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Exam 4: Adjustments,financial Statements,and Financial Results

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Question 41

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Insert the appropriate letter into the correct blank to describe the type of adjustment required at the end of April and the effect it has on expenses or revenues and assets or liabilities.

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1.D and F
...

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Question 42

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Declared dividends:

A) are an expense of doing business.
B) are not a legal obligation that a company must pay.
C) are a way to distribute the company's profits to its shareholders.
D) are not recorded as a liability because they are not an expense of doing business.

E) B) and C)
F) All of the above

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Question 43

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If a company reports sales in the current period when management knows it has little chance of collecting payment from customers,it would fraudulently increase:

Closing entries:

A deferral adjustment that decreases an asset will include an increase in an expense. BT: Comprehension

Adjustments ensure that the related accounts on the balance sheet are up to date and complete. BT: Knowledge

A company has a loan that accrues interest at a rate of $20 a day.The company pays the interest once a quarter.Which of these would be an accurate adjustment for a month in which no payments are made?

Which of the following accounts would normally be classified as a current liability?

A company owes rent at a rate of $6,000 per month.The company pays the rent owed on the tenth of each month for the previous month.At the end of each month,what kind of adjustment is required?

The equality of recorded debits and credits is checked by preparing a(n) :

Which of the following is a true statement about the nature of Equipment,account?

The sales revenue account has a credit balance of $367,200 at year end.After closing entries are made,the account will:

If total debits are not equal to total credits in a trial balance,which of the following errors may have occurred?

The adjusted trial balance shows the end-of-year balance for Retained Earnings. BT: Knowledge

Brandon Company's annual accounting year ends on September 30.All journal entries have been made for the period ended September 30,2007,except for the following two items.Prepare the adjusting journal entries that are needed. A.Cash of $4,200 was collected on August 1,2007,for services to be provided evenly over the following 12 months beginning on August 1.Unearned Service Revenue was credited for $4,200 when the cash was received. B.The company earned service revenue of $2,000 on a special job that was completed on September 29,2007.Collection will be made during October 2007.No entry has been recorded yet.

One of the major advantages of making adjustments in order to improve the quality of financial statements is that they:

Which of the following statements about an adjusted trial balance is true?

Permanent accounts:

Match the term and the definition.There are more definitions than terms. _____ Contra-account _____ Carrying value _____ Deferral adjustment _____ Closing journal entry _____ Net loss _____ Trial balance _____ Temporary account _____ Accrual adjustment _____ Income before income taxes A.When revenue minus expenses is a negative number. B.Adds new values into the balance sheet and income statement accounts. C.Also known as transportation and storage expense. D.An income account that is only open long enough to record one transaction. E.The level of profit before considering income tax. F.A journal entry that eliminates an account from the chart of accounts. G.Lists the balances of all accounts to check that revenues equal expenses. H.The amount at which an asset or liability is reported in the financial statements. I.An account that is paired with another account whose book value it reduces. J.Lists the balances of all accounts to check that debits equal credits. K.The number of years that a company has to pay back its loans and other financing. L.A journal entry that transfers net income or loss to the retained earnings account. M.Converts some of an asset's or liability's book value into an expense or revenue. N.When a company lowers the price of a product. O.An account that must have a zero balance after closing entries have been made. P.The level of revenue a company has before it pays administrative expenses.

Adjustments are only made if cash has been received or paid during the period. BT: Comprehension