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Exam 3: Adjusting Accounts and Preparing Financial Statements

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Question 71

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Match the typical classification of each item listed below to the correct balance sheet category

Premises

Responses

Prepaid insurance

Plant assets

Common Stock

Equity

Buildings used in business operations

Investments

Wages payable

Long-term liabilities

Accounts payable

Current Assets

Retained earnings

Current liabilities

Current portion of long-term debt

Intangible assets

Land held for future plant expansion

Cash

Long-term note payable

Accounts Receivable

Patents

Premises

Prepaid insurance

Common Stock

Buildings used in business operations

Wages payable

Accounts payable

Retained earnings

Current portion of long-term debt

Land held for future plant expansion

Cash

Long-term note payable

Accounts Receivable

Patents

Responses

Plant assets

Equity

Investments

Long-term liabilities

Current Assets

Current liabilities

Intangible assets

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Correct Answer

Premises

Responses

Prepaid insurance

Common Stock

Buildings used in business operations

Wages payable

Accounts payable

Retained earnings

Current portion of long-term debt

Land held for future plant expansion

Cash

Long-term note payable

Accounts Receivable

Patents

Premises

Prepaid insurance

Common Stock

Buildings used in business operations

Wages payable

Accounts payable

Retained earnings

Current portion of long-term debt

Land held for future plant expansion

Cash

Long-term note payable

Accounts Receivable

Patents

Responses

Question 72

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Since it is an important financial statement,the trial balance must be prepared according to specified accounting procedures.

A) True
B) False

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Question 73

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The calendar year-end adjusted trial balance for Acosta Co.follows: Required: a. Prepare a classified year-end balance sheet. (Note: A $7,000 installment on the long-term note payable is due within one year.) b. Calculate the current ratio.

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

A ____________________ is useful in preparing interim statements and in showing the effects of proposed transactions.

An asset that cost $50,000 was purchased on January 1.The asset has an estimated useful life of three years and an estimated salvage value of $3,200.Prepare the necessary adjusting journal entry for the end of the year.

Since the revenue recognition principle requires that revenues be earned,there are no unearned revenues in accrual accounting.

The last four steps in the accounting cycle include preparing the adjusted trial balance,preparing financial statements and recording closing and adjusting entries.

Identify the differences between accrual accounting and cash basis accounting.

Based on the following information,what would be the beginning balance in the Retained Earnings Account,assuming all accounts have a normal balance? $\begin{array}{lrlr}\text { Cash } & \$ 6,754 & \text { Dividends } & \$ 2,000 \\\text { Accounts receivable } & 13,733 & \text { Consulting fees earned } & 13,71 \\\text { Office supplies } & 2,625 & \text { Rent expense } & 3,67 \\\text { Land } & 37,153 & \text { Salaries expense } & 6,64 \\\text { Office equipment } & 14,535 & \text { Telephone expense } & 560 \\\text { Accounts payable } & 6,463 & \text { Miscellaneous expense } & 280 \\\text { Common stock } & 54,490 & \text { Retained Earnings } & ?\end{array}$

On October 1 of the current year,Morton Company paid $9,600 cash for a one-year insurance policy that took effect on that day.On the date of the payment,Morton recorded the following entry: $\begin{array}{|l|l|r|r|}\hline \text { Oct. 01 } & \text { Insurance Expense } & 9,600 & \\\hline & \text { Cash } & & 9,600 \\\hline\end{array}$ Prepare the required adjusting entry at December 31 of the current year.

A 10-column spreadsheet used to draft a company's unadjusted trial balance,adjusting entries,adjusted trial balance and financial statements and which is an optional tool in the accounting process is a(n) :

Which of the following statements is incorrect?

A contra account is an account linked with another account; it is added to that account to show the proper amount for the item recorded in the associated account.

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the:

The accrual basis of accounting:

The 12-month period that ends when a company's activities are at their lowest point is called the:

A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400.If office supplies expense for the year is $3,100,what amount of office supplies was purchased during the period?

If all columns balance upon completion of a work sheet,you can be sure that no errors were made in preparing the work sheet.

Barnes Company has 20 employees who are each paid $80 per day for a 5-day workweek.The employees are paid each Friday.This year the accounting period ends on Tuesday.Prepare the December 31 year-end adjusting journal entry Barnes Company should make to accrue salaries.