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Exam 4: Income Measurement and Accrual Accounting

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Question 111

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Adjustments are recorded for all transactions involving outside entities.

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Question 112

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Frannie's Dance Studio accounting records reflect the following account balances at January 1, 2015. During 2015, the following transactions occurred: 1 On February 1, rented a small studio for a one year period of time. Paid $6,000 cash. 2 On November 1, received $1,200 cash for dance lessons to be provided evenly over November, December, and January. 3 By December 31, used $3,000 of the supplies 4 At December 31, accrued $3,000 in wages and salaries. 5 During the year, paid cash for $20,000 in wages and salaries 6 During the year, earned $40,000 cash in dance lesson revenue. Required: Required: A Determine the effect on the accounting equation of the preceding transactions. Create a table to reflect the increases and decreases in accounts. B Prepare an income statement for Frannie's Dance Studio for 2015. Ignore income tax effects. C Prepare a classified balance sheet for Frannie's Dance Studio at December 31, 2015.

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Question 113

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The unit of measure in Japan is the U.S. dollar.

Which one of the following adjustments increases net income for the period?

Balance sheet accounts are also known as which of the following?

Describe the benefits of using the accrual process as compared to the cash basis.

Revenue is always earned continuously over time.

--------- is the name given to revenue, expense, and dividend accounts because they are closed at the end of the period.

Why is the use of the U.S. dollar as a unit of measure for financial statement data in the U.S. widely accepted?

Autumn Resorts purchased guest room furniture on January 1, 2014 for $120,000. The furniture has an estimated useful life of ten years. What amount will appear on Autumn's income statement for depreciation expense for the year ending June 30, 2015?

Which of the following statements is true concerning assets?

Which of the following is the attribute used to measure many assets that are recognized on a balance sheet, because it is more objective and verifiable?

Expenses can be matched against revenue

The selection of historical cost over current value as the attribute to be measured for assets is an example of the trade-off of

Which one of the following is an example of a deferred revenue?

The asset account, Supplies, has a balance of $700 on January 1. During January, the company purchased $16,000 of supplies on account and the liability was appropriately recorded. A count of supplies at the end of January indicates a balance of $900. Which one of the following is a correct amount to be reported on the company's financial statements for the month ending January 31?

Carpenter Transport Company purchased a truck at a cost of $60,000 on January 1, 2011. The truck has an estimated useful life of 9 years and a $15,000 residual value. A. How much depreciation expense should be reported for the year 2015? B. What is the total amount of accumulated depreciation at December 31, 2015? C. Show how the truck and the related accumulated depreciation would appear on Carpenter's December 31, 2015, balance sheet immediately after the adjustments are recorded and posted. D. Is the amount on the balance sheet what the truck could probably be sold for on December 31, 2015? What principle governs? E. How much depreciation expense should be reported for the year 2016?

Match the most probable matching method to the costs listed below -Cost of two-year insurance policy

What role do accounting records play in the adjustment process?

The recognition of revenue may result from the settlement of a liability rather than from the acquisition of an asset.