ACCT 211 Read & Interact Chapter 3 Adjusting Accounts for Financial Statements solutions answers

ACCT 211 Read & Interact Chapter 3 Adjusting Accounts for Financial Statements solutions complete answers 

 

After an adjusted trial balance is prepared, what is the next step in completing the work sheet used in preparing financial statements?

 

On December 31, AB Consulting recorded two days' wages of $100 in an adjusting entry which included a debit to Salaries Expense and a credit to Salaries Payable. On January 1, the accountant prepared a reversing entry which included which of the following?

 

Explain the required steps to complete a work sheet by placing the following steps in the correct order. (Put the first step at the top.)

 

What is a work sheet? 

 

Brown Co. had current assets of $15,000, total assets of $30,000 and current liabilities of $9,000 at the end of the year. The current ratio for the period is:

 

A reversing entry can be described as a(n): (Check all that apply.)

 

Recall the column headings of a work sheet used to prepare financial statements. Which of the following items are on a worksheet. (Check all that apply.)

 

Vito Co. had current assets of $9,000 and current liabilities of $6,000 at the end of the year. Net income during the year was $21,000. The current ratio for the period is:

 

All of the following are on an unclassified balance sheet: (Check all that apply).

 

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.

 

StoryBook Company provided services to several customers during the month of December. These services have not yet been paid by the customers. StoryBook should record the following adjusting entry at the end of December: (Select all that apply).

 

Explain your understanding of what an accrued expense is by selecting the statements below which are correct. (Check all that apply.)

 

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.

 

The revenue recognition principle states that revenue:

 

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.

 

Which of the following statements describes why accrual accounting better reflects a business's performance? (Check all that apply.)

 

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

 

Rather than crediting the Unearned rent account for $400 of prepaid rent received from a customer, which of the following statements explains an alternate recording procedure to journalize this receipt? (Check all that apply.)

 

Rather than debiting an asset account, which of the following statements explains an alternate recording procedure to journalize prepaid expenses, such as prepaid rent or supplies. (Check all that apply.)

 

Given the following information for Mouse Inc., calculate its profit margin for the year 2018.

 

 

Cash received from a customer for unearned subscription revenue can initially be recorded as either a(n)       (revenue/expense) or a(n)       (liability/expense). No matter how an unearned revenue was initially recorded, after the adjusting entry, net income will be identical.

 

Mouse Inc. uses the alternative method of accounting for prepayments and purchased a $1,200, 6-month insurance policy. The company immediately debited the Insurance expense account. By the end of the period, $400 of the policy had expired. Demonstrate the required adjustment needed at the end of the period.

 

Mouse Inc. received a $2,500 prepayment of rent from one of its tenants and immediately credited the Rent revenue account. By the end of the period, $500 of the rent had not been earned by Mouse Inc.. Demonstrate the required adjustment needed at the end of the period.

 

The formula to figure out the profit margin of a company is       (Net income/Accounts receivable/Net sales) divided by       (Net income/Cash/Net sales).

 

Which of the statements below explains the accounting cycle?

 

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

 

Select the statements below that describe the purpose of a post-closing trial balance. (Check all that apply.)

 

Which of the statements below is (are) correct regarding the accounting cycle? (Check all that apply.)

 

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.

 

Choose the statement below that explains what "closing" means.

 

Which statements below are true regarding permanent and temporary accounts? (Check all that apply.)

 

Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. (Check all that apply.)

 

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

 

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.

 

StoryBook Company provided services to several customers during the month of December. These services have not yet been paid by the customers. StoryBook should record the following adjusting entry at the end of December:

 

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.)

 

For the current year, a business has earned (but not recorded or received) $200 of interest from investments. Demonstrate the required adjusting entry by completing the following sentence. The required adjusting entry would be to debit the       (Unearned revenue/Accounts receivable/Cash/Interest receivable) account and        (debit/credit) the       (Cash/Accounts receivable/Interest revenue/Interest receivable) account.

 

Which of the following describe the Salaries payable account? (Check all that apply.)

 

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

 

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:

 

Explain what unearned revenues are by choosing the correct statement below.

 

Define the Salaries payable account by selecting the appropriate statement below.

 

$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.)

 

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.)

 

Describe the final step in the adjusting process.

 

$800 of supplies were purchased at the beginning of the month and the Supplies account was increased. As of the end of the period, $200 of supplies still remain. Which of the following is the correct adjusting entry?

 

Which of the following could be a logical or realistic accounting period for a business that is creating financial statements? (Check all that apply.)

 

A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. Demonstrate the required adjusting journal entry on Dec. 31 by selecting from the choices below.

 

Accrual basis accounting is defined as: (Check all that apply.)

 

Which of the following is (are) true regarding timeliness and the importance of periodic reporting? (Check all that apply.)

 

Which of the statements below describe(s) a temporary account?

 

Demonstrate the last closing journal entry to close the Dividends account by selecting the correct answer below.

 

Which of the statements below describe(s) a permanent account?

 

The entries to close the revenue and expense accounts for Jefferson Company are shown below. The next closing entry in the closing process would include:

 

A company borrowed $4,000 from the bank at an interest rate of 9%. By the end of the accounting period, the loan had been outstanding for 30 days. Demonstrate the required adjusting entry by choosing the correct statement below.

 

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

 

What is a plant asset?

 

The expense recognition (matching) principle aims to record _____________ in the same accounting period as the ___________that are earned as a result of those cost. This principle is a major part of the ______process.

 

Which of the following defines long-term liabilities?

 

$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.

 

Illustrate your understanding of how to use the adjusted trial balance to prepare the balance sheet by completing the following sentence.

 


In order to prepare a balance sheet using the account balances on an adjusted trial balance, all of the ___ and their debit balances are transferred to the balance sheet as well as all the __ and their __ balances.

 

Identify the accounts below that would be classified as current liabilities on a classified balance sheet.

 

Which of the statements below is correct regarding the difference between a temporary account and a permanent account?



Which of the lists below contains only permanent accounts?

 

Choose the statement(s) below which is (are) true regarding adjusting journal entries.

 

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 ___ account and _____ the ___ account.

 

For the current year, a business has earned (but not recorded or received) $200 of interest from investments. 

The required adjusting entry would be to debit the ___ account and ___ the ___ account.

 

Which of the following statements describes the expense recognition (matching) principle?

 

A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment.

 

Demonstrate the required adjusting journal entry on Dec. 31 by selecting from the choices below.

 

Explain what unearned revenues are by selecting the statements below which are correct.

 

A company borrows $10,000 from the bank at 5% interest. The loan has been outstanding for 45 days. Demonstrate the required adjusting entry for this company by completing the following sentence.

 

The required adjusting entry would be to debit the Interest     account and     the Interest     account.



Some of the steps in the accounting cycle are listed below. Place them in the correct order of use.

 

Define an adjusting journal entry.

 

A company had the following selected balances:

 

The first closing journal entry would include which of the following?

 

Identify which of the accounts below would be classified as a current asset.

 

Define the Income Summary account.

 

By the end of the accounting period, employees have earned salaries of $650, but they will not be paid until the following pay period. Demonstrate the required adjusting entry by completing the following sentence.

The required adjusting entry would be to debit the Salaries ________ account and _______ the Salaries _______ account.

 

A classified balance sheet has several categories for assets and liabilities including:

 

A depreciation adjustment would include a debit to     and    to   .

 

Which of the following lists contains only temporary accounts?

 

At year-end, ABC Company is completing its closing process. Use the following account balances to demonstrate the closing of the Dividends account.

 

The closing process takes place at the    of an accounting period, after the     trail balance is prepared and     the financial statements are prepared.

 

Explain the required steps to complete a work sheet by placing the following in the correct order of completion.



Place the steps in the adjusting process in the correct order in which they would be performed.

 

A company had the following selected balances:

 

The third closing journal entry, after closing revenues and expenses, would include which of the following?

 

At year-end, Zagnut Company is beginning its closing process. Use the following account balances to demonstrate the closing of its expenses accounts.

 

Identify which group of accounts may require adjustments at the end of the accounting period.

 

The income summary account is _ for the sum of all revenue accounts and is _ for the sum of all expenses accounts and its balance will be transferred to the _ account.

 

Explain your understanding of the closing process by choosing the correct stamens below.

 

In order to prepare an income statement using the account balances on an adjusted trial balance, all of the     and their credit balances are transferred to the income statement as well as all of the all of the     and their     balances.

 

A $300,000 building was purchased on December 1. It is estimated that it will have a life of 20 years and zero salvage value. Calculate depreciation expense for the month of December using straight-line depreciation.

 

Which of the following statements about the Accumulated depreciation account is (are) correct?

 

What is depreciation?

 

Review the adjusted trial balance for Gumby Co. and determine the accounts that would be transferred directly to the statement of retained earnings, assuming the income statement was already prepared.

 

Closing means to transfer account balances from     accounts so that they will start with a     balance of the next period.

 

List the order in which financial statements are prepared.

 

Match the item on the left with the definition on the right.

 

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

 

1.
$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).
 
 
2.
Able Company owes interest on a note for a loan. The note is dated December 1st and is due on February 1st. On December 31st, interest expense should be accrued for the following period:
 
 
3.
An adjusted trial balance is:
 
 
4.
At the end of the previous year, a customer owed Chocolates R US $500. On January 31st 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 31st that reflects this?
 
 
6.
Chimney Sweeps provided chimney cleaning services to several clients during the month of February. Chimney's customers owe $2,000 to Chimney. How will Chimney Sweeps record this transaction?
 
 
8.
A classified balance sheet can be described as a balance sheet that:
 
 
11.
Current assets are:
 
 
12.
Define "current" as it applies to assets and liabilities on a classified balance sheet
 
 
13.
Define plant assets by selecting the correct statements below
 
 
14.
Demonstrate your knowledge of preparing an adjusted trial balance by selecting the correct statement below
 
 
15.
Describe an unclassified balance sheet
 
 
16.
Describe the effect of an accrued revenue adjustment on the income statement and the balance sheet by choosing from the statements below.
 
 
17.
Describe the effect of an 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
 
 
18.
Determine which of the statements below are correct regarding the current ratio
 
 
19.
Equity is the _______ claim on the assets. In a corporation this claim is reported in the _______ section of the balance sheet in the _______ account
 
 
20.
Explain the difference between the unadjusted and the adjusted trial balance
 
 
 
 
 
 
 
 
 
 
 
 

23.
The following categories are on the classified balance sheet. List them in the order that they would appear
 
 
24.
Given the following information for Mouse Inc., calculate its profit margin for the year 2015
 
 
25.
Identify the accounts below that would be classified as a long-term investment
 
 
26.
Identify the accounts below that would be classified as long-term liabilities on a classified balance sheet
 
 
27.
Identify which of the accounts below would be classified as a plant asset account
 
 
28.
Identify which of the accounts below would be classified as current assets
 
 
29.
In order to prepare an income statement using the account balances on an adjusting trial balance, all of the ________ and their credit balances are transferred to the income statement as well as all of the _____ and their ______ balances
 
 
30.
In order to prepare the statement of retained earnings, the balance of the retained ________ account balance as well as any debit balance in the _______ account is transferred from the adjusting trial balance and is used along with the reported net income (loss) from the Income Statement
 
 
33.
Review the statements below and select the items that are correct regarding the operating cycle for a business
 
 
35.
Using the financial information of ABC Co. below, compute its current ratio for the period
 
 
 
 
 
 
 
 
 

36.
Using the financial information of ABC Co. below, evaluate the company's current ratio. Select all answers which apply
 
 
37.
What are current liabilities?
 
 
38.
What defines a long-term investment?
 
 
39.
What is an intangible asset?
 
 
40.
What is the date primarily used in adjusting entries?
 
 
41.
What is the difference between an adjusted trial balance and an unadjusted trial balance?
 
 
42.
What is the effect of an accrued expense (such as salaries expense) adjustment on the income statement and the balance sheet?
 
 
43.
Which of the accounts below are considered accrued expenses?
 
 
44.
Which of the following accounts below would appear in the equity section of a classified balance sheet?
 
 
45.
Which of the following accounts is considered a prepaid expense?
 
 
46.
Which of the following accounts would be considered a prepaid expense or prepaid asset account?
 
 
47.
Which of the following adjustments would be required at the end of the period?
 
 
49.
Which of the following describes accrued revenue?
 
 
50.
Which of the following statements accurately explains how to use a worksheet to enter adjustments?
 
 
 
 
 
 
 
 
 

51.
Which of the following statements best explains the posting process of adjusting entries?
 
 
52.
Which of the following statements correctly define(s) profit margin?
 
 
 

3.
Choose the statements below that demonstrates the correct adjusting entry to recognize depreciation expense on a building
 
 
5.
current assets are
 
 
6.
Depreciation
 
 
8.
Explain your understanding of what an unearned revenue are by selecting the statements below which are correct.
 
 
9.
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.
 
 
12.
List in the order in which financial statements are prepared
 
 
15.
Plant Asset
 
 
16.
Show your understanding of the steps involved in adjusting entries by placing the following steps in the correct order of preparation.
 
 
17.
What are current liabilities?
 
 
 
 
 
 
 
 
 
 
 
 
 

21.
Which of the following statements are true regarding depreciation?
 
 
 

1.
A $300,000 building was purchased on December 1. It is estimated that it will have a life of 20 years an zero salvage value. Calculate depreciation expense for the month of December using straight-line depreciation
 
 
2.
$800 of supplies were purchased at the beginning of the month and the Supplies account as increased. As of the end of the period, $200 of supplies still remain. Which of the following is the correct adjusting entry?
 
 
3.
$1000 of cash was received in advance for performing services. By the end of the period, $300 had not yet been earned. (Unearned Rev. was increased at the time of the initial cash receipt). What is the adjusting journal entry?
 
 
4.
A 12 month insurance policy was bought on Dec. 1 for $4,800 and the prepaid insurance was initially increased for the payment. The adjusting journal entry on Dec. 31 is?
 
 
5.
A 12 month insurance policy was purchased for $4,800 and the Prepaid Insurance account was initially increased for the payment. The required adjusting journal entry includes.
 
 
6.
Accounts included in a post-closing trial balance
 
 
7.
Accounts included on the post-trial balance sheet
 
 
8.
Accrual basis accounting
 
 
9.
Accrual basis accounting is defined as
 
 
10.
Accrual basis accounting recognizes (equity/revenues/expenses) when earned and records (liabilities/expenses/revenues) when (incurred/paid) in order to adhere to the matching principle.
 
 
11.
An adjusted trial balance...
 
 
12.
Adjusting entry
 
 
13.
Annual Financial Statement
 
 
15.
Balance Sheet
 
 
16.
Book value
 
 
17.
A business completed $400 service that had not been billed nor recorded as of the end of an accounting period. 

The required adjusting entry would be to debit the (accounts receivable/unearned rev./cash/service rev.) account and (dr./cr.) the (Cash/service rev./ accounts receivable/unearned rev.) accounts.
 
 
18.
By the end of an accounting period employees have earned salaries of $500. They won't be paid until the next accounting period. What is the proper adjusting entry.
 
 
20.
Cash basis accounting
 
 
21.
Cash Basis recognizes (revenues/expenses/equity) when cash is received and records (revenues/expenses/liabilities) when cash is paid.
 
 
22.
Choose the statement below that explains what "closing" means
 
 
24.
a classified balance sheet can be described as a balance sheet that
 
 
25.
Closing means to transfer account balances from ________ accounts so that they will start with a _______ balance at the beginning of the next period.
 
 
 
 
 
 
 
 
 
 
 
 
 

27.
A company borrowed $10,000 and 5% interest. The loan has been outstanding for 45 days. 

The required adjusting entry would be to debit the interest __ (payable, receivable, expense) account and __ (dr, cr) interest ___ (receivable, payable, expense) account.
 
 
28.
A contra account is an account that is linked with another (report/account/statement) It has an (opposite/similar) balance and is (added/subtracted) to/from the other accounts balance.
 
 
29.
Correct adjusting entry to recognize depreciation expense on a building.
 
 
30.
current assets are
 
 
31.
Current assets include
 
 
32.
Current items can be described as those expected to come due within one (month/year) and are listed in order of how (quickly/slowly) they could be converted or paid in cash.
 
 
33.
Define and adjusting journal entry
 
 
34.
Depreciation
 
 
35.
The difference between adjusted and unadjusted trial balance.
 
 
36.
The dividends account balance will be used in preparing the statement of retained earnings.
 
 
37.
Equity is the (owner's/creditor's/litigator's) claim on the assets of a business. In a proprietorship, this claim is reported in the (assets/liabilities/equities) section of a balance sheet in the (retained earnings/revenue/cash) account.
 
 
38.
Examples of Current Liabilities
 
 
39.
Examples of long-term assets
 
 
40.
Examples of long term assets
 
 
41.
Examples of Permanent Accounts
 
 
42.
Expense/Matching Principle
 
 
44.
Explain your understanding of the closing process by choosing the correct statements below
 
 
 
 
 
 
 
 
 

45.
Facts about contra accounts
 
 
46.
Facts about permanent accounts
 
 
47.
Facts about the Accumulated depreciation account
 
 
48.
Facts about the Classified balance sheet
 
 
49.
Fiscal year
 
 
50.
Formula for interest expense
 
 
53.
Illustrate your understanding of how to use the adjusted trail balance to prepare an income statement by completing the following sentence. 

In order to prepare an income statement using the account balances on an adjusted trail balance, all of the __________ and their credit balances are transferred to the income statement as well as all the _____________________ and their ________________ balances
 
revenues; expenses; debit
54.
Illustrate your understanding of how to use the adjusted trail 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 ___________account balance s well as any debit in the __________account is transferred from the adjusted trial balance and is used along with the reported net income (loss) from the Income statement
 
 
55.
Income statement
 
 
 
 
 
 
 
 
 

56.
Income Summary
 
 
57.
The income summary account is (credited, debited) for the sum of all revenue accounts and is (debited, credited) for all expense accounts and its balance will be transferred to the (retained earnings, cash) account.
 
 
58.
In order to prepare a balance sheet using the account balances on an adjusted trail balance, all of the (expenses/assets) and their debit balances are transferred to the balance sheet as well as (liabilities/revenues) and their (cr/dr) balances.
 
 
59.
in order to prepare an income statement using the account balances on an adjusted trial balance all of the (revenues/liabilities) and their credit balances are transferred to the income statement as well as all of the (expenses/assets) and their (debit/credit) balances.
 
 
60.
In order to prepare the statement of retained earnings, the balance of (retained earnings/cash) account balance as well as any debit balance in the (supplies/dividends) account is transferred from the adjusted trial balance and is used along with the reported net income or loss from the income statement.
 
 
61.
Intangible assets examples
 
 
62.
Interim Financial Statement
 
 
63.
The journal entry to close all of a company's expense accounts would include a (dr/cr) to each expense account and a corresponding (dr/cr) to the income (statement/summary) account.
 
 
64.
List the order in which financial payments are prepared.
 
 
65.
List the order in which financial statements are prepared
 
 
66.
Long term Liabilities
 
 
67.
Natural business year
 
 
68.
On Dec. 28 a company completed $600 of catering services. Dec. 31 the customer had not been billed nor had the transaction been recorded. What adjusting entry would we do?
 
 
69.
Order of categories on a classified balance sheet
 
 
 
 
 
 
 
 
 

70.
Order of the Accounting Cycle
 
 
71.
Plant asset
 
 
72.
A plant asset can be defined by which of the following statements
 
 
73.
Plant assets
 
 
74.
A post-closing trail balance is a list of (permanent/temporary) accounts and their balances from the (ledger/journal) (before/after) all (closing/adjusting) entries have been journalized and posted.
 
 
75.
 
 
 
76.
The process of the closing process is to reset ________ (Temporary/permanent) account balances to zero and to transfer the changes in of all of these accounts to the Retained _____ (Earnings, Summary, Withdraw) accounts.
 
 
77.
Review and complete the following statement regarding the Income Summary account.

The income summary account is __________ for the sum of all revenue accounts and is _____________ for the sum of all expense accounts and its balance will be transferred to _______ account
 
 
78.
Select the statements below that explains how to use the Income Summary account.
 
 
79.
Statement of Cash Flows
 
 
80.
Statements about Unearned Revenue
 
 
81.
Steps involved in adjusting entries
 
 
 
 
 
 
 
 
 

82.
Steps of the adjusting process in which they are performed. So like what do you do to make an adjustment?
 
 
83.
The steps to completing a worksheet
 
 
84.
Straightline depreciation
 
 
85.
Things about salaries payable
 
 
86.
Things about the accounting cycle
 
 
87.
Things transferred directly to the statement of retained earnings.
 
 
88.
To close to dividends account
 
 
89.
Trial Balance
 
 
90.
What are current liabilities
 
 
91.
What defines a long-term investment?
 
 
92.
What is and isn't affected in adjusting journal entries
 
 
93.
What is depreciation
 
 
94.
What is needed in order to figure interest expense?
 
 
95.
What is the book value of an asset?
 
 
96.
What is true regarding permanent and temporary accounts?
 
 
97.
What to closing an account mean?
 
 
99.
Work Sheet
 
 
 
 
 
 
 
 
 

100.
A work sheet is a helpful tool to help prepare financial (statements/reports) It is constructed at the (beginning/end) of and accounting period before the adjusting process. All adjustments can easily be seen in the (adjustments/unadjusted) trial balance columns and then an (adjusted/unadjusted) trial balance can be prepared.
 
 
 

 
Use the following information to compute profit margin for each separate company a through e

 

Which of the following five companies is the most profitable according to the profit margin ratio? 

 

A plant asset can be defined by which of the following statements?



On Dec. 27, a business completed a $400 service that had not yet been billed or recorded as of Dec. 31. 



Choose the statement below that explains what “closing” means



An adjusting journal entry is made at the of an accounting period



Select the statements below which correctly describe how to use the work sheet in the adjustment process



Which of the following statements describes the expense recognition(matching) principle?



Illustrate how to use the adjusted trial balance to prepare a statement of retained earnings 



What are current liabilities?



Current assets are:



The third closing journal entry, after closing revenues and expenses, would include which of the following



 

The steps in the closing process are listed on the right. 

 

Place the steps in the adjusting process



 

A $300,000 building was purchased on Dec 1. It is estimated that it will have a life of 20 years. Calculate depreciation expense for the month of December using straight-line depreciation

The purpose of the closing process is to reset accounts balances to zero and to transfer the changes in all of these accounts to the account



The Income Summary account can be defined as which of the following?



Show the steps involved in adjust entries



Identify accounts would be classified as long-term liabilities on a classified balance sheet



Illustrate how to use the adjusted trial balance to prepare the balance sheet
àin order to prepare a balance sheet using the account balances on an adjusted trial balance, all of the and their debit balances are transferred to the balance sheet as well as of the and their balances



An advance payment of $1,000 for services was received on Dec. 1 and was recorded as a liability. By the end of the year, $400 had been earned.



Which of the following statements are true regarding depreciation?



When does the closing process take place?



Choose the statements below which is (are) true regarding adjusting journal entries



Illustrate how to use adjusted balance to prepare an income statement
àin order to prepare an income statement using the account balances on an adjusted trial balance, all of the and their credit balances are transferred to the income statement as well as of the and their balances







Demonstrate the last closing journal entry to close the Withdrawals account



Review the following totals from a work sheet. Based on these totals, the company experienced (a) net loss of $2,500


 

2.
An adjusting journal entry module is made at the ________ (beginning/middle/end) of an accounting period.
 
 
3.
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 what the correct adjusting entry should include by choosing the correct statement below.
 
 
4.
A company borrowed $10,000 from the bank at 5% interest. The loan has been outstanding for 45 days. Demonstrate the required adjusting entry for this company by completing the following sentence

The required adjusting entry would be to debit the Interest (expense/payable/receivable) _______________ account and (debit/credit) _____________ the Interest _______________ (expense/payable/receivable) account.
 
 
5.
Determine which of the following transactions may require adjustments.
 
 
9.
List the order of financial statements prepared.
 
 
10.
Place the steps in the adjusting process the correct order in which they would be performed
 
 
11.
A plant asset can be defined by which of the following statements?
 
 
 
 
 
 
 
 
 
 
 
 

12.
Show your understanding of the steps involved in adjusting entries by lacing the following steps in the correct order of preparation
 
 
13.
Which of the following statements about the Accumulated depreciation account is (are) correct?
 
 
 

1.
$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 entry.
 
 
3.
A $300,000 building was purchased on Dec. 1. It is estimated that it will have a life of 20 years. Calculate depreciation expense for the month of December using straight-line depreciation.
 
 
4.
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 Dec. 31 includes a:
 
 
5.
Accrual basis accounting recognizes ________ when earned and records __________ when ________ in order to adhere to the matching principle.
 
 
6.
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. What is the correct adjusting entry?
 
 
7.
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?
 
 
8.
Before sorting/transferring amounts to the financial statement columns on a worksheet, the Trial Balance, __________, and Adjusted Trial Balance columns must be ) __________.
 
 
9.
A business has a $5,000 from a bank a 16% annual interest. Calculate the amount of interest to accrue if the loan has been outstanding for 90 days. Use a 360 day year.
 
 
10.
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?

a. Credit Salaries expense for $500.
b. Debit Salaries payable for $500.
c. Debit Salaries expense for $500.
d. Credit Unearned revenues for $500.
 
 
11.
Cash basis accounting recognizes _________ when cash is received and records ________ when cash is paid.
 
 
12.
A classified balance sheet has several categories for assets and liabilities including: (Check all that apply)

Current assets
Plant assets
Noncurrent liabilities
Operating expenses
Tangible current assets
Noncurrent equity
Long term investments
 
 
13.
A classified balance sheet have categories. List the order of the categories in which they were appear on a classified balance sheet.
 
 
14.
A company borrowed $10,000 from the bank at 5% interest. The loan has been outstanding for 45 days. 

The required adjusting entry would be to debit the Interest ________ account and ________ the Interest _________ account.
 
 
15.
A contra account is an account that is linked with another ________. It has a(n) __________ balance and its ___________ to/from the other account's balance.
 
 
16.
Current assets are:
 
 
17.
Define "current" as it applies to assets and liabilities on a classified balance sheet.
 
 
18.
Define the Income Summary account
 
 
19.
Explain the difference between the unadjusted and the adjusted trial balance.
 
 
20.
Explain your understanding of what unearned revenues are by selecting the statements below which are correct. (Pick all that apply)

a. They refer to earnings which have been earned, but not yet billed.
b. They are also called accounts receivable.
c. They are also called deferred revenues.
d. They are a liability
e. They are reported on a balance sheet.
f. They refer to cash received in advance of performing a service.
 
 
21.
The formula for computing accrued interest is:
 
 
22.
For the current year, a business has earned (but not recorded or received) $200 of interest from investments. The required adjusting entry would be to debit the ___________ account and __________ the ____________ account.
 
 
 
 
 
 
 
 
 
 

23.
Given that a company reported net income for the year, determine how a company would complete its work sheet for a period.
 
 
24.
Identify which of the accounts below would be classified as a plant asset account. (Check all that apply.)

-Machinery
-Cash
-Patent
-Building
-Notes receivable due in two years
-Land currently being used
-Supplies
-Equipment
 
 
25.
In order to prepare a balance sheet using the account balances on an adjusting trial balance, all of the ________ and their debit balances are transferred to the balance sheet as well as all of the __________ and their _______ balances.
 
 
26.
In preparing a post-closing trial balance, which of the following statements are correct? (Check all that apply.)

a. All permanent accounts with a balance in the general ledger will be included.
b. The total of all debit balances will equal the total of all credit balances
c. All revenues and all expenses will be included
d. The retained earnings account on the post-closing trial balance will include the net income or net loss for the period
e. All temporary accounts with a balance in the general ledger will be included.
 
 
27.
The journal entry to close all of a company's expense accounts would include a _______ to each of the expense accounts and a corresponding ________ to the Income __________ account.
 
 
29.
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 ____________ account and ________ the ______________ account.
 
 
30.
Permanent Accounts are:
 
 
31.
A post-closing trial balance is a list of _________ accounts and their balances from the __________ after all ________ entries have been journalized and posted.
 
 
32.
Some of the steps in the accounting cycle are listed below. Place them in the correct order of use.

- Prepare the adjusted trial balance
- Journalize and post-closing entries
- Journalize transactions into the journal
- Prepare the financial statements
- Journalize and post the adjusting entries
- Prepare post-closing trial balance.
 
 
33.
Temporary Accounts are:
 
 
 
 
 
 
 
 
 

34.
What are the required steps to complete a work sheet?
 
 
35.
What are the steps for the closing process?
 
 
36.
What are the steps of adjusting entries?
 
 
37.
What are the steps to the closing process?
 
 
38.
What is an adjusting journal entry?
 
 
39.
What is an intangible asset?
 
 
41.
What is depreciation?
 
 
42.
What is keying?
 
 
43.
What is the book value of an asset?
 
 
44.
What is the purpose of the Accumulated Depreciation account?
 
 
45.
What is true regarding depreciation? (Pick all that apply)

a. Depreciation is recognized on the day a plant asset is purchased.
b. Depreciation is the process of allocating the cost of an asset to the period the asset benefits.
c. Depreciation is the original cost of an asset minus any residual value and this amount is expensed over its useful life.
d. Depreciation is recorded as an adjusting entry
e. Depreciation always measures the "decline in value"
f. Depreciation is recognized at the end of an accounting period.
 
 
46.
What's debited/credited in the correct adjusting entry to recognize depreciation expense on a building?
 
 
47.
What's the difference between a temporary account and a permanent account?
 
 
48.
What's the final step in the adjusting process?
 
 
49.
What's true regarding adjusting journal entries? (pick all that apply)

a. Cash is never affected
b. A balance sheet account is always affected
c. Cash may sometimes be affected
d. An income statement account is always affected
 
 
 
 
 
 
 
 
 

50.
When preparing the statements of Retained Earnings, the balance of the Retained earnings account and the debit balance in the _________ account is used along with the net income (loss) from the Income statement
 
 
51.
Which of the accounts below would be classified as long-term or fixed assets? (Check all that apply.)

-Equipment
-Vehicles
-Accounts Receivable
-Building
-Land
 
 
52.
A work sheet is a helpful tool which may be used to help prepare financial ________. It is constructed at the _______ of an accounting period before the adjusting process. All adjustments can be easily seen in the _________ trial balance columns and then an _________ trial balance can be prepared.