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Exam 3: The Accounting Cycle: End of the Period

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Question 91

True/False

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After closing entries are posted to the accounts in the general ledger,all asset and liability accounts have a balance of zero.

A) True
B) False

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Question 92

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When the balance of the Unearned Revenue account decreases during an accounting period:

A) Accrual-basis revenues exceed cash collections from customers.
B) Accrual-basis expenses exceed cash collections from customers.
C) Accrual-basis revenues are less than cash collections from customers.
D) Accrual-basis net income is less than cash-basis net income.

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

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Question 93

Multiple Choice

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Which of the following is(are) true regarding the characteristics of adjusting entries?

A company lends $30,000 with 10% interest on May 1,2015.This amount plus interest is due on April 30,2016.Record the adjusting entry on December 31,2015.

Which of the following regarding adjusting entries is correct?

Which of the following accounting principles states that expenses are recognized in the same period as the revenues they help to generate?

A company pays its employees $5,600 every two weeks ($400/day).The current two-week pay period ends on December 26,2015,and employees are paid $5,600.The next two-week pay period ends on January 9,2016,and employees will be paid $5,600.Record the adjusting entry on December 31,2015.

A company purchases new equipment for $24,000 cash on August 1,2015.At the time of purchase,the equipment is expected to be used in operations for four years (48 months)and have no resale or scrap value at the end.The company depreciates the equipment evenly over the 48 months ($500/month).Record the adjusting entry for depreciation on December 31,2015.

On November 1,2015,a company receives $1,800 for services to be provided evenly over the next six months.The December 31,2015,adjusting entry for the company would include a credit to Unearned Revenue for $600.

The adjusted trial balance for Yondel Company at December 31,2015 is presented below: Prepare the closing entries for Yondel Company for the year ended December 31,2015.

Consider the following events for Sophia Incorporated: Under accrual-basis accounting,what is the appropriate day to record the expenses related to the sand volleyball camp?

Consider the following events for Betterment Incorporated: Under accrual-basis accounting,what is the appropriate day to record the revenues related to lawn services?

Which of the following statements are correct? For accrual-basis accounting: (1) record revenues when earned. (2) record expenses when cash is paid. For cash-basis accounting: (3) record revenue when cash is received. (4) record expenses when benefit is received.

A company pays $1,700 cash to employees for work performed during the month.Record the payment using (a)accrual-basis accounting and (b)cash-basis accounting.

Under cash-basis accounting,if costs associated with producing revenue in the current year are not paid in cash until the following year,the costs should be expensed in the following year.

Long-term liabilities are liabilities due in more than one year.

The year-end adjusted trial balance included the following account balances: Cash,$5,000;Equipment,$25,000;Accounts payable,$7,000;Common stock,$15,000;Retained earnings,$6,000;Dividends,$1,000;Service revenue,$18,000;Salaries expense,$9,000;and Utilities expense,$6,000.Prepare the post-closing trial balance.