Accounting Test Ch. 3 & 4

Contra asset accounts, such as ACCUMULATED DEPRECIATION, always have normal debit balance

FALSE

Prepaid insurance is an ASSET account that appears on the BALANCE SHEET

TRUE

which of the following accounts will have an ending balance after the closing process is completed?

accumulated depreciation

the entries that transfer the revenue, expense and dividends balance to the retained earning account to prepare the companys books for the next period are called

closing entries

the entry to record depreciation expense includes a debit to

depreciation expense account

which of the following categories of accounts are temporary accounts that are at the end of the year?

revenues, expenses and dividends

Healthy living, a diet magazine collected $240,000 in subscription revenue on May 31. Each subscriber will receive an issue of the magazine in each of the next 12 months beginning with June issue. the company uses the accural method of accounting. What is the amount of the Subscription Revenue that has been earned by the end of December?

$140,000

the asset account office supplies had a beginning balance of 5300. during the accounting period office supplies were purchased on account for 4900. a physical count, on the last day of the accounting period shows 2300 of supplies on hand. what is the amount of the supplies expense for the accounting period?

7900

Bryson services Inc performed accounting services for a client in December. A bill was mailed to the client on December 30. the company received a check by mail on January 5th. Which of the following accounts should appear on the balance sheet as of December 31 as related to the service performed?

Accounts Receivable

The permanent accounts- assets, liabilities, and stockholders equity--are closed to the Common Stock Account

FALSE we only close 3 types of accounts 1) revenue 2)expense 3) Dividends

Argyle Designs Inc has entered into a contract to design 40 new dresses for a customer. It will collect a total of $40,000 after the design services are complete. Argyle started design work on June 1st. As of June 30, it finished 8 out of the 40 designs. The company will make an adjusting entry at the end of June to accrue 10,000 of service revenue.

FALSE; because 40,000/ 40= 1,000 x 8= 8,000

In the worksheet, the adjusted trial balance of the Service Revenue account appears in the credit column of the income statement

TRUE

If a company is using accrual basis accounting when should it record revenue?

When services are performed, even though cash may be received at a later date

a) service revenue accrued 1400 b) unearned revenue that has been earned 800 c) office supplies on hand 700 d) salaries owed for employees 1800 e) one month of prepaid rent expired 1200 f) depreciation on equipment 1500

a) accounts receievable service revenue b) unearned revenue service revenue c) supplies expense office supplies d) salaries payable salaries expense e) rent expense prepaid rent f) depreciation expense equipment accumulated depreciation equipment

which of the following is a contra asset account?

accumulated depreciation

the financial statement that reports assets, liabilities, and stockholders equity as of the last day of the period is the

balance sheet

salaries are 6500 per week for five working days and are paid weekly at the of the day Friday. The end of the month falls on a Thursday. The accountant for Dayton inc made the appropiate accural adjustment and posted it to the ledger. the balance of the salaries payable as shown on the adjusted trial balance will ___ (assume that there was no beginning balance in the salaries payable account)

credit balance of 5200

On september 1st 2016 Joy inc paid 8000 in advance for an eight month rental space covering the period of septmeber 2016- through april 2017. the deferred expense was initially recorded as an asset. Joy Inc makes an adjusting entries once a year at a year end. the adjustin entry on december 31 2016 would include a

debit of 4,000 to rent expense

Unearned Revenue is an ______ account and carries a normal ____ balance

liability; credit

which of the following adjusted balances would appear in the balance sheet CREDIT column of the worksheet

salaries payable

provide 4 closing entries for the company:

service revenue income summary income summary salaries expense supplies expense depreciation expense income summary retained earnings retained earnings dividends

an income statement includes

service revenue and utiltiies expense