On which financial stement will income summary be shown?
  • the clearing account
  • no financial statement
  • snow removal services that have been provided but have not been billed or paid
  • liability, credit
fees payable would appear on the balance sheet as a (n)
  • asset, debit
  • False
  • liability
  • liability, credit
Generally accepted accounting principles require that companies use the ______ of accounting.
  • contra asset, expense
  • accrual basis
  • Unearned revenue
  • prepaid insurance
Which of the following is NOT true about closing entries?
  • all real accounts are closed at the end of the period
  • unearned rent
  • after the income statement and before the balance sheet
  • to verify that all the adjusting entries have been posted
Which of the following accounts would likely be included in a deferral adjusting entry?
  • prepaid insurance
  • all real accounts are closed at the end of the period
  • a deferred expense
  • Unearned revenue
Of the following steps of the accounting cycle, which step should be completed last?
  • verify that the debits and credit are in balance
  • debit Salaries expense; credit Salaries payable
  • an adjusted trial balance is prepared
  • the adjusted trial balance
which of the following is considered to be unearned revenue?
  • Unearned revenue
  • theater tickets sold for next month's performance
  • income summary
  • current liabilities and long-tern liabilities
which of the accounts below would NOT appear in the balance sheet columns of the end-of-period spreadsheet?
  • Unearned revenue
  • service revenue
  • the end-of-period spreadsheet
  • prepaid insurance
The adjusting entry to adjust supplies was omitted at the end of the year. This would affect the income statement by having
  • expenses when their future economic value expires
  • current liabilities and long-tern liabilities
  • expense understated and therefore net income overstated
  • after the income statement and before the balance sheet
the end-of-period spreadsheet
  • is used to summarize account balances and adjustments for the financial statements
  • all real accounts are closed at the end of the period
  • expenses when their future economic value expires
  • states that the revenues and related expenses should be reported in the same period
The income statement should be prepared
  • verify that the debits and credit are in balance
  • balance sheet in the noncurrent assets section
  • before the statement of owner's equity and balance sheet
  • balance sheet in the property, plant, and equipment section
What is the purpose of the adjusted trial balance?
  • after the income statement and before the balance sheet
  • before the statement of owner's equity and balance sheet
  • to verify that all the adjusting entries have been posted
  • balance sheet in the property, plant, and equipment section
The general term used to indicate delaying the recognition of an expense already paid or of a revenue already received is
  • False
  • deferral
  • liability
  • accrual basis
For the year ending December 31, Orion, Inc. mistakenly omitted adjusting entries for $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired. For the year ending December 31, what is the effect of these errors on revenues, expense, and net income?
  • debit Salaries expense; credit Salaries payable
  • net income of $21,720
  • net income is overstated by $2,300
  • $4,020 net income
prepaid advertising, representing payment for the next quarter, would be reported on the balance sheet as a (n)
  • False
  • True
  • current asset
  • asset
the income statement columns in the end-of-period spreadsheet show that debits are equal to $55,800 and credit are $77,What does this information mean to the accountant?
  • increase and expense account
  • net income of $21,720
  • before the statement of owner's equity and balance sheet
  • the clearing account
which of the following has steps of the accounting cycle in proper sequence (come steps may be missing)?
  • service revenue
  • analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, and prepare a post-closing trial balance
  • the end-of-period spreadsheet
  • expense understated and therefore net income overstated
Accumulated depreciation and depreciation expense are classified, respectively, as
  • unearned rent
  • accrual basis
  • balance sheet in the property, plane, and equipment section
  • contra asset, expense
adjusting entries affect at least one
  • income statement account and one balance sheet account
  • before the statement of owner's equity and balance sheet
  • balance sheet in the property, plant, and equipment section
  • when they are incurred, whether or not cash is paid
The account type and normal balance of prepaid expense is
  • a deferred expense
  • asset, debit
  • current asset
  • liability, credit
the accounting concepts upon which deferrals and accruals are based is
  • liability, credit
  • True
  • False
  • matching
during the end-of-period processing, which of the following best describes the logical order of steps?
  • to verify that all the adjusting entries have been posted
  • preparation of adjustments, adjusted trial balance, financial statements
  • theater tickets sold for next month's performance
  • when they are incurred, whether or not cash is paid
The unexpired insurance at the end of the fiscal period represents
  • Unearned revenue
  • service revenue
  • a deferred expense
  • the end-of-period spreadsheet
During the end-of-period processing, which of the following best describes the logical order of steps?
  • verify that the debits and credit are in balance
  • preparation of adjustments, adjusted trial balance, financial statements
  • when they are incurred, whether or not cash is paid
  • False
After all of the account balances have been extended to the balance sheet columns of the work sheet, the totals of the debit and credit columns show debits of $37, 686 and the credit of $41,This indicates that
  • theater tickets sold for next month's performance
  • the amounts are out of balance and need to be corrected
  • debit to wages expense and a credit to wages payable
  • verify that the debits and credit are in balance
if there is a balance in the unearned subscriptions account after adjusting entries are made, it represents a (n)
  • deferral
  • a deferred expense
  • prepaid insurance
  • liability
Notes receivable due in 390 days appear on the
  • after the income statement and before the balance sheet
  • before the statement of owner's equity and balance sheet
  • balance sheet in the noncurrent assets section
  • expenses when their future economic value expires
The account type and normal balance of unearned revenue is
  • liability
  • liability, credit
  • False
  • asset, debit
closing entries
  • net income is overstated by $2,300
  • income statement account and one balance sheet account
  • when they are incurred, whether or not cash is paid
  • must be journalized and posted
which of these accounts would appear in the balance sheet columns of the end-of-period spreadsheet?
  • contra asset, expense
  • prepaid insurance
  • equal each other
  • liability, credit
the income summary account is also called
  • net income of $21,720
  • a deferred expense
  • True
  • the clearing account
the income statement is prepared from
  • net income of $21,720
  • the end-of-period spreadsheet
  • an adjusted trial balance is prepared
  • the adjusted trial balance
Which of the following is NOT an essential part of the accounting records?
  • current liabilities and long-tern liabilities
  • all real accounts are closed at the end of the period
  • the end-of-period spreadsheet
  • debit to wages expense and a credit to wages payable
prepaid insurance is reported on the balance sheet as a
  • False
  • current asset
  • current liabilities and long-tern liabilities
  • asset, debit
in the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry?
  • the company has a net loss of $3,415 for the period
  • debit Salaries expense; credit Salaries payable
  • increases the balance of an expense account
  • verify that the debits and credit are in balance
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