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Exam 2: Accounting for Accruals and Deferrals

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Question 41

Multiple Choice

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Prior to closing, Syracuse Company's accounting records showed the following balances: After closing, Syracuse's retained earnings balance would be

A) $16,800.
B) $23,700.
C) $21,000.
D) $26,400.

E) A) and D)
F) A) and B)

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Question 42

Multiple Choice

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Which of the following correctly states the proper order of the accounting cycle?

A) Record transactions, adjust accounts, close temporary accounts, prepare statements.
B) Adjust accounts, record transactions, close temporary accounts, prepare statements.
C) Record transactions, adjust accounts, prepare statements, close temporary accounts.
D) Adjust accounts, prepare statements, record transactions, close temporary accounts.

E) None of the above
F) C) and D)

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Question 43

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The following accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: The amount of Carolina's retained earnings after closing on December 31, Year 1 was:

The following accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: Total assets on Carolina's December 31, Year 1 balance sheet would amount to:

Warren Enterprises had the following events during Year 1: The business issued $40,000 of common stock to its stockholders. The business purchased land for $24,000 cash. Services were provided to customers for $32,000 cash. Services were provided to customers for $10,000 on account. The company borrowed $32,000 from the bank. Operating expenses of $24,000 were incurred and paid in cash. Salary expense of $1,600 was accrued. A dividend of $8,000 was paid to the stockholders of Warren Enterprises. Assuming the company began operations during Year 1, the amount of retained earnings as of December 31, Year 1 would be:

The recognition of an expense may be accompanied by which of the following?

Adjusting entries never affect a business's cash account.

A payment to an employee in settlement of salaries payable decreases an asset and decreases equity.

Sheldon Company began Year 1 with $1,200 in its supplies account. During the year, the company purchased $3,400 of supplies on account. The company paid $3,000 on accounts payable by year end. At the end of Year 1, Sheldon counted $1,400 of supplies on hand. Sheldon's financial statements for Year 1 would show:

The term "accrual" describes an earnings event that is recognized before cash is paid or received.

In the closing process, the amounts in temporary accounts are moved to net income, a permanent account.

Accounts that are closed include expenses, dividends, and unearned revenues.

Which of the following accounts would not appear on a balance sheet?

The following accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: The amount of net income shown on Carolina's Year 1 income statement would amount to:

Which of the following would cause net income on the accrual basis to be different from (either higher or lower than) "cash provided by operating activities" on the statement of cash flows?

Which of the following statements is true in regard to accrual accounting?

In uncertain circumstances, the conservatism principle guides accountants to: