FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 2: Accounting for Accruals and Deferrals

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

True/False

Review LaterAdd Note

Review Later

Revenues and expenses are temporary accounts.

A) True
B) False

Correct Answer

verified

Show Answer

Question 52

Essay

Review LaterAdd Note

Review Later

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts.Increase = I Decrease = D Not Affected = NACalloway Company received $750 from a customer for services to be performed at a future date.

Correct Answer

verified

Collecting a payment in advance from a ...

View Answer

Show Answer

Question 53

Essay

Review LaterAdd Note

Regarding the relationships of revenues and expenses to assets and liabilities, state whether each of the following statements is true or false.Recording an increase in a revenue account may be associated with a decrease in assets.Recording an increase in a revenue account may be associated with a decrease in liabilities.An increase in Salaries Expense may be accompanied by a decrease in Salaries Payable.Recording a decrease in assets may be associated with an increase in an expense account.A decrease in Supplies will be accompanied by an increase in Supplies Expense.

Oregon Company began operations on January 1, Year 1, by issuing $10,000 in common stock to the stockholders. On March 1, Year 1, Oregon accepted an advance of $36,000 to provide services for a one-year period beginning April 1. During Year 1, services in the amount of $32,000 were provided to customers on account, and 80% of this amount was collected by year-end. During Year 1, operating expenses incurred on account were $24,000, and 60% of this amount was paid by year-end. During the year, Oregon paid $1,200 to purchase supplies. By year-end, $1,080 of the supplies had been used. Dividends to stockholders were $2,000 during the year. During Year 1, Oregon paid salaries of $28,000, and on December 31, Year 1, the company accrued salaries of $2,800.Oregon recorded all appropriate adjusting entries at year end.What would Oregon report for service revenue for Year 1?What would Oregon report for salaries expense for Year 1?What would Oregon report for supplies expense for Year 1?What would the amount be for net cash flows from operating activities for Year 1?What is the net income for Year 1?What would the balance in the retained earnings account be at December 31, Year 1?

Which of the following statements about accrual accounting is true ?

ABC Company ended Year 1 with the following account balances:Cash $600, Common Stock $400, and Retained Earnings $200.The following transactions occurred during Year 2:Issued common stock for $19,000 cash.ABC borrowed an additional $11,000 from Chris Bank.ABC earned $9,000 of revenue on account.ABC incurred $4,000 of operating expenses on account.Cash collections of accounts receivables were $6,000.ABC provided additional services to customers for $1,000 cash.ABC purchased land for $14,000.ABC used $3,000 in cash to make a partial payment on its accounts payable.ABC declared and paid a $200 dividend to the stockholdersOn December 31 ABC had accrued salaries of $4,000. -What is the amount of net income (loss) reported on the December 31, Year 2 income statement?

Adjusting entries never affect a business's cash account.

Prior to closing the accounts, Syracuse Company's accounting records showed the following balances: $\begin{array}{lr}\text { Retained earnings } & \$ 7,400 \\\text { Service revenue } & 8,450 \\\text { Interest revenue } & 1,200 \\\text { Salaries expense } & 5,300 \\\text { Operating expense } & 1,750 \\\text { Interest expense } & 900 \\\text { Dividends } & 1,500\end{array}$ After closing the accounts, Syracuse's retained earnings balance would be

Which of the following is a claims exchange transaction?

Providing services to customers on account is an asset exchange transaction.

The following data were taken from the accounting records of Li Company at December 31, Year 1 after adjusting entries have been entered. The December 31, Year 1 closing entries have not been made. $\begin{array}{llr}\text { Service revenue } & 166,000 \\\text { Retained earnings } & 95,000 \\\text { Accounts receivable } & 26,500 \\\text { Salaries expense } & 88,000 \\\text { Operating expense } & 15,400 \\\text { Accounts payable } & 22,800 \\\text { Supplies expense } & 760 \\\text { Prepaid rent } & 4,000 \\\text { Common stock } & 90,000\\ \text { Supplies } &400\\ \text { Dividends } &2,400\\ \text { Insuxance expense} &1,600\\ \text { Rent expense} &20,000\\ \text {Unearned revenue } &1,530\\\end{array}$ Required:List the accounts that should be closed at the end of Year 1.Prepare an income statement for Li Company for Year 1.What is the balance in retained earnings after closing?

The following transactions apply to Einstein Corporation.Issued common stock for $50,000 cash.Provided services to customers for $28,000 on account.Purchased land for $16,000 cash.Purchased $1,500 of supplies on account.Paid $12,000 for operating expenses.Paid $550 on accounts payable.Collected $25,000 cash from customers.Accrued $600 of salary expense at year end.Paid $2,000 dividends to stockholders.Required:Identify the effect on the statement of cash flows for each of the above transactions.Classify the above accounting events into one of four types of transactions (asset source, asset use, asset exchange, claims exchange).

What effect does the recording of revenue normally have on total assets?

Dixon Company collected cash during December of Year 1 from a customer for services to be performed during January of Year 2. Indicate whether each of the following statements about this transaction is true or false.Dixon's Year 2 income statement would not be affected by this transaction.Dixon's Year 1 statement of cash flows would be affected by this transaction.This transaction is an asset exchange transaction.The revenue for the services provided will be recorded in Year 2.The transaction increases Dixon's liabilities.

Hernandez Company began business operations and experienced the following transactions during the year beginning January 1, Year 1:Issued common stock for $50,000 cash.Provided services to customers for $125,000 on account.Purchased $2,500 of supplies on account.Paid $30,000 cash to rent office space for a 12-month period beginning July 1, Year 1.Collected $115,000 cash from customers.Paid cash for $90,000 of operating expenses.Adjusted the accounting records to reflect that there was $750 of supplies remaining on hand at year-end.Recorded an end-of-year adjustment to recognize rent expense.Required:Record the above transactions on a horizontal statements model, reflecting their effect on the different financial statements.Prepare Hernandez Company's income statement, balance sheet and statement of cash flows for the year ended December 31, Year 1.

What types of accounts are "matched" when the matching concept is used in a discussion of accrual accounting?

Define the accounting cycle and list the stages of the cycle.

Duluth Company collected a $6,000 cash advance from a customer on November 1, Year 1 for work to be performed over a six-month period beginning on that date. If the year-end adjustment is properly recorded, what will be the effect of the adjusting entry on Duluth's Year 1 financial statements?

Which of the following shows how paying cash to lease office space for one year affects the company's financial statements?

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: $\begin{array} { l lll} \text { Cash } & \$ 3,400& \text { Accounts receivable } & \$ 1,450 \\\text { Dividends} & 1,700& \text { common stock } & 2,175 \\\text { Land } & 2,000 &\text { Revenue } & 2,000 \\\text { Accounts payable } & 1,050 &\text { Expense } & 1,150\end{array}$ What is the amount of total assets on Carolina's December 31, Year 1 balance sheet?