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Exam 4: Accrual Accounting and Adjusting Entries

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Question 51

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Wolf Industries plant operates five days per week with a daily payroll of $50,000. Employees are paid every Saturday for the work week just completed (Monday through Friday) . The last day of the month is Wednesday, May 31. The correct adjusting entry at May 31 is

A)

B)

C)

D)

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Question 52

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Assets become expenses when:

A) purchased for cash or on credit.
B) asset is delivered.
C) they are paid for in cash.
D) their economic benefits expire.

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Question 53

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The entry to close the Insurance Expense account at the end of the accounting period is to:

Fashion Consultants purchased office supplies for its showroom during the month of May for $7,200. The supplies were paid for during May. On May 1, the Supplies account had a balance of $800. On May 31, supplies on hand amounted to $500.

Which one of the following adjustments decreases net income for the period?

There are three closing entries. The first one is to close ____, the second one is to close ____, and the last one is to close ____.

Duck Insurance Company received advance payments from customers during 2012 of $100,000. At December 31, 2012, $15,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2012, what will the balances be in the Unearned Insurance Revenue and Insurance Revenue accounts?

Failure to record the earned portion of unearned revenue would result in which of the following?

____________________ are the journal entries made at the end of the accounting period to return the balance in all temporary accounts to zero.

Some of the steps in the accounting cycle are listed below. Select the choice that places these steps in the correct order.

Thompson Company borrowed $100,000 on a one-year, 10% note on September 1, 2012, with interest and principal to be paid at maturity. How much interest payable will be reported on Thompson's balance sheet as of November 30, 2012?

Which one of the following is an example of an accrued liability?

The following revenue and expense account balances were taken from the Adjusted Trial Balance for Fraser Services Co. for December 31, 2012: Prepare an income statement.

The supplies account has a balance of $1,000 on January 1. During January, the company purchased $25,000 of supplies on account and the liability was appropriately recorded. A count of supplies at the end of January indicates a balance of $3,000. Which one of the following is a correct amount to be reported on the company's financial statements for the month ending January 31?

Which one of the following is the last step in the accounting cycle?

Pickering, Inc. borrowed $500,000 from BTL Bank on November 1, 2012. The terms of the loan (note) is 6% interest due in 6 months.

Sharp Inc. purchased equipment at a cost of $700,000 in January, 2003. As of January 1, 2012, depreciation of $315,000 had been recorded on this asset. Depreciation expense for 2012 is $35,000. After the adjustments are recorded and posted at December 31, 2013, what are the balances of Equipment and Accumulated Depreciation?

What does the phrase, "Revenue is recognized when earned" mean?

What effect does "recognizing accrued interest revenue at the end of the accounting period" have on the accounting equation?

Graystone Company's plant operates five days per week with a daily payroll of $100,000. Employees are paid every Tuesday for the prior week's work (Monday through Friday) . The last day of the month is Tuesday, April 30. What effect does the accrual at April 30 have on Graystone's net income?