expense as of December 31 of the first year using the straight-line method.

$350

A calendar year-end reporting period is defined as a (1 / 3 / 12)________ -month period which ends on (December/January/March)_______ 31st.

12 december

What is needed in order to figure interest expense? (Check all that apply.) Multiple select question. Original cost of asset Fraction of year since last payment Salvage value Years of useful life Principal amount owed Annual interest rate

Fraction of year since last payment Principal amount owed Annual interest rate

Define the Income Summary account.

It is a temporary account used during the closing process to summarize revenues and expenses.

The formula for figuring interest expense is:

amount owed x interest rate x fraction of the year since last payment

$200 of supplies were purchased at the beginning of the period and recorded as an asset. During the period, $90 of supplies were used. The adjustment to show the supplies used up would cause (assets/liabilities/expenses) ________ to be reduced and (expenses/liabilities/revenues) ______ to be increased, so net income would decline.

assets expenses

Current assets are:

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

The expense recognition (matching) principle aims to record (expenses/assets/liabilities)_________ in the same accounting period as the (expenses/revenues/assets)________ that are earned as a result of those costs. This principle is a major part of the (timing/adjusting/estimating)________ process.

expenses revenues adjusting

Not recording an accrued expense will have the following effect on the financial statements: liabilities on the balance sheet will be overstated. liabilities on the balance sheet will be understated. expenses on the income statement will be overstated. expenses on the income statement will be understated.

liabilities on the balance sheet will be understated. expenses on the income statement will be understated.

A classified balance sheet can be described as a balance sheet that: (Check all that apply.) Multiple select question. 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. 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. is more useful to decision makers. organizes assets and liabilities into important subgroups.

Which of the following could be a logical or realistic accounting period for a business that is creating financial statements? one-month six-month one-year

one-month six-month one-year

A business has a $10,000 loan from a bank at 8% annual interest. Calculate the amount of interest to accrue if the loan has been outstanding for 45 days. Use a 360 day year. Multiple choice question. $800 $100 $360 $98.63

$100

Describe the effect of the adjusting entry to show the earned amount of a previously recorded unearned revenue on the income statement and on the balance sheet by choosing the correct statements below. (Check all that apply.) Multiple select question. A liability (unearned revenue) will be reduced. A revenue account is increased. Net income is reduced. Net income is increased. Total liabilities are increased. Total liabilities are reduced.

A liability (unearned revenue) will be reduced. A revenue account is increased. Net income is increased. Total liabilities are reduced.

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

Which of the following lists of assets would be classified as plant assets?

Buildings, Machines

Identify the accounts below that would be classified as intangible assets on a classified balance sheet. (Check all that apply.) Multiple select question. Copyrights Trademark Patent Investments (in stocks of other companies) Land (held for future expansion) Prepaid rent Goodwill Accounts receivable Franchise

Copyrights Trademark Patent Goodwill Franchise

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. Multiple choice question.

Debit Accounts receivable for $600.

Define plant assets by selecting the correct statements below. (Check all that apply.) Multiple select question. Plant assets are cash and other resources that are expected to be sold, collected or used within one year. Plant assets are expected to be held for less than one year. Plant assets are property, plant and equipment that are tangible. Plant assets are equipment and other assets that have a life greater than one year.

Plant assets are property, plant and equipment that are tangible. Plant assets are equipment and other assets that have a life greater than one year.

An adjusted trial balance is:

a list of accounts and balances after adjusting entries have been recorded and posted

What defines a fiscal year for a business?

It is any period which consists of 12 consecutive months.

Accrual basis accounting is defined as: (Check all that apply.) Multiple select question. an accounting system that uses the matching principle to determine when to recognize revenues and expenses. an accounting system which is consistent with generally accepted accounting principles. an accounting system that recognizes revenues when cash is received and records expenses when cash is paid. an accounting system that uses the adjusting process to recognize revenues when earned and expenses when incurred.

an accounting system that uses the matching principle to determine when to recognize revenues and expenses. an accounting system which is consistent with generally accepted accounting principles. an accounting system that uses the adjusting process to recognize revenues when earned and expenses when incurred.

Summarize the closing process by listing the closing entries in the order in which they would occur at the end of the accounting period. Step 1: Close Income Statement (credit/debit) ____ balance accounts. Step 2: Close Income Statement (credit/debit) _____ balance accounts. Step 3: Close (income summary/dividends) ______. Step 4: Close (income summary/dividends) ______.

credit Blank 2: debit Blank 3: income summary Blank 4: dividends

The following categories are on a classified balance sheet. List them in the order that they would appear.

current assets long term investments plant assets intangible assets current liabilities noncurrent liabilities

The Fish Aquarium obtained funds from a bank and owes interest on a note at the end of the month. The required adjusting journal entry will

debit interest expense and credit interest payable

A 12-month insurance policy was purchased on Dec. 1 for $4,800 and the Prepaid insurance account was initially increased for the payment. The required adjusting journal entry on December 31 includes a: (Check all that apply.)

debit to Insurance expense for $400. credit to Prepaid insurance for $400.

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

revenues