Which of the following would not be considered an adjusting entry?
Which of the following is a requirement for revenue recognition under accrual accounting?
Which account would not appear in a closing journal entry?
On December 15, Year 1, a company receives an order from a customer for services to be performed on December 28, Year 1. Due to a backlog of orders, the company does not the perform the services until January 3, Year 2. The company sends a bill to the customer on January 4, Year 2 and the customer pays for the services on January 10, Year 2. When should revenue be recorded by the company, assuming the accrual method of accounting?
Which account is least likely to be debited when revenue is earned?
Salaries payable at the end of the period was $500. Salary expense for the period was $1,100 and $1,400 was paid to employees in cash.
What was salaries payable at the beginning of the period?
A company operates five days per week with a daily payroll of $6,000. Employees are paid every Friday. The last day of the accounting period is Thursday, October 31. What is the amount of Wage Expense to be recorded on the next payday, Friday, November 1?
An advertising agency receives a $10,000 cash deposit from a client on February 15th for an advertising campaign which will begin in March. Which of the following statements is true for the agency (which uses accrual accounting)?
An electronics store had the following transactions in February:
What would Net Income (on an accrual basis) for the month of February would be?
The following journal entries were recorded by a company during the month of September. What was net income for the month?
|Journal Entry 1|
|Journal Entry 2|
|Journal Entry 3|
|Journal Entry 4|
|Journal Entry 5|
|Cost of Goods Sold||3,200|
|Journal Entry 6|
Determine Net Income for September
After the closing process is complete, which of the following is false?
Unadjusted Trial Balance
|Journal Entry 7|
|Journal Entry 8|
|Journal Entry 9|
|Journal Entry 10|
|Journal Entry 11|
Net Income is 3,050
Unadjusted Trial Balance
December 31, Year 1
|Unearned Service Revenue||3,000|
|Journal Entry 12|
|Journal Entry 13|
|Journal Entry 14|
|Journal Entry 15|
|Journal Entry 16|
|Journal Entry 17|
Net Income is 31,850
Columbia, Inc. had the following transaction in February:
Columbia should report how much revenue in February?
Columbia should report how much expense in February?
For each transaction listed, determine the effect on the February financial statements. Indicate + for increase, or – for decrease. Leave the cell blank if there is no effect.
|Balance Sheet||Income Statement|
|1||Paid wages earned in January||—||—|
|2||Prepaid rent expired||—||—||+||—|
|3||Performed service which customer had paid for in January||—||+||+||+|
|4||Collected on credit sales made in Jan.|
|5||Depreciation on equipment was recorded||—||—||+||—|
|6||Hired a new manager and signed a contract to pay her $60,000 per year.|
|7||Dividends were declared an immediately paid||—||—|
|8||Purchased shares of another company’s stock for cash|
|9||Performed a service for a customer, collected three fourths in cash and balance on account.||+||+||+||+|
|10||Purchased a patent, paying cash|
|11||Incurred expenses, paid four-fifths in cash and put the balance on account||—||+||—||+||—|
For each of the following independent situations, determine the effect of ignoring the required 12/31 year-end adjusting entry. Would assets, liabilities, and equity be understated (U) or overstated (O) if the entry is not made? If there would be no effect, leave the cell blank.
|Cash was received on Dec. 1 when a 2-year lease was signed. Rent revenue was credited on that date.||—||+|
|Interest is incurred but not yet paid on a long-term note payable||—||+|
|Equipment with a 5-year life has been used 1 year||—||+|
|One-half of a prepaid insurance policy has expired||+||+|
The following accounts reflect the correct Year 1 year-end balances after adjustment but before closing.
|Accumulated depreciation||225||Accounts payable||52|
|Common stock||100||Cost of goods sold||420|
|Inventory||90||Note payable, due 8/1/Y4||63|
|Prepaid rent||10||Rent expense||40|
|Retained earnings, 1/1/Y1||400||Salary expense||125|
|Sales revenue||855||Unearned revenue||30|
4. Closing the Income Summary Accounts:
Step 1: Close revenue and expenses to Income Summary
Step 2: Close Income Summary and Dividends to RE