Accounting Expert Answers & Study Resources : Page 42

81.In July, a company pays three years' insurance in advance. The December 31 adjusting entry is a.Insurance Expense – Debit; Prepaid Insurance – Credit b.Prepaid Insurance – Debit; Insurance Expense – Credit c.Insurance Expense – Debit; Cash – Credit d.Prepaid Insurance – Debit; Cash – Credit 82.An adjusted trial balance is prepared to a.test that the.

51.Here is the trial balance for McLeary Corporation: McLeary Corporation Trial Balance January 31, 2010 Cash$3,000 Accounts Receivable2,000 Art Supplies3,000 Office Supplies5,000 Prepaid Rent7,000 Prepaid Insurance5,000 Art Equipment5,000 Office Equipment3,000 Accounts Payable$10,000 Common Stock5,000 Retained Earnings5,000 Dividends? Advertising Fees Earned? Wages Expense? Utilities Expense5,000 Telephone Expense3,000 ________      $       A$           B If the trial balance showed a balance of $8,000 in the Wages Expense account and a balance of $34,000 in the Advertising.

31.Revenue cannot be recognized unless delivery of goods has occurred or services have been rendered. 32.Accrual accounting recognizes revenues and expenses at the point that cash changes hands. 33.A deferral is the recognition of an expense that has arisen but not yet recorded. 34.Adjusting entries are useful in apportioning costs among two or.

81.Typically, the chart of accounts begins with a.revenue accounts. b.asset accounts. c.liability accounts. d.expense accounts. 82.The purpose of the ledger is to a.keep a record of documentation to support each transaction. b.make sure that all assets, liabilities, etc., have credit balances at all times. c.record chronologically the day's transactions. d.maintain a separate account for each asset, liability, etc. 83.Which of.

61.All companies use the same standard set of accounts. 62.The accounts in a chart of accounts are normally listed in alphabetical order. 63.The numbering scheme of a chart of accounts should contain no gaps. 64.Wages payable is a type of expense. 65.Dividends are classified as an expense. 66.Unearned revenues are classified as liabilities on the.

32.In the journal provided, prepare journal entries (in good form) for the following transactions. If no entry is required, write “no entry.” Omit explanations. Mar.1Investors opened a dance school, called Yolonda's Dance Studio, by depositing $15,000 into a business bank account in exchange for 15,000 shares of $1 par value stock. 2Paid.

23.Briefly discuss the differences between Prepaid Insurance and Insurance Expense. 24.Using the following transactions, calculate (a) the ending balance of Cash, (b) the ending balance of Accounts Receivable, (c) total liabilities, and (d) net income for the period. a. Opened business by issuing common stock for $20,000. b. Billed customers for services rendered,.

7.Why is the Dividends account increased by a debit? Explain in terms of its relationship to stockholders' equity. 8.Indicate whether each account below has a normal debit or a normal credit balance. a. Automobilesg. Dividends b. Accounts Payableh. Retained Earnings c. Common Stocki. Land d. Prepaid Rentj. Interest Payable e. Advertising Expensek. Notes Receivable f. Service Revenue 9.Indicate.

11.The classification issue involves the assignment of accounts to business transactions. 12.When a company receives an order, a transaction has occurred. 13.A credit to an asset account means that asset account has been increased. 14.A debit has an unfavorable effect on an account. 15.For a T account, an account balance is the difference in.

61.Which of the following accounts will eventually be followed with an inflow of cash? a.Prepaid Insurance b.Unearned Revenue c.Dividends d.Accounts Receivable 62.Which of the following accounts will eventually be followed with an outflow of cash? a.Design Revenue b.Notes Receivable c.Accounts Payable d.Prepaid Rent 63.All of the following actions can help a business manage its cash flows except a.convince its creditors to.

41.A depreciable asset's original cost can typically be obtained by referring to the balance sheet. 42.Allowance for depreciation is another term for depreciation expense. 43.Depreciation Expense–Equipment is an example of a contra account. 44.The carrying value of equipment is the estimated dollar amount the equipment could be sold for. 45.The heading of an adjusted.

71.A company recorded office supplies in an asset account when the supplies were purchased. Failure to take inventory and make an adjusting entry will result in an a.understatement of liabilities. b.understatement of stockholders' equity. c.understatement of assets. d.overstatement of stockholders' equity. 72.A company's five-day weekly payroll of $980 is paid on Fridays. Assume that the.

51.In the accounting cycle, closing entries are prepared before adjusting entries. 52.Closing entries are journal entries made at the beginning of an accounting period. 53.In the accounting cycle, information from source documents is initially recorded in the journal. 54.Financial statements cannot be prepared until the accounts have been adjusted. 55.Nominal account balances are reduced.

12.If a debit to Supplies were posted as a credit, and a credit of the same amount to Cash were posted as a debit, what would be the effect, if any, on the two accounts and on the trial balance column totals? 13.Record the following transactions, using proper form, in the.

51.In a journal entry, credits are always indented. 52.In a journal entry, the Post. Ref. column is left blank until the entry has been posted. 53.It is sometimes correct for a compound entry's debit totals and credit totals to be unequal. 54.The ledger account form has a Balance column. 55.One might see “J2” correctly.

61.Use this information to answer the following question. The trial balance for Tsung Corporation appears as follows: Tsung Corporation Trial Balance December 31, 2010 Cash$  200 Accounts Receivable500 Prepaid Insurance50 Supplies150 Office Equipment400 Accumulated Depreciation–Office Equipment$  200 Accounts Payable300 Common Stock600 Service Revenue Earned500 Salaries Expense100 Rent Expense200   ______ $1,600$1,600 If the estimated depreciation for office equipment were $200, the adjusting entry would contain a a.debit to Accumulated Depreciation,.

34.Post the following transaction. General JournalPage 14 Date DescriptionPost. Ref. Debit Credit 2010 July20Accounts Receivable415 Commissions Earned415 Commission earned on sale of painting Accounts ReceivableAccount No. 112 Date ItemPost. Ref. Debit Credit Balance DebitCredit 2010 Commissions EarnedAccount No. 411 Date ItemPost. Ref. Debit Credit Balance DebitCredit 2010 .

15.Provide explanations for the following related journal entries: a.Cash6,000 Common Stock6,000 b.Law Library3,400 Accounts Payable3,400 c.Cash600 Accounts Receivable1,000 Legal Fees Earned1,600 d.Cash500 Accounts Receivable500 e.Accounts Payable3,400 Cash3,400 16.Provide explanations for the following related journal entries: a.Prepaid Rent4,000 Cash4,000 b.Trucks and Automobile36,000 Notes Payable36,000 c.Cash600 Accounts Receivable600 d.Notes Payable18,000 Cash18,000 e.Cash2,500 Unearned Fees2,500 .

TRUE/FALSE 1.The intentional preparation of misleading financial statements is referred to as fraudulent financial reporting. 2.Net income is misleading when revenue is overstated or expenses are understated by significant amounts. 3.When the estimates involved in earnings management begin moving outside a reasonable range, the financial statements can become misleading. 4.Accounting periods of greater than.

41.The amount of profit would always be equal to the ending cash balance. 42.One can obtain a clear picture of a company's liquidity by referring to its income statement. 43.One can obtain a clear picture of a company's liquidity by referring to its statement of cash flows. 44.Revenue should be recorded when it.

27.Selected amounts from the condensed financial statements of Timson Corporation for 2009 and 2010 are presented below with several amounts missing. The 2008 year-end balance of retained earnings is $82,883. Income Statement20102009   Revenues$490,304 $     a Costs and expensesh(501,295) Income taxes       (853)           (3,603) Net income$__i___     $______ Statement of Retained Earnings   Beginning-of-year balance    $   j$  c Net income3,747d Dividends    k          (3,845) End-of-year balance   .

31.Generally, before Accounts Payable is debited, it is credited. 32.When payment is received for services not yet rendered, no entry is recorded until that service has been rendered. 33.When revenue has been earned, no entry is recorded until the related cash has been collected. 34.A contract is an example of a source document. 35.A.

41.All of the following are examples of source documents except a.checks. b.invoices. c.journals. d.receipts. 42.Which of the following transactions increases both assets and stockholders' equity? a.Payment received from a credit customer b.Received a bank loan c.Rendered a service, payment not yet received d.Declared and paid a dividend 43.Which of the following accounts will not affect stockholders' equity? a.Advertising Expense b.Dividends c.Land d.Sales 44.A dividend will.

21.Which of the following accounts has a normal debit balance? a.Dividends b.Common Stock c.Unearned Fees d.Retained Earnings 22.Which of the following accounts has a normal debit balance? a.Art Fees Earned b.Notes Payable c.Prepaid Insurance d.Unearned Art Fees 23.Which of the following accounts has a normal credit balance? a.Accounts Receivable b.Common Stock c.Wages Expense d.Dividends 24.Which of the following accounts has a normal debit balance? a.Wages Payable b.Fees.

28.From the following alphabetical list of account balances, all of which are normal, for Aloha Corporation on September 30, 2010, prepare a trial balance in proper form (the amount of Dividends must be computed). Accounts Payable$  780 Accounts Receivable460 Cash400 Common Stock800 Dividends? Equipment1,380 Prepaid Advertising20 Retained Earnings400 Revenue Earned1,000 Wages Expense60 Wages Payable20 29.Using the alphabetical list of account balances presented.

31.A transaction in which six months' rent is paid in advance results in which of the following journal entries? a.Prepaid Rent – Debit; Cash – Credit b.Rent Receivable – Debit; Cash – Credit c.Rent Revenue – Debit; Cash – Credit d.Rent Expense– Debit; Cash – Credit 32.Which of the following events does not require a.

11.All decreases in stockholders' equity are a result of expenses. 12.Assets become liabilities when they expire. 13.Instead of the word profit, accountants use net income because the latter term can be defined more precisely. 14.A cash payment that reduces a liability does not result in an expense. 15.Revenue is produced when accounts receivable are.

21.The going concern assumption is not applied to a.companies that have sustained losses for the previous two years. b.companies about to file for bankruptcy. c.the partnership form of business. d.companies that have been in existence for less than a year. 22.The going concern assumption helps solve the a.matching issue. b.accounting period issue. c.revenue recognition issue. d.continuity issue. 23.Equipment might be.

71.Which of the following statements is true about a journal entry? a.Decreases in liabilities are indented. b.The Post. Ref. column is left blank until entries are posted. c.A line is skipped between each debit and each credit. d.Assets are entered before liabilities. 72.Which of the following statements is not necessarily true about a journal entry? a.Liabilities.

31.In the journal provided, prepare journal entries (in good form) for the following transactions. If no entry is required, write “no entry.” Omit explanations. May1Investors opened a dry cleaning service, called Junction Cleaners, by depositing $100,000 into a business bank account and receiving 50,000 shares of $2 par value stock in.

51.In accounting, depreciation refers to the a.allocation of asset cost. b.wearing away of an asset. c.decline in value of an asset. d.obsolescence of an asset. 52.Which of the following assets is not subject to depreciation? a.Store fixtures b.Art equipment c.Land d.Computers 53.Which of the following accounts is a contra account? a.Accumulated Depreciation–Office Furniture b.Interest Payable c.Depreciation Expense–Office Furniture d.Unearned Revenue 54.The carrying value of a.

33.In the journal provided, prepare journal entries (in good form) for the following transactions. If no entry is required, write “no entry.” Omit explanations. Nov.1Investors opened a dance school called Olga's Dance Studio by depositing $24,000 into a business bank account in exchange for 24,000 shares of $1 par value stock. 2Paid.

11.The cost principle relates most closely to the a.recognition point. b.recognition issue. c.valuation issue. d.classification issue. 12.Which of the following business events is not a transaction? a.Signing a contract b.Paying wages c.Receiving goods d.Purchasing a service 13.If Accounts Receivable has debit postings of $29,000, credit postings of $22,000, and a normal ending balance of $24,000, which of the following was.

31.Which of the following is an application of accrual accounting? a.Depreciating a building as quickly as allowed by income tax regulations b.Recording utilities expense in the accounting period covered by the monthly bill c.Expensing a machine in its entirety when purchased d.Recording revenue at the time payment is received 32.Which of the following accounts need.

19.Given the following ledger account and postings, complete the Balance column. Assume no previous postings in the account. Accounts ReceivableAccount No. 113 Date ItemPost. Ref. Debit Credit Balance DebitCredit 2010 Feb.1J21,820 3J3320 9J3700 14J3410 20.What two purposes are served by using the Post. Ref. columns of a journal and ledger? 21.Briefly explain the difference between Unearned Art Fees and Art Fees Earned. 22.Use the following descriptive.

21.An increase in revenue is recorded with a credit. 22.Dividends should appear on the statement of retained earnings. 23.The account Dividends has a normal credit balance. 24.Revenues have a normal credit balance. 25.Retained Earnings has a normal debit balance. 26.Accounts Payable has a normal credit balance. 27.When stockholders make an investment, the Common Stock account is.

  MULTIPLE CHOICE 1.When a business records revenue before it has been earned, it has violated the measurement issue of a.recognition. b.evaluation. c.classification. d.valuation. 2.When a business reports an asset at an inflated dollar amount, it has violated the measurement issue of a.recognition. b.valuation. c.classification. d.realization. 3.When a business erroneously records expenses as assets, it has violated the measurement issue of a.communication. b.classification. c.valuation. d.recognition. 4.Which of.

61.Depreciation Expense–Equipment is a permanent account. 62.Cash is a nominal account. 63.Supplies Expense is a temporary account. 64.A revenue account is closed with a credit to the revenue account and a debit to Income Summary. 65.Net income provides a good measure of a business's debt-paying ability. 66.Profitability is best determined from cash flow information.   .

21.The cash basis of accounting is prohibited for income tax purposes. 22.In applying the matching rule, expenses should be recognized in the same accounting period as the revenues to which they are related. . 23.Assets are converted to revenues as they benefit the company. 24.Direct cause-and-effect relationships between revenues and expenses can be.

41.Which of the following is an example of a deferral? a.Debit Interest Expense, credit Interest Payable b.Debit Accounts Receivable, credit Legal Fees Earned c.Debit Property Taxes Expense, credit Property Taxes Payable d.Debit Depreciation Expense–Truck, credit Accumulated Depreciation–Truck 42.An adjusting entry would not include which of the following accounts? a.Income Taxes Payable b.Unearned Revenue c.Interest Receivable d.Cash 43.An adjusting entry cannot.

  SHORT ANSWER 1.Use this journal entry to answer the following question. Nov.16Accounts Payable685 Cash685 Recorded payment of a liability Explain how the above journal entry relates to the measurement issues of (a) recognition, (b) valuation, and (c) classification. 2.Explain why the dollar amount of total stockholders' equity probably will not equal the dollar amount that would.

11.The recording of an expense could result in a corresponding increase in a.stockholders' equity. b.revenue. c.a liability. d.an asset. 12.When expenses exceed revenues, a.a net income will result. b.a net loss occurs. c.stockholders' equity increases. d.a liability is created. 13.Expenses are incurred a.to generate revenue. b.to produce liabilities. c.only during the adjustment process. d.to produce assets. 14.The cost of doing business is also known as a.a.

26.Using the T accounts below, record the following transactions. Label each entry with the appropriate letter. a. The stockholders contributed cash of $40,000 and a truck worth $48,000 into the business in exchange for 8,800 shares of $10 par value stock. b. Paid two months' rent in advance, $2,400. c. Agreed to do.

10.Harris Corporation provided monthly waste-removal services for Goble Corporation, which resulted in the following transactions in Harris's records: Using T accounts, prepare the corresponding entries in Goble's records. 11.By what amount, if any, would each of the following errors cause a trial balance to be out of balance? a. A purchase of supplies.

17.Given the following ledger account and postings, complete the Balance column. Assume no previous postings in the account. Unearned Art FeesAccount No. 213 Date ItemPost. Ref. Debit Credit Balance DebitCredit 2010 May1J12,500 7J1700 8J2500 12J2200 18.Given the following ledger account and postings, complete the Balance column. Assume no previous postings in the account. Accounts PayableAccount No. 212 Date ItemPost. Ref. Debit Credit Balance DebitCredit 2010 Dec.1J18,200 7J12,800 8J2600 12J2800 .

  MULTIPLE CHOICE 1.Which of the following transactions results in the recognition of an expense? a.Expiration of the usefulness of equipment during the accounting period b.Payment on an account payable c.Declaration and payment of a dividend d.Payment on the principal portion of a loan 2.Which of the following actions can distort company records and result in fraudulent.

35.Post the following transaction. General JournalPage 8 Date DescriptionPost. Ref. Debit Credit 2010 May12Land5,000 Notes Payable5,000 Issued note for purchase of land LandAccount No. 141 Date ItemPost. Ref. Debit Credit Balance DebitCredit 2010 Notes PayableAccount No. 211 Date ItemPost. Ref. Debit Credit Balance DebitCredit 2010 .

5.For each item below, indicate whether a debit or a credit applies. a. Decrease in Accounts Payable b. Decrease in Land c. Increase in Retained Earnings d. Increase in Unearned Revenue e. Decrease in Interest Payable f. Increase in Prepaid Insurance g. Increase in Wages Expense h. Decrease in Art Supplies i. Increase in Advertising Fees Earned 6.For each item.

TRUE/FALSE 1.When a company receives a product previously ordered, a recordable transaction has occurred. 2.When a business hires a new employee, a recordable transaction has occurred. 3.The valuation issue deals with how the components of a transaction should be categorized. 4.In accounting, to recognize means to record a transaction or event. 5.Purchase requisitions are recognized.

30.In the journal provided, prepare journal entries (in good form) for the following transactions. If no entry is required, write “no entry.” Omit explanations. Apr.1Investors opened a dry cleaning service, called Same Day Cleaners, by depositing $60,000 into a business bank account and receiving 60,000 shares of $1 par value stock.