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Exam 4: Adjustments,financial Statements,and the Quality of Earnings

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Question 51

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Which of the following does not correctly describe the following adjusting journal entry?

A) Total assets do not change.
B) The transaction is an example of an accrual.
C) Stockholders' equity decreases.
D) Net income is not affected.

E) A) and C)
F) A) and B)

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Question 52

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Depreciation expense is an estimated allocation of the cost of long-term assets and is recorded in a contra-asset called accumulated depreciation.

A) True
B) False

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Question 53

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What does the total asset turnover ratio measure and how is it calculated? Give two examples of transactions that decrease the ratio.

On September 1,2019,Fast Track,Inc.was started with $30,000 invested by the owners as contributed capital.On September 30,2019,the accounting records contained the following amounts: Prepare a statement of stockholders' equity for September,the first month of operation.Ignore income taxes.

Which of the following correctly describes the effects of initially recording deferred revenue when cash is received from a customer?

Which of the following does not correctly describe an adjusting journal entry that debits interest expense and credits interest payable?

Which of the following accounts would not be included in the closing process at year-end?

The declaration of a $5,000 dividend by JLH Company would be reported on which of JLH's financial statements?

Which of the following journal entries is used to record a deferral?

Which of the following correctly describes the effects of initially recording prepaid insurance expense when cash is paid to purchase an insurance policy?

Which of the following transactions does not create a deferral?

Below are two related transactions for Golden Corporation.The annual accounting period ends December 31.The books are adjusted only at year-end. A.October 1,2019: Golden Corporation borrowed $100,000 and signed a note providing for 8% interest.The principal and interest are due in one year on September 30,2020. B.December 31,2019: End of the annual accounting period. Prepare the required journal entry at October 31 and December 31,2019 for each of the above items.

Which of the following transactions results in an increase in both net income and stockholders' equity?

What is the effect on the financial statements when a company fails to adjust the unearned revenue account for revenues earned at year-end?

Accounts that start a new accounting period with zero balances are referred to as temporary accounts and include both balance sheet and income statement accounts.

Which of the following does not correctly describe the following adjusting journal entry?

On September 1,2019,Fast Track,Inc.was started with $30,000 invested by the owners as contributed capital.On September 30,2019,the accounting records contained the following amounts: Prepare an income statement for September for the first month of Fast Track's operation.Ignore income taxes.

Johnson Corporation is completing the accounting information processing cycle at the end of the fiscal year,June 30,2019.Johnson has provided the following trial balances as of June 30,2019: A.Reconstruct the adjusting entries and prepare a brief explanation of each. B.What is the amount of net income? C.Calculate earnings per share (EPS)assuming 1,000 shares of common stock are outstanding.

An accrued expense is incurred and paid for in the current period.

The results or a balance on one financial statement may affect the results or a balance on another financial statement. Prepare a response to the following items. A.Describe how the income statement is related to the statement of stockholders' equity. B.Describe how the statement of stockholders' equity is related to the balance sheet. C.Describe how the statement of cash flows is related to the balance sheet.