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Financial statements are typically prepared in the following order:


A) Balance sheet, statement of retained earnings, income statement.
B) Statement of retained earnings, balance sheet, income statement.
C) Income statement, balance sheet, statement of retained earnings.
D) Income statement, statement of retained earnings, balance sheet.
E) Balance sheet, income statement, statement of retained earnings.

F) B) and E)
G) B) and C)

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Match the following definitions with the appropriate term:

Premises
Statements that show the effects of proposed transactions as if the transactions had already occurred.
Entries recorded at the end of each accounting period to transfer end-of-period balances in revenue, expense and dividends accounts to retained earnings.
A spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted trial balance and financial statements.
The time span from when cash is used to acquire goods and services until cash is received from the sale of those goods and services.
Accounts that are used to record transactions and events for one accounting period only; they include revenues, expenses and dividends.
Accounts that reflect on activities related to one or more future periods; they include all balance sheet accounts.
Recurring steps performed each accounting period, starting with analyzing and recording of transactions in the journal and continuing through the post-closing trial balance.
Analyses and other informal reports prepared by accountants when organizing the information presented in reports and financial statements.
A list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.
A temporary account used only in the closing process and to where the balances of revenue and expense accounts are transferred.
Responses
Working papers
Operating cycle
Income summary
Work sheet
Post-closing trial balance
Accounting cycle
Closing entries
Pro forma
Permanent accounts
Temporary accounts

Correct Answer

Statements that show the effects of proposed transactions as if the transactions had already occurred.
Entries recorded at the end of each accounting period to transfer end-of-period balances in revenue, expense and dividends accounts to retained earnings.
A spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted trial balance and financial statements.
The time span from when cash is used to acquire goods and services until cash is received from the sale of those goods and services.
Accounts that are used to record transactions and events for one accounting period only; they include revenues, expenses and dividends.
Accounts that reflect on activities related to one or more future periods; they include all balance sheet accounts.
Recurring steps performed each accounting period, starting with analyzing and recording of transactions in the journal and continuing through the post-closing trial balance.
Analyses and other informal reports prepared by accountants when organizing the information presented in reports and financial statements.
A list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.
A temporary account used only in the closing process and to where the balances of revenue and expense accounts are transferred.

On June 30, 2014, Apricot Co. paid $5,000 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses in asset accounts at the time of cash payment. On June 30, 2014 Apricot should record:


A) A credit to an expense for $5,000.
B) A debit to an expense for $5,000.
C) A credit to a prepaid expense for $5,000.
D) A debit to a prepaid expense for $5,000.
E) A debit to Cash for $5,000.

F) A) and B)
G) None of the above

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A classified balance sheet organizes assets and liabilities into important subgroups that are not found on an unclassified balance sheet.

A) True
B) False

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The accrual basis of accounting:


A) Is generally accepted for external reporting since it is more useful for most business decisions.
B) Is flawed because it gives complete information about cash flows.
C) Recognizes revenues when received in cash.
D) Recognizes expenses when paid in cash.
E) Eliminates the need for adjusting entries at the end of each period.

F) A) and D)
G) None of the above

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A(n) _______________________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

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unadjusted...

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Awn Services paid a dividend of $8,700 during the current year. The entry to close the dividend account at the end of the year is:


A)  Dividends 8,700 Cash 8,700\begin{array} { | c | r | r | } \hline \text { Dividends } & 8,700 & \\\hline \text { Cash } & & 8,700 \\\hline\end{array}
B)  Retained earnings 8,700 Dividends 8,700\begin{array} { | c | c | c | } \hline \text { Retained earnings } & \mathbf { 8 } , 700 & \\\hline \text { Dividends } & & \mathbf { 8 , 7 0 0 } \\\hline\end{array}
C)  Dividends 8,700 Retained earnings 8,700\begin{array} { | c | r | r | } \hline \text { Dividends } & 8,700 & \\\hline \text { Retained earnings } & & 8,700 \\\hline\end{array}
D)  Common Stock 8,700 Dividends 8,700\begin{array} { | c | c | c | } \hline \text { Common Stock } & 8,700 & \\\hline \text { Dividends } & & 8,700 \\\hline\end{array}
E)  Income Sumnuary 8,700 Retained earnings 8,700\begin{array} { | c | c | c | } \hline \text { Income Sumnuary } & 8,700 & \\\hline \text { Retained earnings } & & 8,700 \\\hline\end{array}

F) A) and D)
G) A) and C)

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Classified balance sheets commonly include the following categories. Indicate the typical classification of each item listed below by placing the correct balance sheet category in the blank space next to the item. Classified balance sheets commonly include the following categories. Indicate the typical classification of each item listed below by placing the correct balance sheet category in the blank space next to the item.

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Describe a worksheet and explain why it is useful.

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A worksheet is a useful tool for organiz...

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The following information is available for the Wooden Company: The following information is available for the Wooden Company: From the information provided, calculate Wooden's profit margin ratio for each of the three years. Comment on the results, assuming that the industry average for the profit margin ratio is 6% for each of the three years. From the information provided, calculate Wooden's profit margin ratio for each of the three years. Comment on the results, assuming that the industry average for the profit margin ratio is 6% for each of the three years.

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blured image Analysis comment: The profit margin has...

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Profit margin is calculated by dividing net sales by net income.

A) True
B) False

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The time period assumption presumes that an organization's activities can be divided into specific time periods.

A) True
B) False

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Closing entries are normally entered in the general journal and then posted to the work sheet.

A) True
B) False

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Classified balance sheets commonly include the following categories.Indicate the typical classification of each item listed below

Premises
Prepaid insurance
Common stock
Buildings used in business operations
Wages payable
Accounts payable
Retained earnings
Current portion of long-term debt
Land held for future plant expansion
Cash
Long-term note payable
Accounts receivable
Patents
Responses
Plant assests
Equity
Investments
Long-term liabilities
Current assets
Current liabilities
Intangible assets

Correct Answer

Prepaid insurance
Common stock
Buildings used in business operations
Wages payable
Accounts payable
Retained earnings
Current portion of long-term debt
Land held for future plant expansion
Cash
Long-term note payable
Accounts receivable
Patents

Plant assets and intangible assets are usually long-term assets that are used to produce or sell products and services.

A) True
B) False

Correct Answer

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Match the following transactions with each of the following types of accounts .

Premises
Used to record revenue earned but not received.
Used to record wages owed, but not paid.
Used to record expiration of prepaid insurance.
Used to record revenue received in advance.
Responses
Accrued expense
Accrued revenue
Prepaid expense
Unearned revenue

Correct Answer

Used to record revenue earned but not received.
Used to record wages owed, but not paid.
Used to record expiration of prepaid insurance.
Used to record revenue received in advance.

A post-closing trial balance includes:


A) All ledger accounts with balances, none of which can be temporary accounts.
B) All ledger accounts with balances, none of which can be permanent accounts.
C) All ledger accounts with balances, which include some temporary and some permanent accounts.
D) Only revenue and expense accounts.
E) Only asset accounts.

F) A) and D)
G) A) and E)

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Expenses incurred but unpaid that are recorded during the adjusting process with a debit to an expense and a credit to a liability are:


A) Intangible expenses
B) Prepaid expenses
C) Unearned expenses
D) Net expenses
E) Accrued expenses

F) B) and E)
G) A) and B)

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Based on the following information, determine the current assets, assuming all accounts have a normal balance? Based on the following information, determine the current assets, assuming all accounts have a normal balance? A) $74,800 B) $37,647 C) $60,265 D) $23,112 E) $60,953


A) $74,800
B) $37,647
C) $60,265
D) $23,112
E) $60,953

F) A) and E)
G) None of the above

Correct Answer

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Throughout an accounting period, the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees. What is the end-of-period adjusting entry to record the portion of those fees that have been earned?


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.

F) A) and C)
G) A) and E)

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