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Exam 3: Accounting for Deferrals

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Question 41

Multiple Choice

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On December 31,Year 3,Supplies,Inc.adjusted its records to recognize $10,000 of accrued salaries.Based on this information alone,the

A) balance sheet at the beginning of Year 4 would show $10,000 of accrued salaries expense.
B) balance sheet at the beginning of Year 4 would show $10,000 of accrued salaries payable.
C) income statement for Year 3 would show $10,000 of accrued salaries payable.
D) income statement for Year 4 would show $10,000 of accrued salaries expense.

E) C) and D)
F) All of the above

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Question 42

Multiple Choice

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On February 1,Year 1,Cora Company collected $60,000 cash for consulting services to be provided for one year beginning immediately.The company's fiscal closing date is December 31.Based on this information,the amount of unearned revenue appearing on the December 31,Year 2 balance sheet would be

A) $60,000
B) $55,000
C) $5,000
D) zero

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

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Question 43

Multiple Choice

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Langley Inc.accepted a $24,000 retainer for which the company agreed to provide services in the future.Recognizing this event would

[The following information applies to the questions displayed below.] Wichita, Inc. reported the following amounts on its financial statements prepared as of the end of the current accounting period: -What is the company's return-on-equity ratio?

Regarding the relationships of revenues and expenses to assets and liabilities,state whether each of the following statements is true or false.

Tammy Company paid cash to purchase a long-term operational asset.The cost of the asset will be expensed (depreciated)

[The following information applies to the questions displayed below.] Wichita, Inc. reported the following amounts on its financial statements prepared as of the end of the current accounting period: -What is the company's debt-to-assets ratio?

An adjusting entry that decreases unearned revenue and increases service revenue is a claims exchange transaction.

Purchasing supplies for cash is an asset exchange transaction.

On September 1,Year 1,Zelda Company collected $120,000 cash for services to be provided for one year beginning immediately.The company's fiscal closing date is December 31.Based on this information,the amount of revenue appearing on the Year 1 income statement would be

Hans Company's December 31,Year 1,balance sheet showed $800 cash,$500 supplies,$400 accounts payable,$300 common stock,and $600 retained earnings.The company experienced the following events during year 2. (1) Purchased $1,000 of supplies on account (2) Earned $2,000 cash revenue (3) Paid $1,200 cash to reduce accounts payable created in Event 1 above (4) Physical count revealed $300 of supplies on hand at the end of Year 2 Based on this information,the company would report

On October 1,Year 1,Jason Company paid $7,200 to lease office space for one year beginning immediately.What is the amount of rent expense that will be reported on the Year 1 income statement and what is the cash outflow for rent that would be reported on the Year 1 statement of cash flows?

Asset use transactions always involve the payment of cash.

Unearned revenue is reported on the income statement by subtracting it from revenue.

On August 1,Year 1,Lace Company paid $2,400 cash for an insurance policy that would provide protection for a one-year term.Which of the following shows how the required adjustment on December 31,Year 1,will affect Lace Company's ledger accounts?

Joseph Company purchased a delivery van on January 1,Year 1 for $35,000.The van is estimated to have a 5-year useful life and a $5,000 salvage value.How much expense should Joseph recognize in Year 1 related to the use of the van?

Duluth Co.collected a $6,000 cash advance from a customer on November 1,Year 1 for services to be provided over a six-month period beginning on that date.If the year-end adjustment is properly recorded,what will be the effect of the adjusting entry on Duluth's Year 1 financial statements?

Foster Company's December 31,Year 1,balance sheet showed $2,700 cash,$1,000 common stock,and $1,700 retained earnings.The company experienced the following event during Year 2.On October 1,collected $12,000 in advance for an agreement to provide office space for one year beginning immediately. Based on this information alone,

Recognizing an expense may be accompanied by which of the following?

Regarding the relationships of depreciation expense,book value,and accumulated depreciation,state whether each of the following statements is true or false.