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Financial Accounting Set 2

(T/F) Collection on an account receivable will increase both cash and accounts receivable.
False
(T/F) The normal balance of the dividend account is a credit.
False
(T/F) Adjusting entries are often made because some business events are not recorded as they occur.
True
(T/F) Accrued revenues are revenues that have been received but not yet recognized.
False
(T/F) When closing entries are prepared, each income statement account is closed directly to retained earnings.
False – Can be closed income summary account, not income statement.
If total liabilities decreased by $4,000, then
b.) assets must have decreased by $4,000, or stockholders equity must have increased by $4,000.
The purchase of an asset for cash
d.) leaves total assets unchanged.
Powers Corporation received a cash advance of $500 from a customer. As a result of this event,
a.) assets increased by $500
At December 1, 2014, Orear Company’s Accounts Receivable balance was $5,600. During December, Orear had credit sales of $15,000 and collected accounts receivable of $12,000. At December 31, 2014, the Accounts Receivable balance is
b.) $8,600 debit

5600 + 15000 -12000 = 8,600

Oakville Inc. purchased a 12-month insurance policy on March 1, 2014 for $1,800. At March 31, 2014, the adjusting journal entry to record expiration of this asset will include:
c.) a debit of Insurance Expense and a credit to Prepaid Insurance for $150.

1800/12=150

A company purchased office supplies costing $3,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $900 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be:
c.) debit Supplies Expense, $2,100; credit Supplies, $2,100.

If 3000 is purchased and 900 left, then 2100 should be expensed.
Debits increase expenses & credit 2100 would decrease asset account of office supply.

Which one of the following is not justification for adjusting entries?
d.) Adjusting entries are necessary to bring general ledger accounts in line with the budget.
On April 1, 2013, nPropel Corporation paid $48,000 cash for equipment that will be used in business operations. The equipment will be used for four years. nPropel records depreciation expense of $48,000 for the calendar year ending December 31, 2013. Which accounting principle has been violated.?
Expense recognition principle.
Walton Company collected $9,600 in May of 2013 for 4 months of service which would take place from October of 2013 through January 2014. The revenue reported from this transaction during 2013 would be:
b.) $7,200.

October, November, December = 3 months
9600/4=2400 * 3 = $7200

Wang Company had the following transactions during 2013:
* Sales of $10,800 on account
* Collected $4,800 for services to be performed in 2014
* Paid $3,100 cash in salaries for 2013
* Purchased airline tickets for $600 in December for a trip to take place in 2014

What is Wang’s 2013 net income using accrual accounting?

d.) $7,700
There are usually how many closing journal entries?
b.) 4

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