Question 1

Profit margin = ___________________ divided by net sales.

Accepted Answer

The answer of Profit margin = ___________________ divided by net...

Question 2

Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $185,000, expenses of $103,700, and the company paid $18,000 cash in dividends to the owner (sole stockholder) . The retained earnings account before closing had a balance of $297,000. The ending retained earnings balance after closing is:

Accepted Answer

A)  $185,000
B)  $63,300
C)  $81,300
D)  $360,300
E)  $378,300F) A) and D)
G) A) and E)

Question 3

Accrued expenses at the end of one accounting period are expected to result in cash payments in a future period.

Accepted Answer

A) True 
 B)False

Question 4

Explain the difference between temporary and permanent accounts.

Accepted Answer

Temporary, or nominal, accounts accumula...

Question 5

A post-closing trial balance reports:

Accepted Answer

A)  All permanent ledger accounts with balances.
B)  All nominal ledger accounts with balances.
C)  All temporary and permanent ledger accounts with balances.
D)  Only revenue and expense accounts.
E)  Only asset accounts.F) C) and E)
G) All of the above

Question 6

On April 1, Santa Fe, Inc. paid Griffith Publishing Company $1,548 for 36-month subscriptions to several different magazines. Santa Fe debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What adjusting entry should be made by Santa Fe, Inc. for the adjustment on December 31 of the first year assuming the company is using a calendar reporting period and no previous adjustments had been made?

Accepted Answer

A)  Debit Subscription Expense $516 and credit Prepaid Subscriptions $516.
B)  Debit Prepaid Subscriptions $516 and credit Subscription Expense $516.
C)  Debit Subscription Expense $387 and credit Cash $387.
D)  Debit Unearned Subscriptions $387 and credit Subscription Expense $387.
E)  Debit Subscription Expense $387 and credit Prepaid Subscriptions $387.F) D) and E)
G) B) and C)

Question 7

On October 1, Goodwell Company rented warehouse space to a tenant for $2,500 per month and received $12,500 for five months' rent in advance on that date. The collection was credited to the Unearned Rent account. The company's annual accounting period ends on December 31. The Unearned Rent account balance at the end of December, after adjustment, should be:

Accepted Answer

A)  $5,000.
B)  $7,500.
C)  $12,500.
D)  $2,500.
E)  $10,000.F) C) and E)
G) D) and E)

Question 8

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:

Accepted Answer

A)  Assets overstated and equity understated.
B)  Assets and equity both understated.
C)  Assets overstated, net income understated, and equity overstated.
D)  Assets, net income, and equity understated.
E)  Assets, net income, and equity overstated.F) B) and E)
G) A) and B)

Question 9

Victor Company received $3,200 from a customer in March of the current year as an advance payment on services. At the end of the year, $1,400 worth of services have been provided. The year-end adjusting entry that Victor should make to account for the revenue earned is:

Accepted Answer

A)   
B)   
C)   
D)   
E)   F) B) and E)
G) B) and C)

Question 10

Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of:

Accepted Answer

A)  Items that require contra accounts.
B)  Items that require adjusting entries.
C)  Asset and equity.
D)  Asset accounts.
E)  Income statement accounts.F) B) and C)
G) D) and E)

Question 11

The first five steps in the accounting cycle include analyzing transactions, journalizing, posting, preparing an unadjusted trial balance, and recording adjusting entries.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting Accounts for Financial Statements

Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of:

Correct Answer
verified

Profit margin = ___________________ divided by net sales.

Correct Answer
verified

Explain the difference between temporary and permanent accounts.

Correct Answer
verified
Temporary, or nominal, accounts accumula...
View Answer

A post-closing trial balance reports:

Correct Answer
verified

Accrued expenses at the end of one accounting period are expected to result in cash payments in a future period.

Correct Answer
verified

Correct Answer
verified

Victor Company received $3,200 from a customer in March of the current year as an advance payment on services. At the end of the year, $1,400 worth of services have been provided. The year-end adjusting entry that Victor should make to account for the revenue earned is:

Correct Answer
verified

The first five steps in the accounting cycle include analyzing transactions, journalizing, posting, preparing an unadjusted trial balance, and recording adjusting entries.

Correct Answer
verified

Correct Answer
verified

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:

Correct Answer
verified

Correct Answer
verified

Exam 3: Adjusting Accounts for Financial Statements

Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of:

Correct AnswerverifiedShow Answer

Profit margin = ___________________ divided by net sales.

Correct AnswerverifiedShow Answer

Explain the difference between temporary and permanent accounts.

Correct AnswerverifiedTemporary, or nominal, accounts accumula...View AnswerShow Answer

A post-closing trial balance reports:

Correct AnswerverifiedShow Answer

Accrued expenses at the end of one accounting period are expected to result in cash payments in a future period.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Victor Company received $3,200 from a customer in March of the current year as an advance payment on services. At the end of the year, $1,400 worth of services have been provided. The year-end adjusting entry that Victor should make to account for the revenue earned is:

Correct AnswerverifiedShow Answer

The first five steps in the accounting cycle include analyzing transactions, journalizing, posting, preparing an unadjusted trial balance, and recording adjusting entries.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Temporary, or nominal, accounts accumula...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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