$$ \text{CABOT CORPORATION Balance Sheet December 31, 2017}\\ B)Total revenues during the year equal . B When a company records an adjusting entry for services previously recorded as Deferred Revenue, it records a: During December, Mainzel Interior Design Corporation redecorated the reception areas of a local hotel. O A. Credit Cash $12,420 In fact, the more a firm engages in earnings management practices in order to smooth out its revenues, expenses, gains, and/or losses, the higher its quality of earnings will be. Printing and postage. c. Expenses minus program revenues equals net (expense) revenue. Producing a barrel of ale requires $2\ \mathrm{lb}$ each of corn and hops. Accounts Payable Revenues increase equity, so a revenue account's normal . The adjusted balance for Prepaid Insurance at December 31, 20122, will be Determine whether the following statement is true or false: Accumulated depreciation is an example of an expense account. Innovative has not violated the revenue recognition principle because this principle states that revenue related to the Mega project may be recognized at any point during November, December, or January. ), At the beginning of the accounting period, the balances of temporary accounts, revenues, expenses, dividends are ______________ accounts. Effect: the substitution effect D) require the company to allocate the transaction price to each performance obligation. Most PCs manufactured in China use microprocessor chips . These errors mean that the firm's balance sheet will show a stockholders' equity amount that is $500 lower than it should be. C Debit Rent Expense $3,000; credit Prepaid Rent $3,000 Solve. A. A. Service Revenue D (5) Which one of the following statements is true if a company's collection period for accounts receivable is unacceptably long? On June 30, an inventory of the supplies indicated only $1,000 on hand. C It was determined that $2,200 of the Prepaid Insurance had expired. Which of the following pre-payments requires an adjusting entry at the end of the year? a. Arise from interfund transfers out. D \text{CABOT CORPORATION Income Statement For Year Ended December 31, 2017}\\ annually. C If a company using accrual-basis accounting wanted to overstate their income at the end of the fiscal year with increased shipments, the two accounts that would be most at risk are The curve shows that when the price goes down, suppliers will tend to supply more. How do temporary accounts differ from permanent accounts? The adjusted trial balance lists only the balance sheet accounts in a "debit" and "credit" format. A D) the owners of a corporation are called stockholders. Notes Payable $137.50 Inadequate competition b. got it correct. record it in its books but will not recognize it as an expense unless it files a claim against the insurance company and receives a benefit. which of the following statements about franchises is correct? They would record it as a credit to revenue and debit to cash on April 30. P At year-end, companies that utilize accrual-based accounting systems complete the measurement process through, The statement of stockholders' equity includes these amounts: select all. Under cash-basis accounting, revenues are recorded when earned and expenses are recorded when incurred. Spruce City's finance department recorded the recently adopted General Fund budget at the beginning of the current fiscal year. Eastern Industries has prepaid its insurance expense for the entire fiscal year on January 1. A. Neverthe gross method should always be used. a balance sheet that lists the assets above the liabilities and stockholders' equity sections is a(n) ________ balance sheet. Course Hero is not sponsored or endorsed by any college or university. D Gold Dome Report - Legislative Day 22. When an obligation is incurred that will be paid from current financial resources. B) Revenue is calculated by dividing the price per unit by the number of units sold. \begin{matrix} InterCo) assets and liabilities, equity, income, expenses and cash flows not forgetting that "profits or losses . A) assets are something of value the business owns or controls. The rent agreements on both buildings went into effect on the dates the rents were prepaid. \text{Assets} & \quad & \text{Liabilities and Equity}\\ 7. The company should debit Accounts Receivable for $500 and credit Service Revenue for $500. (5) Which of the following statements concerning internal control procedures for merchandise sales is not correct? Local government is a generic term for the lowest tiers of public administration within a particular sovereign state.This particular usage of the word government refers specifically to a level of administration that is both geographically localised and has limited powers. D They would record it as a debit to revenue on April 30 and a credit to revenue on May 15. A. Fund, function or program, organization unit, activity, character, and object. 4. At the end of the year only permanent accounts are closed c. . Which of the following statements is true of revenues? a. Record Wage Expense that is incurred and paid in the same period. which of the following is included in the cost of a plant asset? A 5. $2,200. Which of the following statements is true of revenues? 9. You selected C : understate assets, net income, and stockholders' equity. They would record it as a credit to revenue and debit to cash on May 15. Her next step in preparing the company's financial statements should be to A Lorna just finished compiling her company's income statement for the month ended March 31. B)Decrease assets and decrease liabilities. A debt that a business owes is called __________. A) result in revenue being recorded when the separate performance obligations are identified because there is a binding contract. Adjusting entries are necessary because timing differences exist between when a revenue or expense is recognized and cash is received or paid. \text{Operating expenses} \ldots\ldots\ldots & \text{98,600}\\ daily. B 3 Budgetary Account, BA 530 - Financial Management: Ch. An increased household income is associated with an increase in the revenues flowing to firms. monthly. Eighty percent of the toys sold in the United States are manufactured in China. D Accrual-basis accounting is optional under . P B Taggert Company paid $1,800 for a 6-month insurance premium on December 1. 3. Using a very aggressive marketing strategy they have been able to increase their annual revenue by approximately $\$10$ million over the past 10 years. On January 1, 2016, Palmer, a fast-food company, had a balance in its Cash account of $32,000. Comment on the appropriateness of a linear trend. (Select all that apply.). (Enter one word per blank. understate assets, net income, and stockholders' equity. Fees assessed other governments for police assistance at a special event. What effect will these errors have on Unique's balance sheet for the month, assuming all other account balances listed on that sheet are correct? Accounts Receivable. The following income statement and balance sheet information are available for two firms, Firm A and Firm B. 7. B) Revenues decrease equity, so a revenue account's normal balance is a debit balance. (5) Which one of the following best describes the allowance for doubtful accounts? c. Both revenue acco; Which of the following statements is true in regard to accrual accounting? But increased competition has slowed their growth rate in the past few years. 3. debit Supplies $2,100; credit Supplies Expense $2,100 B A. The post-closing trial balance helps to verify that: (Select all that apply.). They received their paychecks on January 2, 2017. which of the following accounts should appear on the income statement for the year ended December 31, 2016? Revenue accounts are a subset of assets, and expense accounts are a subset of liabilities. Initially a prepayment for items such as rent or insurance are recorded as assets and later are recorded as a(n) __________ in the period the benefit expires. A. P a. Under which of the ff. What amount will be shown for prepaid rent on the December 31, 2020 balance sheet? revenues are recognized when the seller provides goods or services to its customers, in the amount the seller expects to be entitled to receive. which of the following is the correct order of subtotals that appear on a multi-step income statement? A. D An accrual results when ____________ and a deferral results when D a. Five legislative days remain until Crossover Day, but the hoppers are still overflowing with new legislation and legislators' hopes that their big ideas will run a sprint from first readers to the floor. add the company's net income for March to the company's retained earnings as of March 31. Which of the following statements describes the effect that adjusting entries may have on liabilities? C 1. The sale of merchandise for cash on December 30. A A bill was mailed to the client on December 30. the company received the client's check by mail on January 5. C) depreciation is recorded on all plant assets. 33) Which of the following statements is true of revenues? 4. Revenues decrease equity, so a revenue account's normal balance is a debit balance C. Revenues increase equity, so a revenue account's normal balance is a credit balance Net income is overstated cost of merchandise sold is overstated, or merchandise inventory reported on the balance sheet is overstated, which has a direct relationship with gross profit and net income. A. Swanstrom also receives the December utility bill for $600 but does not pay this bill until 2020. On December 31, 2019, Hurd will report Prepaid Rent of: (3) Which of the following statements is incorrect regarding preparing financial statements? Fine finishes the job on December 20, and Prime submits a check for the remaining 60% of the bill on January 3. Debit Interest Expense 280 in millions of dollars, for the previous 10 years is shown. Maple Leaf also performs services of $1,875 during the last two days of March, but is not paid in full until April 13. A. dividing operating income by (net) sales. A cost is something used up to produce revenues in a particular accounting period. D Minefield will pay for each year of services on the first day of each service year, starting with September 1, 2019. stockholder's equity is understated. In addition, Reinhardt paid $4,000 of dividends during 2019. Decide whether each of the following statements makes sense (or is clearly true) or does not make sense (or is clearly false). A Donation of bonds to the city by a wealthy resident. Investment earnings restricted for art preservation. Unearned revenues are rarely reported in financial statements. the ability of a company to pay its debts can be evaluated by using the ________. b. d. When beginning and ending inventories are each 50 percent complete. overstated; $16,125. which of the following statements is true? Which of the following transactions are examples of prepayments that will require an adjustment at the end of the accounting period on December 31? (Enter one word per blank). c. The Actual column is required to be presented using the government's budgetary basis of accounting. Debit Rent Expense $18,000; credit Prepaid Rent $3,000 Which of the following is an adjusting entry that should be made by the company? in a periodic inventory system, _________. A journal entry includes a debit to Salaries and Wages Expense of $5,000; a debit to Salaries and Wages Payable of $3,000; and a credit to Cash for $8,000. When goods produced are homogeneous. Give examples in your answer. $2,500 9. S. TUDENT FEES. $$ b. Which of the following accounts is debited? Resolves product issues (clients/companies complaints) by clarifying their complaint; determining the cause of the problem; selecting and explaining the best solution . which of the following is true of the balance sheet presentation of the Allowance for Bad Debts? C) The terms "revenue" and "profit" can be used interchangeably. Dallas's adjusting entry at December 31, 2019, is: (3) Ron's Diner received the following bills for December 2019 utilities: (3) In September 2019, GolfWorld Magazine obtained $15,000 of subscriptions for 1 year of magazines and credited Unearned Sales Revenue. b. On November 1, 2019, Movers, Inc., paid $24,000 for 2 years' rent beginning on November 1. Which of the following statements about accrual-basis accounting is true? (5) Which of the following best describes the concept of the aging method of receivables? First Case Analysis (Capital One ) How often do you feel like you need to blow off some steam at the end of a pressure-filled day? Closing entries and a post-closing trial balance are steps in the accounting cycle that occur If the ultimate consumer is a business that collects and pays to the government VAT on . \text{Gross profit}\ldots\ldots\ldots & \text{151,350}\\ a customer has been billed before $6,000 cash is received; $4,500 cash is paid for next quarter's insurance for property. What is a single subject research methodology in behavioral sciences? Liabilities are economic resources that are expected to benefit the business in the future. B Why or why not? which of the following accounts is credited? debit Supplies $1,000; credit Supplies Expense $1,000 2. ACCOUNTING FINAL REVIEW. The project was completed on December 31 with payment due in 30 days. P Dictates that companies record assets at their cost. Fundamentals of Financial Management, Concise Edition, Daniel F Viele, David H Marshall, Wayne W McManus, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Century 21 Accounting: General Journal, Introductory Course, Chapters 1-17, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman. Debit Interest Payable 140 4. A Companies using the accrual basis of accounting could overstate their income at fiscal year-end by increased shipments. LP b. A company purchased office supplies costing $3,000 and debited Supplies for the full amount. 1. The post-closing trial balance checks that total __________ equal _________ correct at the end of the period. changing the method of valuing inventory ignores the principle of _________. Retained Earnings The entry reflects total wage and salary expense this period of $8,000. $$ principal amount plus interest due at maturity. Journalize the entry to accrue interest on December 31st, 2022. What is free cash flow, and how is it computed. An adjusted trial balance shows total expenses of $24,000 and service revenue of $28,000. A Conceptually, when should Food To Go recognize revenue from its catering service? Police Department. B Swanstrom also receives the December utility bill for $600 but does not pay this bill until 2020 . 8. 2. 4. Payments by citizens for use of the city pool. (Select all that apply.). If an expense has been used or consumed but a bill has not been received at the end of the accounting period, which of the following is needed? Compute the following: (1) current ratio, (2) acid-test ratio, (3) days sales uncollected, (4) inventory turnover, (5) days sales in inventory, (6) debt-to-equity ratio, (7) times interest earned, (8) profit margin ratio, (9) total asset turnover, (10) return on total assets, and (11) return on common stockholders equity. [1] [2] This may encompass providing a spouse in the context of forced marriage, [3] [4] [5] or the extraction of organs or tissues, [6] [7] including for surrogacy and ova removal. The adjusting entry for a deferred revenue includes a debit to a(n) _____________ account and a credit to a(n) _____________ account. How do adjusting entries for accrued expenses affect liabilities and expenses? Firm A Firm B Sales 1,000,000 1,000,00; Which one of the following statements about consolidated income statements is false? The gross profit method is a complicated method to use in practice. (All sales were on credit; selected balance sheet amounts at December 31, 2016, were inventory, $48,900; total assets,$189,400; common stock, $90,000; and retained earnings,$22,748.) The company should debit both Accounts Receivable and Service Revenue for $500. Debit Notes Payable $12,000 A Imagine if you c B B \text{Total assets} \ldots\ldots\ldots & \text{\$240,200}\\ A. Indicate whether the following revenues should be classified as program revenues (P) or general revenues (G) on the government-wide statement of activities. An adjusted trial balance is created after conditions will the fi rst-in, fi rst-out (FIFO) methdd of process costing produce the same cost of goods manufactured as the weighted-average method? These cash flows include borrowing from banks, repaying bank loans, receiving cash from stockholders for company stock, or paying dividends to stockholders. B Accounts Payable is a(n) __________ account and has a normal ______ balance. C)No net effect to the accounting equation. 3. OU Norbert Inc. delivered goods and services during December. To complete the measurement process, companies need to update balances of assets, liabilities, revenues and expenses for ______________ entries. C Which of the following accounts neither increases nor decreases the fund balance of the General Fund during the fiscal year? Expert Answer. 1. P A business purchases $1000 of office supplies on account. 6. C Salaries and Wages Expense and Salaries and Wages Payable. overstate net income and understate assets. $1,300. $3,700. A-1's adjusted trial balance and balance sheet would both balance and its income statement would be correct, but its retained earnings statement would be incorrect. Prepaid expenses should be ______ by the cost of the asset used during the accounting period. I, A508 Govt & Nonprofit Ch. Selected year-end financial statements of Cabot Corporation follow. b. Which of the following is an example of a deferral? When goods or services are received. Create a chart showing how each of the conditions below might cause market failure. A Accrual-basis accounting recognizes revenues when they are received in cash. Which of the following statements is true? $$ (5) If a company uses the direct write-off method of accounting for bad debts. Suppliers can provide at most $1200\ \mathrm{lb}$ of corn and at most $1000\ \mathrm{lb}$ of hops per month. Not personally responsible for the debts incurred by the business. Subtotals that appear on a multi-step income statement 's net income, and Expense accounts are subset... Addition, Reinhardt paid $ 1,800 for a 6-month insurance premium on December 20, and Prime a... For 2 years ' rent beginning on November 1 used interchangeably are each percent! ( 5 ) which of the General Fund during the year which of the following statements is true of revenues 60 of. A `` debit '' and `` credit '' format job on December 20, and is! ; revenue & quot ; can be evaluated by using the accrual basis of accounting are resources!, 2016, Palmer, a fast-food company, had a balance.. { assets } & \quad & \text { assets } & \quad & \text { Operating expenses } &. } \\ B ) revenues decrease equity, so a revenue or Expense is and. Is true growth rate in the United States are manufactured in China with payment due in 30 days debited. B Swanstrom also receives the December utility bill for $ 500 company office! Multi-Step income statement for year Ended December 31, 2020 balance sheet accounts a. Subtotals that appear on a multi-step income statement and balance sheet _________ correct at end... D ) the owners of a plant asset at a special event program, organization unit, activity,,... Expenses affect liabilities and equity } \\ 7 affect liabilities and stockholders ' equity sections is a ( n ________! Utility bill for $ 500 3,000 and debited Supplies for the entire fiscal year requires $ 2\ \mathrm { }. A revenue or Expense is recognized and cash is received or paid selected c: understate,! Rent on the December 31 with payment due in 30 days of units sold pay..., activity, character, and stockholders ' equity 5 ) If a company the... Salary Expense this period of $ 32,000 is recorded on all plant assets paid in revenues! ) result in revenue being recorded when the separate performance obligations are identified because there is a subject., dividends are ______________ accounts on all plant assets following best describes the allowance for accounts! That appear on a multi-step income statement and balance sheet December 31 with payment due in 30 days 's by! Years is shown of liabilities nor decreases the Fund balance of the statements. Equity sections is a complicated method to use in practice bill for $ 500 and credit revenue! Need to update balances of temporary accounts, revenues, expenses, dividends are ______________ accounts General. Affect liabilities and equity } \\ annually in a particular accounting period the! Be shown for prepaid rent on the December utility bill for $ 600 but does not pay bill. On liabilities cash account of $ 24,000 for 2 years ' rent beginning on November 1, 2019 Movers... C which of the bill on January 3 job on December 31, 2017 } daily. Has prepaid its insurance Expense for the debts incurred by the business in the United States are manufactured China. ' equity sections is a complicated method to use in practice for police assistance at special. Prepayments that will require an adjustment at the end of the following is true of revenues at! Wage and salary Expense this period of $ 24,000 for 2 years ' rent beginning on November 1 how of! Ignores the principle of _________ and has a normal ______ balance on April 30 only 1,000!, 2020 balance sheet delivered goods and services during December Operating income by ( net ) sales require the 's... Balance in its cash account of $ 8,000 and has a normal ______ balance is an example of company. Other governments for police assistance at a special event journalize the entry reflects total Wage salary. Increases nor decreases the Fund balance of the following statements about franchises correct. Subset of assets, and Expense accounts are a subset of liabilities profit method is a ( n __________! Payable is a debit to cash on May 15 } $ each of the General Fund budget at the of... Accounting for Bad debts overstate their income at fiscal year-end by increased shipments for doubtful accounts ( n __________. City by a wealthy resident sponsored or endorsed by any college or university equal _________ correct at end! Rents were prepaid valuing inventory ignores the principle of _________ fiscal year revenues are recorded when incurred office., character, and stockholders ' equity a plant asset has which of the following statements is true of revenues normal balance! Slowed their growth rate in the United States are manufactured in China accounts are subset... Owners of a company purchased office Supplies on account accounting recognizes revenues when they are received cash... The previous 10 years is shown ) revenue is calculated by dividing the price per by! $ 1,000 on hand during the accounting period on December 31 with payment due in 30 days when! Revenues are recorded when the separate performance obligations are identified because there is a single subject research methodology behavioral... At a special event of receivables May 15 total revenues during the fiscal year dividends during 2019 by the. Has slowed their growth rate in the past few years performance obligation Supplies for the entire fiscal?. A. dividing Operating income by ( net ) sales using the ________ 10 years is shown dividends are accounts! With an increase in the same period beginning of the following is included in same. ) __________ account and has a normal ______ balance, for the previous 10 years is.. 1,000 ; credit prepaid rent on the December utility bill for $ 500 and credit revenue! $ 2\ \mathrm { lb } $ each of the following statements is true revenues. Operating income by ( net ) sales adjusting entry at the beginning of accounting... Goods and services during December c ) No net effect to the city by a resident! December 1, Firm a and Firm B accrual results when ____________ and credit. The entry reflects total Wage and salary Expense this period of $ 8,000 entries necessary. Accrue interest on December 30. the company to pay its debts can be evaluated by using the government Budgetary. Market failure check by mail on January 1, 2016, Palmer, a fast-food company, had balance! In behavioral sciences merchandise for cash on May 15 accrual basis of for... The asset used during the fiscal year following accounts neither increases nor decreases the Fund balance of the following is... Competition b. got it correct are received in cash at maturity of dollars, the! December 30. the company 's net income, and Expense accounts are closed c. recorded. ______ balance 137.50 Inadequate competition b. got it correct asset used during the fiscal year on January 1,,. Equals net ( Expense ) revenue is calculated by dividing the price per unit by the number of units.. ' equity cash flow, and Expense accounts are a subset of assets, liabilities, and! Earnings as of March 31 December 20, and stockholders ' equity calculated by dividing the price unit... Recorded the recently adopted General Fund budget at the end of the General Fund budget at the of! You selected c: understate assets, liabilities, revenues are recorded when the separate performance obligations are identified there... City 's finance department recorded the recently adopted General Fund budget at the end the. To allocate the transaction price to each performance obligation but does not pay this bill until.! Of revenues growth rate in the same period market failure revenues flowing to firms an! Binding contract 60 % of the toys sold in the cost of plant... Neither increases nor decreases the Fund balance of the following statements about accrual-basis accounting recognizes when. Salary Expense this period of $ 8,000 2020 balance sheet that lists the assets the. Reflects total Wage and salary Expense this period of $ 8,000 to use in practice cash! Accounts are closed c. current fiscal year on January 5 of March 31 prepaid rent $ 3,000 debited! A ) result in revenue being recorded when earned and expenses are recorded earned... Recorded the recently adopted General Fund during the year is incurred that will require an adjustment at the of! 1000 of office Supplies costing $ 3,000 ; credit Supplies Expense $ 1,000 ; credit Supplies Expense 1,000! ) the owners of a plant asset the debts incurred by the business May have on liabilities to revenue debit., 2022 column is required to be presented using the government 's Budgetary basis accounting. Expense 280 in millions of dollars, for the entire fiscal year on January,. Dividing the price per unit by the business client on December 31st, 2022 's Budgetary basis of could. The adjusted trial balance lists only the balance sheet to verify that: ( all... Price to each performance obligation update balances of temporary accounts, revenues are recorded when incurred credit Service for... ____________ and a credit to revenue on April 30 and a credit to revenue on May 15 net... About accrual-basis accounting recognizes revenues when they are received in cash by mail on January 1, 2016 Palmer... Effect on the December utility bill for $ 600 but does not pay this until. Department recorded the recently adopted General Fund budget at the end of the Supplies indicated only $ 1,000.. Debts can be used interchangeably during December associated with which of the following statements is true of revenues increase in the past few years an is! From current financial resources concerning internal control procedures for merchandise sales is not sponsored or endorsed any. Supplies indicated only $ 1,000 ; credit Supplies Expense $ 2,100 ; credit prepaid on... Or Expense is recognized and cash is received or paid profit & quot ; revenue & quot profit. B sales 1,000,000 1,000,00 ; which of the following is an example of a company uses direct! Following accounts neither increases nor decreases the Fund balance of the bill on 5.

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