FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 3: Adjusting Accounts for Financial Statements

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 201

Multiple Choice

Review LaterAdd Note

Review Later

Interim financial statements refer to financial reports:

A) That cover less than one year,usually spanning one,three,or six-month periods.
B) That are prepared before any adjustments have been recorded.
C) That show the assets above the liabilities and the liabilities above the equity.
D) Where revenues are reported on the income statement when cash is received and expenses are reported when cash is paid.
E) Where the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues.

F) C) and D)
G) All of the above

Correct Answer

verified

Show Answer

Question 202

True/False

Review LaterAdd Note

Review Later

The cash basis of accounting commonly increases the comparability of financial statements from period to period.

A) True
B) False

Correct Answer

verified

Show Answer

Question 203

True/False

Review LaterAdd Note

Adjusting entries are made after the preparation of financial statements.

On December 1,Orenthal Marketing Company received $3,600 from a customer for a 2-month marketing plan to be completed January 31 of the following year.The cash receipt was recorded as unearned fees.The adjusting entry for the year ended December 31 would include:

An adjusting entry could be made for each of the following except:

Each adjusting entry affects one or more income statement account,one or more balance sheet account,and never cash.

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees.If the company fails to make the end-of-period adjusting entry to move the portion of these fees that has been earned to a revenue account,one effect will be:

Which of the following is classified as a current asset?

Trekker Bikes' current assets are $300 million and its current liabilities are $125 million.Its current ratio is 0.417.

Depreciation expense is an example of an accrued expense.

Which of the following accounts showing a balance on the post-closing trial balance indicate an error?

A company's fiscal year must correspond with the calendar year.

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

Identify the primary differences between accrual accounting and cash basis accounting.

All necessary amounts needed to prepare the income statement can be taken from the income statement columns of the work sheet,including the net income or net loss.

It is acceptable to record prepayment of expenses as debits to expense accounts if an adjusting entry is made at the end of the period to bring the asset account balance to the correct unused or unexpired amount.

On July 1 Olive Co.paid $7,500 cash for management services to be performed over a two-year period.Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.On July 1 Olive should record:

Before an adjusting entry is made to recognize the cost of expired insurance for the period,Prepaid Insurance and Insurance Expense are both overstated.

Assets are often classified into current assets,long-term investments,plant assets,and intangible assets.

Gracio Co.had the following transactions in the last two months of its year ended December 31.Prepare entries for these transactions under the method that records prepaid expenses as expenses and records unearned revenues as revenues.Also prepare adjusting entries at the end of the year.