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Exam 3: Adjusting Accounts and Preparing Financial Statements

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Question 81

Multiple Choice

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Under the alternative method for accounting for unearned revenue,which of the following pairs of journal entry formats is correct?

A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E

F) A) and E)
G) A) and B)

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Question 82

Multiple Choice

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All of the following are true regarding unearned revenues except:

A) They are payments received in advance of services performed.
B) The adjusting entry for unearned revenues increases assets and increases revenues.
C) The adjusting entry for unearned revenues increases revenues and decreases liabilities.
D) They are liabilities.
E) As they are earned, they become revenues.

F) A) and E)
G) B) and E)

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Question 83

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Ben had total assets of $149,501,000,net income of $6,242,000,and net sales of $209,203,000.Its profit margin was 2.98%.

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:

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of its related asset.

Adjusting entries:

Accrued revenues at the end of one accounting period often result in cash _______________________ in the next period.

If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be ___________________ and equity would be ___________________.

On June 30 of the current calendar year,Apricot Co.paid $7,500 cash for management services to be performed over a two-year period.Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.The adjusting entry on December 31 for Apricot would include:

In preparing statements from the adjusted trial balance,the balance sheet must be prepared first.

The accrual basis of accounting:

It is acceptable to record cash received in advance of providing products or services to revenue accounts.

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

Adjusting entries result in a better matching of revenues and expenses for the period.

Earned but uncollected revenues are recorded during the adjusting process with a credit to a revenue account and a debit to an expense account.

______________ revenues are liabilities requiring delivery of products and for services.

The balance in Tee Tax Services' office supplies account on February 1 and February 28 was $1,200 and $375,respectively.If the office supplies expense for the month is $1,900,what amount of office supplies was purchased during February?

An adjusting entry often includes an entry to Cash.

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period,the financial statements prepared at that time would show:

Accrued expenses at the end of one accounting period are expected to result in cash payments in a future period.