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Exam 3: Adjusting Accounts and Preparing Financial Statements

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Question 31

True/False

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Adjusting entries are used to record the effects of internal economic (financial)transactions and events.

A) True
B) False

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Question 32

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Which of the following accounts would not be on the post closing trial balance?

A) Accounts Payable
B) Accounts Receivable
C) Common Stock
D) Dividends
E) Retained Earnings

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

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Question 33

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Statements that show the effects of proposed transactions as if the transactions had already occurred are called:

Kader Co.paid a total of $35,000 in dividends during the current year.The entry needed to close the dividends account is:

The _____________________ form of balance sheet lists the asset accounts on the left side and the liabilities and equity accounts on the right side.The ______________________ form of balance sheet lists items vertically with assets followed by liabilities then equity accounts.

Reebok's net income was $180,000; its total assets were $1,050,000; and its net sales were $3,500,000.Calculate the company's profit margin ratio.

Discuss how accrual accounting enhances the usefulness of financial statements.

The current portion of long-term debt is classified with the _________________________.

The recurring steps performed each accounting period,starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance,are referred to as the:

On December 31,the balance in the Prepaid Advertising account was $176,000,which is the remaining balance of a twelve-month advertising campaign purchased on August 31 in the current year.Assuming the cost is spread equally over each month how much did this advertising campaign cost in total?

Interim statements report a company's business activities for a 1-year period.

The Income Summary account is closed to the retained earnings account.

How is the current ratio calculated? How is it used to evaluate a company?

Adjusting entries are normally entered in the general journal prior to being posted to the work sheet.

On April 30,2011,a three-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31,2011?

A company's post-closing trial balance has a debit total of $475,000 and a credit total of $457,000.This indicates that __________________________.

What is the purpose of a post-closing trial balance?

Which of the following errors would cause the Balance Sheet columns of a work sheet to be out of balance?

Adjusting entries result in a better matching of revenues and expenses.

An expense account is normally closed by debiting Income Summary and crediting the expense account.