ACT 2200 Lecture Notes - Lecture 3: General Ledger, Income Statement, Promissory Note

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yellowcattle191

29 May 2017

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It"s only logical, then, that in the same period we should also record all expenses incurred to generate that revenue. The result is a measure net income that matches current period revenues and expenses. Accruals occur when the cash flow occurs after either the expense is incurred or the revenue is earned. When a company has incurred an expense but hasn"t yet paid cash or recorded an obligation to pay. in the case of accrued expenses, we paid cash after we incurred the expense and recorded a liability. The adjusting entry for an accrued revenue always includes a debit to an asset account (increase an asset) and a credit to a revenue account (increase a revenue). A list of all accounts and their balances after we have updated account balances for adjusting entries. Entries used to record events that occur during the period but that have not yet been recorded by the end of that period.

Related Questions

questions:

1. Generally, revenue from sales should be recognized at a pointwhen

Answer

management decides it is appropriate to do so.

the product is available for sale to the ultimate consumer.

the entire amount receivable has been collected from thecustomer and there remains no further warranty liability.

none of these.

2. What is the general approach as to when product costs arerecognized as expenses?

Answer

In the period when the expenses are paid.

In the period when the expenses are incurred.

In the period when the vendor invoice is received.

In the period when the related revenue is recognized.

3. Recognition of expense related to amortization of anintangible asset illustrates which principle of accounting?

Answer

Expense recognition.

Full disclosure.

Revenue recognition.

Historical cost.

4. Which accounting assumption or principle is being violated ifa company is a party to major litigation that it may lose anddecides not to include the information in the financial statementsbecause it may have a negative impact on the company's stockprice?

Answer

Full disclosure.

Going concern.

Historical cost.

Expense recognition.

5. Where is materiality not used in providingfinancial information?

Answer

Applying the revenue recognition principle.

Determining what items to include in the financialstatements.

Applying the going concern assumption.

Determining the level of disclosure.

apricotcrocodile918

1. Which of the following identifies the proper order of theaccounting cycle?

A. Analyze, Journalize, Unadjusted Trial Balance

B. Analyze, Post, Unadjusted Trial Balance

C. Journalize, Post, Adjusted Trial Balance

D. Unadjusted Trial Balance, Adjusted Trial Balance, Close

E. Adjusted Trial Balance, Adjustments, Financial Statements

2. Interim financial statements refer to financial reports:

A. That cover less than one year, usually spanning one, three orsix-month periods

B. That are prepared before any adjustments have beenrecorded

C. That show the assets above the liabilities and theliabilities above the equity

D. Where revenues are reported on the income statement when cashis received and expenses are reported when cash is paid

E. Where the adjustment process is used to assign revenues tothe periods in which they are earned and to match expenses withrevenues

3. The accounting principle that requires revenue to be reportedwhen earned is the:

A. Matching principle

B. Revenue recognition principle

C. Time period principle

D. Accrual reporting principle

E. Going-concern principle

4. Adjusting entries:

A. Affect only income statement accounts

B. Affect only balance sheet accounts

C. Affect both income statement and balance sheet accounts

D. Affect only cash flow statement accounts

E. Affect only equity accounts

5. The system of preparing financial statements based onrecognizing revenues when the cash is received and reportingexpenses when the cash is paid is called:

A. Accrual basis accounting

B. Operating cycle accounting

C. Cash basis accounting

D. Revenue recognition accounting

E. Current basis accounting

6. If throughout an accounting period the fees for legalservices paid in advance by clients are recorded in an accountcalled Unearned Legal Fees, the end-of-period adjusting entry torecord the portion of those fees that has been earned is:

A. Debit Cash and credit Legal Fees Earned

B. Debit Cash and credit Unearned Legal Fees

C. Debit Unearned Legal Fees and credit Legal Fees Earned

D. Debit Legal Fees Earned and credit Unearned Legal Fees

E. Debit Unearned Legal Fees and credit Accounts Receivable

7. A company had no office supplies available at the beginningof the year. During the year, the company purchased $250 worth ofoffice supplies. On December 31, $75 worth of office suppliesremained. How much should the company report as office suppliesexpense for the year? A. $75 B. $125 C. $175 D. $250 E. $325 8. OnJanuary 1 a company purchased a five-year insurance policy for$1,800 with coverage starting immediately. If the purchase wasrecorded in the Prepaid Insurance account and the company recordsadjustments only at year-end, the adjusting entry at the end of thefirst year is:

A. Debit Prepaid Insurance, $1,800; credit Cash, $1,800

B. Debit Prepaid Insurance, $1,440; credit Insurance Expense,$1,440

C. Debit Prepaid Insurance, $360; credit Insurance Expense,$360

D. Debit Insurance Expense, $360; credit Prepaid Insurance,$360

E. Debit Insurance Expense, $360; credit Prepaid Insurance,$1,440

9. Unearned revenue is reported on the financial statementsas:

A. A revenue on the balance sheet

B. A liability on the balance sheet

C. An unearned revenue on the income statement

D. An asset on the balance sheet

E. An operating activity on the statement of cash flows

10. Which of the following assets is not depreciated?

A. Store fixtures

B. Computers

C. Land

D. Buildings

E. Vehicles

11. On April 30, 2011, a three-year insurance policy waspurchased for $18,000 with coverage to begin immediately. What isthe amount of insurance expense that would appear on the company'sincome statement for the year ended December 31, 2011? A. $500 B.$4,000 C. $6,000 D. $14,000 E. $18,000 12. Expenses incurred butunpaid that are recorded during the adjusting process with a debitto an expense and a credit to a liability are:

A. Intangible expenses

B. Prepaid expenses

C. Unearned expenses

D. Net expenses

E. Accrued expenses

13 The difference between the cost of an asset and theaccumulated depreciation for that asset is called

A. Depreciation Expense

B. Unearned Depreciation

C. Prepaid Depreciation

D. Depreciation Value

E. Book Value

14. A company purchased a new truck at a cost of $42,000 on July1, 2011. The truck is estimated to have a useful life of 6 yearsand a salvage value of $3,000. How much depreciation expense willbe recorded for the truck for the year ended December 31, 2011?

A. $3,250

B. $3,500

C. $4,000

D. $6,500

E. $7,000

15. A company's Office Supplies account shows a beginningbalance of $600 and an ending balance of $400. If office suppliesexpense for the year is $3,100, what amount of office supplies waspurchased during the period?

A. $2,700

B. $2,900

C. $3,300

D. $3,500

E. $3,700

chocolatereindeer731

HELP WITH THESE QUESTIONS!

1.Which basic principle of accounting states that assets areinitially recorded at the amounts paid to acquire the assets?

Select one:

A. Objectivity principle

B. Cost principle

C. Measuring unit concept

D. Going concern concept

E. None of the above

2.Urbana Company signed a one-year lease on April 1, 2016, andpaid the $22,800 total yearâs rent in advance. Urbana recorded thetransaction as a debit to Prepaid Rent and a credit toCash.

What adjusting entry should Urbana make on December 31, 2016 (noprevious adjustment has been made)?

Select one:

17,100

17,100

17,100

17,100

5,700

5,700

5,700

5,700

3.On January 1, 2016, Sirius Black Corporation's retainedearnings account had a balance of $1,570,000. During 2016 thecompany had revenues of $270,000 and expenses of $186,000. OnDecember 31, the companyâs retained earnings had a balance of$1,601,000.

Determine the amount of dividends paid during 2016.

Select one:

A. $85,000

B. $53,000

C. $26,500

D. $61,500

4.Which one of the following is not a reason for whichadjusting entries are made?

Select one:

A. To accrue expenses to reflect expenses incurred in the periodthat are not yet paid or recorded

B. To allocate the earned portion of unearned revenue to reflectrevenues earned during the period

C. To close the income statement accounts and prepare them forthe following year's activity

D. To allocate used or expired assets to reflect expensesincurred in the period

5.A trial balance that balances is useful because it indicateswith certainty that:

Select one:

A. All entries into accounts during the period were madecorrectly.

B. All accounts have normal balances.

C. Total debits in the general ledger equal total credits.

D. All of the above

viridiandolphin81

ACT 2200 Lecture Notes - Lecture 3: General Ledger, Income Statement, Promissory Note

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