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 1,500ofsuppliesthatwereused,(2)unearnedrevenueof4,200 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 55,800andcreditare77,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 37,686andthecreditof41,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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