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Exam 3: Adjusting Accounts for Financial Statements

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Question 161

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All of the following statements regarding the Income Statement columns on the worksheet are true except:

A) The balances in the Income Statement credit column are revenues.
B) The balances in the Income Statement credit column are unearned revenues.
C) The balances in the Income Statement debit column are expenses.
D) The difference between the totals of the Income Statement columns is net income or net loss.
E) The net income or net loss from the Income Statement columns is entered in the Balance Sheet & Statement of Retained Earnings columns.

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Question 162

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The following information is available for the Noir Detective Agency.After closing entries are posted,what will be the balance in the Retained earnings account? $\begin{array} { l r } \text { Net Loss } &\$ 17,600 \\\text { Retained earnings } & 289,000 \\\text { Dividends } & 32,000\end{array}$

A) $239,400.
B) $274,600.
C) $303,400.
D) $289,000.
E) $257,000.

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Question 163

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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.

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation. -How much depreciation expense will be recorded for the furniture for the first year ended December 31?

A company's month-end adjusting entry for Insurance Expense is $1,000.If this entry is not made then expenses are understated by $1,000 and net income is overstated by $1,000.

All of the following regarding reversing entries are true except:

Match the following terms with the appropriate definition. -Tangible assets that are long-lived and used to produce or sell products or services.

Classified balance sheets commonly include the following categories: A. Current assets B. Long-term investments C. Plant assets D. Intangible assets E. Current liabilities F. Long-term liabilities G. Equity. Match the typical classification of each item below with its correct balance sheet category (A through G) . -Store Supplies

On November 1,Jovel Company loaned another company $100,000 at a 6.0% interest rate.The note receivable plus interest will not be collected until March 1 of the following year.The company's annual accounting period ends on December 31.The amount of interest revenue that should be reported in the first year is:

After posting the entries to close all revenue and expense accounts,Marker Company's Income Summary account has a credit balance of $6,000,and its Dividends account has a debit balance of $2,500.These balances indicate that net income for the current accounting period amounted to $3,500.

If the Balance Sheet and Statement of Retained Earnings columns of a work sheet fail to balance when the net income is added to the Balance Sheet and Statement of Retained Earnings Credit column,the cause could be:

________ expenses are those costs that are incurred in a period but are both unpaid and unrecorded.

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

Interim financial statements report a company's business activities for a one-year period.

Andrew's net income was $280,000; its total assets were $1,050,000; and its net sales were $3,500,000.Calculate the company's profit margin ratio.

The correct adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31 is:

At the beginning of the year,a company's balance sheet reported the following balances: Total Assets = $225,000; Total Liabilities = $25,000; Total Paid-in capital of $100,000; and Retained earnings = $100,000.During the year,the company reported revenues of $46,000 and expenses of $30,000.In addition,dividends for the year totaled $20,000.Assuming no other changes to Retained earnings,the balance in the Retained earnings account at the end of the year would be:

Which of the following accounts is a permanent (real) account?

The total amount of depreciation recorded against an asset over the entire time the asset has been owned:

On May 1,a two-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?