all accounts that appear in the balance sheet; account balances are carried forward from period to period. (b) An accounting time period of one year in length is referred to as a fiscal year. Study principlesofaccounting.com and earn college credit. Notice that the original entry is backwards. halston_maresh. 14. true Transfer the balances of temp. 6. prepaid expenses Test. Find study materials for any course. Which of the following statements explains timing differences for tax and financial accounting? 11. true No cash is disbursed on Wednesday. Chapter 1: Welcome to the World of Accounting, Chapter 6: Cash and Highly-Liquid Investments, Chapter 11: Advanced PP&E Issues/Natural Resources/Intangibles, Chapter 12: Current Liabilities and Employer Obligations, Chapter 15: Financial Reporting and Concepts, Chapter 16: Financial Analysis and the Statement of Cash Flows, Chapter 17: Introduction to Managerial Accounting, Chapter 18: Cost-Volume-Profit and Business Scalability, Chapter 19: Job Costing and Modern Cost Management Systems, Chapter 20: Process Costing and Activity-Based Costing, Chapter 21: Budgeting – Planning for Success, Chapter 22: Tools for Enterprise Performance Evaluation, Chapter 23: Reporting to Support Managerial Decisions, Chapter 24: Analytics for Managerial Decision Making. 1. transactions 2. periodicity assumption 3. true 4. right 5. matching principle 6. false 7. multiperiod costs and revenues that must be split among two or more accounting periods 8. accruals 9. Next, Prepaid Insurance is debited for $22,000; to establish the correct ending debit balance of $10,000, one must record a $22,000 debit (the existing balance is a $12,000 credit). 8. accruals Operating Expenses Rent expense Salaries expense Supplies expense Insurance expense Depreciation expense Advertising expense Travel expense Communication expense Utilities expense …. A fiscal year that extends from January 1 to December 31 is referred to as a calendar year. Illustrative Entries Examples of journal entries for numerous sample transactions, Examples of journal entries for numerous sample transactions, Account Types Typical financial statement accounts with debit/credit rules and disclosure conventions, Typical financial statement accounts with debit/credit rules and disclosure conventions, Glossary Includes financial and managerial terms, Time Value of Money Future and present value tables. 12. income statement approach Kimmel, Weygandt, Kieso CHAPTER 3 Bob Anderson, UCSB 2004 3-2 Chapter 3 The Accounting Information System Analyze the effect of business transactions on the basic accounting equation. New Year’s Day. 11. adjusted trial balance Explain what an account is, then apply debits 3-4 ANSWERS TO QUESTIONS 1. Interest Payable 10. prior to preparing financial statements 11. true 12. income statement approach 13. false 14. true 15. accrual basis Chapter 3. Preview text. Nonoperating income and expenses 1. The amount paid on a normal payday should also be expensed. 4. a. 3. true Using cash-basis accounting, on which date should Papa's Pizza record the extermination expense? The $3,000 must be removed from the Revenue account (debited) because it has not yet been earned. Which of the following is not listed in a post-closing trial balance. Chapter 3Adjusting Accounts forFinancial StatementsQUESTIONS1. Visit the bookstore and purchase principlesofaccounting.com textbooks! Ambassador Hotels purchases one year one year of fire insurance coverage on December 1 for $24,000, debiting prepaid insurance. Principles of Acc. The correct entry to record utilities consumed is to debit Utilities Expense and credit Utilities Payable. Conquer your course and sign up for free today! 3-1 Chapter 3 Adjusting Accounts and Preparing Financial Statements QUICK STUDIES Quick Study 3-1 a. Near year-end, the two employees worked Monday, December 31, and Wednesday through Friday, January 2, 3, and 4. 5. matching principle Change in stockholders equity through changes in common stock and retained earnings, Which of the following describes the purpose of closing entries. Multiperiod costs and revenues must be adjusted to reflect the amount consumed or generated in a given period, and the amount prepaid or unearned at the end of the period. This amount should be recorded as a liability — it will be paid on Friday. Operating Expenses. 7. contra Gravity. Record revenues when we earn them and we record expenses with related revenues, when a company has incurred an expense but hasn't yet paid cash or recorded an obligation to pay, when a company has earned revenue but hasn't yet received cash or recorded an amount receivable, a list of all accounts and their balances after we have updated account balances for adjusting entries. This concept is highlighted by noting the date on an income statement: “For the Year Ending December 31, 20XX.”. Profitability ratios 2. 2. periodicity assumption 3-4 ANSWERS TO QUESTIONS 1. 2. periodicity assumption (b) An accounting time period of one year in length is referred to as a fiscal year. 4. right 7. multiperiod costs and revenues that must be split among two or more accounting periods On May 5, Johnson Plumbing receives a phone call from a customer needing a new water heater and schedules a service visit for May 7. Flashcards. 5. matching principle Financial Acc. 10. prior to preparing financial statements Nonoperating Income and Expenses. Problems; Cost Accounting Problems; Finance Problems; Formats. 9. b. Connect Financial Accounting Chapter 3. Chapter 15: Financial Reporting and Concepts ; Chapter 16: Financial Analysis and the Statement of Cash Flows ; Chapters 17-20 Managerial/Cost. Finally, Cash is credited for $24,000 (to correct the error which showed cash increasing by $12,000 when it really decreased by $12,000). View Test Prep - Chapter 3 Quiz Answers from ACC 2023 at University of Florida. Chapter 14: Corporate Equity Accounting ; Chapters 15-16 Using Information. This entry reflects that the $10,000 cash disbursement is recorded as $4,000 of expense (for Thursday and Friday) and a $6,000 payment of the payable that was established on Wednesday. Activity ratios Profitability ratios 1. Nonoperating expenses and losses include expense and loss accounts that are due to the … STUDY. Papers. Question: Quiz: Chapter 3 Financial Quiz 2 Of 3 (1 Complete This Question: 3 Pts Selected Amounts (atDecember 31, 2010) From Green Power, Inc's Information System Appear As Follows (Click The Icon To Vew The Account Balances.) Pablo Management has two part-time employees, each of whom earns $110 per day. To correct and adjust the accounts first requires a debit to Insurance Expense for $2,000 (to reflect the expired amount). Created by. Chapter 3. Bob Anderson, UCSB 2004 3-1 Financial Accounting: Tools for Business Decision Making, 4th Ed. 8. net book value Solvency ratios 4. Log In; Back. What are the … More. 8. a. Answers GOALS ACHIEVEMENT. Principlesofaccounting.com ™ Copyright © 2020. Which of the following is not a characteristic of adjusting entries. 9. unearned, accrued 13. cash, accrual, 1. c. Accountants divide time into specific intervals for measurement purposes. Connect Financial Accounting Chapter 3. 3. b. Using cash-basis accounting, on which date should Johnson record service revenue. 1. transactions With the income statement approach, prepaid expenses and unearned revenues are initially recorded to expense and revenue; subsequent year-end adjustments update balance sheet accounts and reduce expense and revenue accounts as needed. 7. b. Cash Accounting Revenues (cash receipts) ...................................................... $52,000 Expenses (cash payments: $37,500 - $6,000 + $3,250) ...... 34,750 Net income (cash basis) … Terms in this set (47) Time Period Assumption. Financial Accounting Chapter 3. This amount needs to be recorded into the Unearned Revenue account (credited). CHAPTER 3 UNDERSTANDING FINANCIAL STATEMENTS ... answers might be different when doing valuation. Note that the Equipment account is not directly credited. (a) Under the time period assumption, an accountant is required to determine the relevance of each business transaction to specific accounting periods. Click on the certificate for more information. The $6,000 amount ($2,000 per day times 3 days) needs to be expensed for the work rendered. Flashcards. Learn. According to the revenue recognition principle, on which date should Johnson record service revenue, On January 17, Papa's Pizza signs a contract with Bug Zappers for exterminating services related to a recent sighting of cockroaches in the restaurant. ... Accounting Principles Underlying Asset Measurement An asset is any resource that has the potential to either generate future cash inflows or reduce future cash outflows. 10. debit (a) Under the time period assumption, an accountant is required to determine the relevance of each business transaction to specific accounting periods. Which of the following describes the information reported in the statement of stockholders' equity? Reduce the balance of revenue, expense, and dividend accounts to zero. 3. fiscal 6. false 2. d. The accounting for revenue that has been earned and recorded is complete; no adjustment is needed. The understatement of expense causes income and equity to be overstated. Papa's pays for the extermination service on January 29, and Bug Zappers sprays for bugs on February 7.