Accounting Exam 2 Review

B. debit salaries expense $400 and credit salaries payable $400

A company pays each of its two office employees each Friday at the rate of $100/day for a five day week that begins Monday. If the monthly accounting period ends of Tuesday and the employees worked on both Monday and Tuesday, the month end adjustment entry will be?

B. $300 decrease in net income

A company shows a $800 balance in prepaid rent in the unadjusted trial balance columns of a worksheet. The adjustment columns show expired rent of $300. This adjusting entry results in?

Debit Cash $800 Credit Unearned Catering Revenue $800

ABC catering received $800 cash from a customer for catering services to be provided next month. How do you record this transaction?

True

Accrued revenues at the end of one accounting period are expected to result in cash collections in a future period

True

Adjusting entries are necessary so that asset, liability, revenue, and expense account balances are correctly recorded

E. A sales invoice does not provide objective evidence about a transaction

All of the following statements regarding a sales invoice are true except:

False, not recognized, understated

Before an adjusting entry is made to accrued employee salaries, salaries expense and salaries payable are both overstated

False, just prepaid

Before an adjusting entry is made to recognize the cost of expired insurance for the period, prepaid insurance and insurance expense are both overstated

The total of the debit column of the trial balance will exceed the total of the credit column by $9,400

Credit purchase of a new oven $4,700 was posted to Kitchen Equipment debit as $4,700 and Accounts Payable debit. What effect would this error have on the trial balance?

False, depreciation is an expense

Depreciation measures the decline in market value of an asset

True

Failure to record depreciation expense will overstate assets and understate expenses

Debit Cash $250 Credit Rental Revenue $100 Credit Instruction Revenue $150

GiGi's dance studio provided $150 of dance instruction and rented out its dance studio to the same client for another $100. What is the journal entry from these transactions?

Credit to unearned management fees for $60,000

Golddigger Services Ince provides services to clients on May 1, a client prepaid $60,000 for 6 months service in advance. What is the journal entry?

True

If cash was incorrectly debited for $100 instead of crediting it for $100, accounts balance will be overstated

True

Intangible assets are longterm resources that benefit business operations that usually lack physical form and have uncertain benefits

Debit cash, credit service revenue

Joel's consulting received $3,000 from a customer for services provided. What is the journal entry?

True, rev (earned) = $15,000 x .1 = $1,500

On Oct 15, company receives $15,000 cash as a down payment on a consulting contract, credited to unearned consulting revenue. On Oct 31, 10% of the services were complete. The company will recored $1,500 to consulting revenue.

True

Prior to recording adjusting entries at the end of an accounting period, some accounts may not show correct balances even though all transactions were properly recorded

True

Recording revenues early over states current-period income, recording revenues late understates current-period income

True

Revenue accounts are temporary accounts that should begin each accounting period with zero balance

False

Temporary accounts carry their balances into the next accounting period

True

The accrual basis of accounting commonly increases the comparability of financial statements from period to period

A. $325 debit

The unadjusted trial balance columns of a company's worksheet shows the store supplies account with a balance of $750. The adjustment column shows a credit of $425 supplies used during the period. The amount show as store supplies in the balance sheet columns of the worksheet is?

True, 6,242,000 / 209,203,000 = 2.98%

Torsten had total assets of $149,501,000, net income of $6,242,000, and net sales of $209,203,000. Profit margin will be 2.98%

D. entering a revenue amount in the balance sheet, debit column

Which of the following errors would cause the balance sheet columns of a worksheet to be out of balance?

B. organized assets and liabilities into important subgroups that provide more information

a classified balance sheet:

B. Debit unearned service revenue $125, credit service revenue $125

a company charges $125/month to spray a house for insects. A customer paid $875 on December 1, 2014 in advance for seven treatments, which is recorded with a debit to cash and credit to unearned service revenue. On Dec 1 there is one applied treatment. What is the adjusting entry?

False

preparation of a trial balance is the first step in processing a financial transaction

D. ensure that net income or net loss and dividends for the period are closed into the retained earnings account

the closing process is necessary in order to:

False, credit $700

when a company bills a customer for $700 for services rendered, the journal entry to record this transaction will include $700 debit to service revenue

B. all temporary accounts are close but permanent accounts are not closed

when closing entries are made: