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Exam 3: The Accounting Cycle: End of the Period

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Question 81

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Which of the following is true concerning temporary and permanent accounts?

A) Cash is a temporary account.
B) Permanent accounts represent activity over the entire life of the company.
C) Permanent accounts must be closed at the end of every reporting period.
D) Temporary accounts represent activity over the previous three years.

E) None of the above
F) B) and C)

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Question 82

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Which of the following is a possible closing entry?

A) Debit Cash,credit Service Revenue.
B) Debit Cash,credit Retained Earnings.
C) Debit Service Revenue,credit Retained Earnings.
D) Debit Dividends,credit Retained Earnings.

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

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Question 83

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Adjusting entries are unnecessary for transactions that do not involve revenue or expense activities,such as selling common stock or paying dividends.

The post-closing trial balance is a list of all accounts and their balances at a particular date after the account balances have been updated for closing entries.

At the beginning of December,Global Corporation had $2,000 in supplies on hand.During the month,supplies purchased amounted to $3,000,but by the end of the month the supplies balance was only $800.What is the appropriate month-end adjusting entry?

The revenue recognition principle states that:

Adjusting entries should be prepared after financial statements are prepared.

Describe what is meant by prepaid expenses and give two examples.

The following table contains financial information for Trumpeter Inc.before closing entries: What is the amount of Trumpeter's total assets?

Unearned revenues occur when cash is received after the revenue is earned.

Jones Corporation provides services to a customer on June 17,but the customer does not pay for the services until August 12.According to the revenue recognition principle,Jones Corporation should record the revenue on August 12.

If the beginning balance of Retained Earnings equals $10,000,net income for the year equals $6,000,and dividends for the year equal $2,000,then the ending balance of Retained Earnings equals $18,000.

A company performs $2,800 of services during the month and bills customers.The customers are expected to pay next month.Record the customer billing using (a)accrual-basis accounting and (b)cash-basis accounting.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the correct term by placing the letter designating the term in the space provided. -____ A list of accounts and their balances used as the source data to prepare the financial statements.

Adjusting entries are primarily needed for:

What is the difference between permanent accounts and temporary accounts and why does an accounting system have both types of accounts?

A list of all accounts and their balances after posting closing entries is referred to as:

The following data are taken from the cash-basis accounting records of Myerson Company for the year ended December 31,2015: Calculate the amount of revenues and expenses for 2015 under accrual-basis accounting.

Prepare adjusting journal entries,as needed,for the following items. (a)The Supplies account shows a balance of $500,but a count of supplies reveals only $200 on hand at year-end. (b)The company initially records the payments of all insurance premiums as prepaid insurance.The unadjusted trial balance at year-end shows a balance of $500 in Prepaid Insurance.A review of insurance policies reveals that $100 of insurance is unexpired. (c)Employees work Monday through Friday,and salaries of $2,500 per week are paid each Friday.The company's year-end falls on Tuesday. (d)At year-end,the company received a utility bill for December's electricity usage of $200 that will be paid in early January.

Consider the following events for Sophia Incorporated: Under cash-basis accounting,what is the appropriate day to record the expenses related to the sand volleyball camp?