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Exam 3: The Accounting Cycle: End of the Period

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Question 1

True/False

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Under cash-basis accounting,the timing of cash inflows and outflows exactly matches the reporting of revenues and expenses in the income statement.

A) True
B) False

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Question 2

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In the first three years of operations,Lindsey Corporation earned net income/loss of -$150,000,$100,000,and $250,000.At the end of the third year,Lindsey Corporation has a balance of $120,000 in its Retained Earnings account.What is the total amount of dividends Lindsey Corporation paid over the three years?

A) $130,000.
B) $120,000.
C) $80,000.
D) $380,000.

E) A) and C)
F) A) and B)

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Question 3

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The matching principle states that we recognize expenses in the same period as the revenues they help to generate.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the correct term by placing the letter designating the term in the space provided. -____ Assets created before the expense is recognized.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the correct term by placing the letter designating the term in the space provided. -____ Liabilities created when expenses are recognized before cash flows.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the correct term by placing the letter designating the term in the space provided. -____ Financial statement showing that assets equal liabilities plus stockholders' equity.

Closing entries transfer the balances of all temporary accounts (revenues,expenses,and dividends)to the Common Stock account.

The following events pertain to Jasper Corporation: May 1 Jasper purchased office supplies of $3,000 on account. May 5 The office supplies were shipped to Jasper. May 8 Jasper used these office supplies for a one-time event. May 9 Jasper paid $3,000 cash for the office supplies purchased on May 1. Using cash-basis accounting,on which date should Jasper record supplies expense?

Which of the following accounts is(are) listed in a post-closing trial balance?

At the beginning of the period,a company reports a balance in office supplies of $500.During the period,the company purchases an additional $3,500 of office supplies for cash.By the end of the period,only $700 of office supplies remains.Record the period-end adjusting entry.

The purpose of closing entries is to transfer:

The adjusting entry for an accrued expense always includes a debit to an expense account and a credit to a liability account.

Making insurance payments in advance is an example of:

The closing entry for dividends includes a debit to the Dividends account and a credit to Retained Earnings.

Adjusting entries are not necessary when cash is received at the same time revenues are earned.

The adjusted trial balance for China Tea Company at December 31,2015,is presented below: Prepare an income statement for China Tea Company for the year ended December 31,2015:

A post-closing trial balance is a list of all accounts and their balances after we have updated account balances for adjusting entries.

Accrual-basis accounting involves recording revenues when earned and recording expenses with their related revenues.

Describe what is meant by unearned revenues and give two examples.

Which one of the following accounts would NOT have a balance after closing entries?