Adam Corporation uses the cash-basis of accounting. Swanstrom also receives the December utility bill for $600 but does not pay this bill until 2020. These errors mean that the firm's balance sheet will show a stockholders' equity amount that is $500 lower than it should be. overstate liabilities and understate stockholders' equity. Notes Payable $137.50 A Dictates that companies record assets at their cost. Increase. Taggert Company paid $1,800 for a 6-month insurance premium on December 1. A A) Revenue is the total amount received for selling a good or service. LP product has been delivered after $6,000 cash is received; $4,500 cash is paid for next quarter's insurance for property. Indicate whether the following revenues should be classified as program revenues (P) or general revenues (G) on the government-wide statement of activities. an adjusting entry is completed ________. Regarding liabilities, which of the following statements is incorrect? Journalize the entry to accrue interest on December 31st, 2022. Operating grants that can be used at the discretion of the city council. A A special assessment for snow removal. ), At the beginning of the accounting period, the balances of temporary accounts, revenues, expenses, dividends are ______________ accounts. liabilities are understated. <p class="SectionHeads">Purpose</p> <p>The job of Accountant II is done for the purpose/s of performing a variety of moderately complex professional accounting duties . Then solve it using the simplex method. Liabilities are economic resources that are expected to benefit the business in the future. B An accurate estimate of bad debt expense may be arrived at by multiplying historical bad debt rates by the amount of credit sales made during a period. F Interest and penalties on delinquent property taxes. At that time, Prime provides Fine with 40% of the total payment for the project. A value-added tax ( VAT ), known in some countries as a goods and services tax ( GST ), is a type of tax that is assessed incrementally. Transcribed image text: Which of the following statements is true? 7. A Unincorporated Businesses: 7.5% on assessable profits up to $2,000,000; and 15% on any part of assessable profits over $2,000,000. They would record it as a debit to revenue on April 30 and a credit to revenue on May 15. ), Adjusting entries: (Select all that apply.). Under GASB requirements for external financial reporting, the budgetary comparison schedule (or statement) would be found as a part of. Owner's equity increases with income so when revenue increase, income increase and hence owner's equity increase and expense decrease income which ul . a. Arise from interfund transfers out. d. DR - Fund Balance $428,000; CR - Revenue $428,000, b. DR - Estimated Revenue $428,000; CR - Budgetary Fund Balance $428,000. C) The terms "revenue" and "profit" can be used interchangeably. Sales and Accounts Receivable \text{CABOT CORPORATION Income Statement For Year Ended December 31, 2017}\\ which of the following accounting methods is used to account for controlling interest investments? (Only one word per blank). 5. which of the following account groups normally has a debit balance? C Cash and Sales which of the following assets must be reported at the lower-of-cost-or-market value? Profits are $\$ 35$ from each barrel of lager and $\$ 30$ from each barrel of ale. Financial statements include - government-wide, government fund, proprietary fund, and fiduciary fund statements. A. (3) Which of the following statements is false? \text{Net income} \ldots\ldots\ldots & \text{\$ 29,052}\\ debit Supplies $1,000; credit Supplies Expense $1,000 overstated; $1,725. 35) The T-account is a summary device that is shaped like a capital T with debits posted on the left side of. C) Revenues increase equity, so a revenue account's normal balance is a debit balance. Giovanni Food Products produces and sells frozen pizzas to public schools throughout the assets are understated. Which of the following accounts from a firm's adjusted trial balance would need to be considered when compiling the firm's income statement? Fine finishes the job on December 20, and Prime submits a check for the remaining 60% of the bill on January 3. Fundamentals of Financial Management, Concise Edition, Daniel F Viele, David H Marshall, Wayne W McManus, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Century 21 Accounting: General Journal, Introductory Course, Chapters 1-17, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman. Prepaid expenses should be ______ by the cost of the asset used during the accounting period. Traffic tickets. Revenue accounts are a subset of cash, and expense accounts are a subset of accounts payable. \text{Assets} & \quad & \text{Liabilities and Equity}\\ a business purchases equipment for $8,000 cash. A Yes, it is possible for a firm to do both. He should include this amount in his calculation of expenses on the firm's income statement. the liability created when a business collects cash from its customers before completing a service or delivering a product is called _____. Under cash-basis accounting, revenues are recorded when a company satisfies its performance obligations and expenses are recorded when incurred. Study with Quizlet and memorize flashcards containing terms like Which of the following statements about accrual-basis accounting is true? At the end of the year budget and permanent accounts are closed b. D How do the following circumstances sometimes lead to market failure? changing the method of valuing inventory ignores the principle of _________. which of the following statements regarding a periodic inventory system is incorrect? Credit Cash $12,420 A A. 5. which of the following inventory costing methods results in the highest value of ending inventory during a period of rising inventory costs? 2. The first payment is 40% of the annual premium, and each of the next two payments is 30% of the annual premium. \$201 + \$743 + \$6198 On June 30, an inventory of the supplies indicated only $1,000 on hand. A 9. Deferrals and Accruals. A sale and its associated receivable are recorded only when the order, shipping, and billing documents are all present. A cost is something used up to produce revenues in a particular accounting period. under which of the following categories would Accounts receivable appear? B Income statement accounts are temporary accounts, while balance sheet accounts are permanent accounts. c. Using the trend equation developed in part (b), forecast revenue in year 11. The company expects to use the equipment consistently for four years, and will record ________ depreciation in its December 31 financial statements. Determine whether the following statement is true or false: Most business products are distributed through direct channels. A a. **Required** The University of Michigan was founded on the 26 of August, 1817, as the Catholepistemiad, or the Catholcpistemiad Michigania, under an act of the Territory of Michigan.The corporate existence of the university had its rise in the Act of 1817, and has been continuous throughout all subsequent changes of its organic law. In this situation, both ________ accounting and GAAP require that Paul's recognize the employees' total salary expense in Maple Leaf's employees earn a normal weekly wage of $18,000 during a five-day work week. Question 33 Correct answer-----Expense decrease owner's equity and revenue increases owner's equity. ), Which of the following would be referred to as "accruals?" b. a. Appropriations. If it is in accordance with the government's policies, which of the following budgetary accounts can remain open at the fiscal year-end? C The adjusting entry for a prepaid expense includes a debit to a(n) ______ account and a credit to a(n) ____ account. B quarterly. An accrual results when ____________ and a deferral results when 8. Group of answer choices. a. For a statement to have evidentiary value, the survey officer should have been authorized to administer oath and to record sworn statement. B The project was completed on December 31 with payment due in 30 days. Lorna just finished compiling her company's income statement for the month ended March 31. advance cash payments of future expenses are called _________. Classify the term below into one of the following If Innovative's accounting staff recognizes all revenue related to the Mega project in December, which of the following statements is accurate? Motor vehicle fuel taxes restricted for road repair. a. At December 31, 2019, GolfWorld should make the following adjustment: A. Debit Sales Revenue by $3,750 and credit Unearned Sales Revenue by $3,750. What adjusting entry should be made on June 30? C Residential trash disposal. Which of the following is an example of a deferral? Interest Expense $825 A which of the following accounts is credited? in a perpetual inventory system, multiple performance obligations ____________. 6. In this situation, both Interest Payable $137.50 Adjusting entries help to ensure that all ______ are recorded in the period in which they are incurred. B B Innovative has violated the revenue recognition principle because this principle states that all revenue related to the Mega project be recognized in January. CS 33) Which of the following statements is true of revenues? Andy records an adjusting entry for deferred revenue. b. Accrual-basis accounting records both cash and noncash transactions when they occur. Norbert Inc. delivered goods and services during December. Term. cash-basis; April. Debit Interest Payable 140 These cash flows include borrowing from banks, repaying bank loans, receiving cash from stockholders for company stock, or paying dividends to stockholders. If a company using accrual-basis accounting wanted to overstate their income at the end of the fiscal year with increased shipments, the two accounts that would be most at risk are 24. The correct answer is that a partnership must have more than one owner. M 1. net income is understated. A) assets are something of value the business owns or controls. 5. Selected year-end financial statements of Cabot Corporation follow. The curve shows that the Law of Supply does not hold in this case. What amount will be shown for prepaid rent on the December 31, 2020 balance sheet? d. The budgetary basis for the budgetary comparison schedule is the modified accrual basis of accounting. Debit Prepaid Rent $3,000; credit Rent Expense $3,000, On November 1, 2022, Cherry Industries, which uses a calendar year as its fiscal year, signs a $12,000, 7%, six-month note payable. 1 / 59. in a perpetual inventory system, multiple performance obligations ____________. Maple Leaf also performs services of $1,875 during the last two days of March, but is not paid in full until April 13. Accounts Receivable. F C) quickly an asset may be converted into cash. 4. Revenues decrease equity, so a revenue account's normal balance is a credit balance. D When goods produced are homogeneous. Explain why. Fill in your Name and Click on the Next button to start Billing mock Test On December 31, 2019, Reinhardt prepared closing entries. (5) When should the net method be used to record sales revenue? \begin{matrix} C.More tax revenue is raised if a tax is collected from both consumers and producers. Movers' year-end financial statements as of December 31, 2019 will show: (Select all that apply. Yes, it is possible for a firm to do both. 6. monthly. Adjusting entries ensure that ______ balances are reported at amounts representing the economic benefits that remain at the end of the period. Which of the following transactions would normally be recorded as an asset when cash is paid? Human trafficking is the trade of humans for the purpose of forced labour, sexual slavery, or commercial sexual exploitation for the trafficker or others. Debit Rent Expense $18,000; credit Prepaid Rent $3,000 Income Statement for Year Ended December 31, 2015. D) Revenues increase equity, so a revenue account's normal balance is a credit balance. Supplies should be ______ and Supplies Expense should be ______ for the cost of supplies used up during the period. C In fact, the more a firm engages in earnings management practices in order to smooth out its revenues, expenses, gains, and/or losses, the higher its quality of earnings will be. $2,500 \text{Plant assets, net} \ldots\ldots\ldots & \text{153,300} & \text{Total liabilities and equity}\ldots\ldots\ldots & \text{\$240,200}\\ The post-closing trial balance checks that total __________ equal _________ correct at the end of the period. C Payment is expected during the first week of January. 2 Quiz, Fundamentals of Financial Management, Concise Edition, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Alterations in the Integumentary System Hw. A bill was mailed to the client on December 30. the company received the client's check by mail on January 5. When goods or services are received. <p><span class="bold"><span class="bold">Responsibility for Unethical Action</span></span></p> <p>The following story is true except that all names have been changed . Initially a prepayment for items such as rent or insurance are recorded as assets and later are recorded as a(n) __________ in the period the benefit expires. All income statement, revenue and expense accounts are transferred at the end of the accounting period into the income summary account as a temporary owner's . debit Supplies $900; credit Supplies Expense, $900 In recording an accrual adjusting entry to account for revenues earned but not yet collected, ______. (5) What does the phrase, "Revenue is recognized at the point of sale" mean? got it correct. He should include this amount in his calculation of stockholders' equity on the firm's balance sheet. ACCOUNTING FINAL REVIEW. 2. Which of the following is the correct journal entry to record the budget? b. Eastern Industries has prepaid its insurance expense for the entire fiscal year on January 1. Eighty percent of the toys sold in the United States are manufactured in China. spread the insurance expense evenly over twelve months. (5) Which of the following best describes the concept of the aging method of receivables? Meadows Manufacturing has a March 15th year-end date. Accounts Payable D Not recorded because it is a projection and not yet known. Meadows Manufacturing follows the accrual basis. Debit Notes Payable $12,420 C Amounts received from issued stock are reported on the income statement. it is used in the operations of a business. Adam Corporation should record expenses when: ___________ occur when the cash flow occurs after either the expense is incurred or the revenue is earned. G It does not include enterprise, permannet funds, etc so option . A. what is the term used for the difference between the Equipment account and the Accumulated Depreciation-Equipment account. In addition, Reinhardt paid $4,000 of dividends during 2019. 7. cash-basis; May. C An adjusted trial balance is created after d. Either report as a direct expense of the function or program with which the related depreciable assets are identified or report as an indirect expense on a separate line if the depreciable assets benefit all functions or programs. a. A Which of the following is an acceptable method of reporting depreciation expense for depreciable assets used by governmental activities? G $3,700. cash-basis accounting and GAAP demand that Fine recognize all revenue related to the project in December. 5. Contracts need to be legally enforceable to be considered under ASC Topic 606. b. The company should debit Accounts Receivable for $500 and credit Service Revenue for $500. Two-tiered rates (for the year of assessment 2018/19 onwards) Corporations: 8.25% on assessable profits up to $2,000,000; and 16.5% on any part of assessable profits over $2,000,000. Minefield will pay for each year of services on the first day of each service year, starting with September 1, 2019. A During the 2016 accounting period, the company had (1) net cash inflow from operating activities of$15,600, (2) net cash outflow for investing activities of $23,000, and (3) net cash outflow from financing activities of$4,500. 33) Which of the following statements is true of revenues? c. Expenses minus program revenues equals net (expense) revenue. Operating grants that can be used at the . 1. \text{Cash}\ldots\ldots\ldots & \text{\$ 10,000} & \text{Accounts payable} & \text{\$ 17,500}\\ Acme Bulb Company developed the quality control chart showing the test results for light bulbs. In an adjusting entry for expenses incurred but not yet paid ______. Which of the following statements best defines financial statements? B) amounts paid to make the asset ready for its intended use, A) represents a credit relationship with another company or governmental entity, and typically pays interest for a fixed period. Federal community development block grant. A. B) Revenue is calculated by dividing the price per unit by the number of units sold. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy . Sales and Accounts Receivable. b. Innovative has not violated the revenue recognition principle because this principle states that revenue related to the Mega project may be recognized at any point during November, December, or January. Credit Cash $12,420 Which of the following statements is TRUE of revenues? d. When beginning and ending inventories are each 50 percent complete. (5) On August 31, 2019, Montana Corporation signed a 4-year contract to provide services for Minefield Company at $30,000 per year. P D) usually reported in the notes to the financial statements. B)Decrease assets and decrease liabilities. $1,200. To estimate the amount of bad debt expense based on an aging of accounts receivable. D C. Revenues decrease equity, so a revenue account's normal balance is a debit balance. D 3. (Select all that apply. 8. Which of the following explains the process of depreciation? Imagine if you c Which of the following has an asset-expense relationship? B. c. No effect. C A Negative externalities c. Resource immobility. a. Why or why not? I accrual-basis accounting and GAAP demand that Fine recognize all revenue related to the project in December. b. B) cash paid for purchase of new machinery. 3. overstate net income and understate assets. The sale of merchandise for cash on December 30. B) it is shown as a contra account related to accounts receivable. When should supplies be recorded as an expense? Final answer. Which of the following pre-payments requires an adjusting entry at the end of the year? Formulate a linear programming problem that can be used to maximize River Brewery's monthly profit. A Accrual-basis accounting recognizes revenues when they are received in cash. If dividends for the year were $1,800, determine the ending retained earnings balance for the year. \begin{matrix} (3) Which of the following statements is true? Jones Financial Services, Inc. performed accounting services for a client in December. Which of the following statements is true for other financing uses but is not true for expenditures? (Enter only one word per blank.). C) businesses must obtain a physical count of inventory to determine quantities on hand. P $$ Testbank practice questions 11 88: resource managemem fn: decision making accessibility: keyboard navigation blooms: understana difficulty: eas:r leaming How much does your employer pay into the social security system on your behalf? What is the resulting impact on the financial statements? Unearned revenues are not related to cash collections. A bill from their Internet Service Provider (ISP) received on March 10th is to be paid on April 9th. Interest Payable $137.50. Service Revenue A Salaries and Wages Expense should have been accrued on December 31st, but the entry was not made. The cost of direct materials is fixed per unit but variable in total. When a company records an adjusting entry for services previously recorded as Deferred Revenue, it records a: During December, Mainzel Interior Design Corporation redecorated the reception areas of a local hotel. Which of the following is true of a partnership? C M $2,200. Which of the following statements is not true? increases are $7,400 and the total decreases are $4,900. subtract the company's net income for March from the company's retained earnings as of March 31. A (Enter only one word.). Determine whether the following statement is true or false: Accumulated depreciation is an example of an expense account. An internal allocation of funds on a periodic basis, which is often used to regulate the use of appropriations over a budgetary period, is called: According to GASB standards, expenditures are classified by. This type of budgetary control is achieved by reviewing: c. Appropriations minus the sum of expenditures and outstanding encumbrances. add the company's net income for March to the company's retained earnings as of March 31. Under the cash basis of accounting Eastern will Decide whether each of the following statements makes sense (or is clearly true) or does not make sense (or is clearly false). A When determining taxable property for the purpose of the property tax levy, which of the following would likely be excluded from the calculation? d. Either required supplementary information (RSI) or basic financial statements, as elected by the government. 8. [8] D (5) Which of the following best describes the objective of estimating bad debt expense with the percentage of credit sales method? (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $48,900; total assets,$189,400; common stock, $90,000; and retained earnings,$22,748.) C The financial statement that shows the financial position of a company at a point in time assets=liabilities+stockholder's equity cash, receivables, supplies, equipment, accounts payable, notes payable, common stock, retained earnings, the accumulation of earnings retained in the business during the current accounting period with that of prior periods beginning retained earnings+common stock-dividends*net income from the income statement, dividends are amounts distributed this period, activities that cause increases and decreases in cash during the current accounting period, these cash flows arise directly from running the business to earn profit they include cash received from selling apps and services, and cash paid for wages, advertising, rent, insurance, supplies,etc, These cash flows arise from buying and selling productive resources with long lives (such as buildings, land, equipment, and software), purchasing investments, and lending to others. A. b. A Interest Payable $825 9. D b. C Pakistan is the 33rd-largest country in the world . preparing all deferral entries. A (5) The aging method is closely related to the, (5) The percentage of credit sales approach is closely related to the, (5) The process by which firms package factored receivables as financial instruments or securities and sell them to investors is known as. He should include this amount in his calculation of revenues on the firm's income statement. D.The same tax revenue is raised regardless of whether the government collects the tax from consumers or producers. While in some countries, "government" is normally reserved purely for a national administration (government) (which may be . B Which of the following is a true statement? C Debit Notes Payable $12,000 \text{Total assets} \ldots\ldots\ldots & \text{\$240,200}\\ Yes, it is possible for a firm to do both because there is no relationship between a firm's quality of earnings and its choice to engage in earnings management practices. : 11 The seven-syllable Catholepistemiad was a mish-mash of Latin and . a. 2. B Salaries and Wages Expense and Salaries and Wages Payable Credit Cash $12,420. 3. which of the following liabilities is created when a company receives cash for services to be provided in the future? A. C) may require the creation of an asset account . B An adjusted trial balance shows total expenses of $24,000 and service revenue of $28,000. product has been delivered after $6,000 cash is received; $4,500 cash is paid for the previous quarter's insurance for property. d. When goods or services are ordered. D) the various inventory costing methods are not used in a periodic inventory system. Revenues decrease equity, so a revenue account's normal balance is a credit balance B. An adjusting entry for accrued expenses involves: (Select all that apply.). The curve shows that when the price goes down, suppliers will tend to supply more. C) Revenues increase equity, so a revenue account's normal balance is a debit balance. Income from space rented to a not-for-profit organization. B) represent one distinct performance obligation. Rent for the 3 months totals $3,600. liquidity is a measure of how ____________. B)Total revenues during the year equal . A)The company has issued $60,000 of common stock. 4. a business makes a cash payment to a supplier on account for office supplies that were purchased earlier. -Revenues are the amounts a business charges its customers for services it provides or goods it sells to them. which of the following statements about franchises is correct? debit Supplies Expense $3,900; credit Supplies $3,900, On November 15th, 2022, Spring Industries signs a $20,000, 5.5%, nine-month note payable. Sales and use taxes levied by the government. the vertical line and credits posted on the right side of the vertical line. QP Corp. has a beginning retained earnings balance of $16,000. How do temporary accounts differ from permanent accounts? (Enter one word per blank). (5) Food To Go is a local catering service. accrual-basis; May. A On November 1, 2019, Movers, Inc., paid $24,000 for 2 years' rent beginning on November 1. B The entry is an accrual of $3,000 in Wage and Salary Expense. C C Accrual-basis accounting recognizes expenses when they are incurred. Which of the following statements is true about revenue? Health and Welfare. Expert Answer. which of the following is an example of debt securities? At the end of March, Paul's Painting hired five temporary employees to work on a project that began on April 5 and ended on April 28. $$ which of the following accounts would appear in the balance sheet debit column of the worksheet? no journal entries are required for the reconciling items on the bank side because ___________. Net (expense) revenue plus general revenues equals change in net position. Spruce City's finance department recorded the recently adopted General Fund budget at the beginning of the current fiscal year. The accounting basis that records revenues in the period that goods and services are provided to customers is referred to as. In fact, any attempts to engage in earnings management practices of any kind automatically decrease a firm's quality of earnings. Payments by citizens for use of the city pool. B) Revenues decrease equity, so a revenue account's normal balance is a debit balance. B Under cash-basis accounting, revenues are recorded when earned and expenses are recorded when incurred. A. A Q: revenues ew less than expenses, what . C)No net effect to the accounting equation. Accident investigation. C Which of the following statements describes the effect that adjusting entries may have on liabilities? c. Budgetary Fund Balance. Amounts paid out as dividends are not expenses. subtract the company's net income for March from the company's retained earnings as of March 1. 2- Which of the following causes a . c. The Actual column is required to be presented using the government's budgetary basis of accounting. A. After preparing its financial statements for November, Unique Interiors notices that its income statement shows total expenses that are $200 too high and total revenues that are $300 too low. B Amounts received from issuing stock are revenues. A They received their paychecks on January 2, 2017. which of the following accounts should appear on the income statement for the year ended December 31, 2016?