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Exam 3: The Accounting Cycle: End of the Period

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Question 21

True/False

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The adjusting entry for a deferred revenue always includes a debit to an asset account and a credit to a revenue account.The debit is to a liability account.

A) True
B) False

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Question 22

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The Retained Earnings account had a beginning credit balance of $26,000.During the period,the business had a net loss $12,000,and the company paid dividends of $8,000.The ending balance in the Retained Earnings account is:

A) $6,000.
B) $30,000.
C) $22,000.

D) None of the above
E) All of the above

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Question 23

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Prepayments occur when:

Long-term assets are assets that provide a benefit to a company for more than one year.

The concept of matching in accounting refers to:

If the beginning balance of Retained Earnings equals $10,000,net income for the year equals $6,000,and dividends for the year equal $2,000,then the ending balance of Retained Earnings equals $18,000.Ending Retained Earnings = beginning Retained Earnings ($10,000)+ net income ($6,000)- dividends ($2,000)= $14,000.

Under cash-basis accounting,if a company provides services to a customer in the current year but does not collect cash until the following year,the company should report the revenue in the current year.Under cash-basis accounting,revenues are recorded at the time cash is collected.

Which of the following best describes the information reported in the income statement?

In the statement of stockholders' equity,the balance of Retained Earnings increased by $32,000.The company declared a dividend of $10,000 during the year.What was the net income for the year?

Adjusting entries are not necessary when cash is paid at the same time expenses are incurred.

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

Adjusting entries are unnecessary for transactions that do not involve revenue or expense activities,such as selling common stock or paying dividends.

Adjusting entries are primarily needed for:

Which of the following concepts suggests that expenses should be recognized in the same period as the revenues they help to generate?

Consider the following items: Land Accounts Receivable Notes Payable (due in three years) Accounts Payable Retained Earnings Prepaid Rent Deferred Revenue Buildings Notes Payable (due in six months) Equipment How many of the items listed above are generally long-term assets?

When a company prepares closing entries,which one of the following is NOT a correct closing entry?

In the statement of stockholders' equity,Retained Earnings had a beginning balance of $60,000.During the period,the company reports a net loss of $10,000 and net cash outflows of $15,000.The ending balance in the Retained Earnings account is:

The adjusting entry for an accrued revenue always includes a debit to a liability account and a credit to a revenue account.The debit is to an asset account.

Making insurance payments in advance is an example of a(n) :

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.