Chapter 4: Adjusting Entries and FS Preparation (accounting)

1.Adjusting entries are either accruals or deferrals. In a deferral the cash flow:

a. Occurs after the expense recognition

b. Occurs by definition the same time as the expense recognition

c. None of the above

d. Is irrelevant since the cash flow means nothing in the accrual model

e. Occurs before the expense recognition

2.

The following financial statements were prepared at the end of the month of May: TOPS IN TOPIARY - INCOME STATEMENT FOR the month of May Revenue $2,540 Expenses: Rent Expense $500 Advertising Expense $500 Wages Expense $200 $1,200 Net Income $1,340 TOPS IN TOPIARY - STATEMENT OF OWNER'S EQUITY FOR the month of MAY Owner's Equity at May 1 $0 plus: Investment 2,000 plus: Net Income 1,340 less: Withdrawals Owner's Equity at May 31$3,340 TOPS IN TOPIARY - BALANCE SHEET AS OF MAY 31 ASSETS LIABILITYND OWNER'S EQUITY Current Assets: Current Liabilities: Cash $1,380 Accounts Payable $300 Accounts Receivable $1,500 Advertising Payable $500 |Prepaid Rent $ 500 Advances from Customers $200 Prepaid Advertising $ 500 Supplies $ 100 $3,980 Equipment $ 360 Owner's Equity $3,340 Total Assets $4,340 Total Liabilities & OE $4,340 During June the following transactions occurred: Paid the helper the $200 owed from works done in May (the amount owed is in Accounts Payable). Completed the job for which the customer paid $200 in May. Tops in Topiary collected $1000 in cash once finished. Paid $500 for the rent of July. At the end of June notices that there are no supplies left. Makes a note to buy some in July. At the end of June notices that there are few flyers left (used for advertising) worth $100 and decides to order some for July. Before ordering, the printer (supplier of flyers) asks to be paid $500 of the amount owed for the flyers done in May. Tops in Topiary pays $500. In June collected in cash $3,000 for 3 jobs are done for a total of $4,200, the rest is owed in account by the customers. In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years. In June 23rd Edward Scissorhands withdrew some cash for personal reasons ($3,000). Prepare "T" Accounts in ACCRUAL Basis for the period ended on June 30th and then answer the question. At the end of the accounting period (June 30th, T account after AJE), what is the balance of Accounts Payable?The following financial statements were prepared at the end of the month of May: TOPS IN TOPIARY - INCOME STATEMENT FOR the month of May Revenue $2,540 Expenses: Rent Expense $500 Advertising Expense $500 Wages Expense $200 $1,200 Net Income $1,340 TOPS IN TOPIARY - STATEMENT OF OWNER'S EQUITY FOR the month of MAY Owner's Equity at May 1 $0 plus: Investment 2,000 plus: Net Income 1,340 less: Withdrawals Owner's Equity at May 31$3,340 TOPS IN TOPIARY - BALANCE SHEET AS OF MAY 31 ASSETS LIABILITYD OWNER'S EQUITY Current Assets: Current Liabilities: $1,380 Accounts Payable $300 Accounts Receivable $1,500 Advertising Payable $500 Prepaid Rent $ 500 Advances from Customers $200 Prepaid Advertising $ 500 Supplies $ 100 $3,980 Equipment $ 360 Owner's Equity $3,340 Total Assets $4,340 Total Liabilities & OE $4,340 During June the following transactions occurred: 1) Paid the helper the $1,000 owed from works done in May (the amount owed is in Accounts Payable). 2) Completed the job for which the customer paid $200 in May. Tops in Topiary collected $2000 in cash once finished. 3) Paid $500 for the rent of July. 4) At the end of June notices that there are no supplies left. Makes a note to buy some in July. 5) At the end of June notices that there are few flyers left (used for advertising) worth $200 and decides to order some for July. Before ordering, the printer (supplier of flyers) asks to be paid $600 of the amount owed for the flyers done in May. Tops in Topiary pays $600. 6) In June collected in cash $3,000 for 3 jobs are done for a total of $4,500, the rest is owed in account by the customers. 7) In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years. 8) In June 23rd Edward Scissorhands withdrew some cash for personal reasons ($2,000). Prepare "T" Accounts in ACCRUAL Basis for the period ended on June 30th and then answer the questions. At the end of the accounting period (June 30th, T account after AJE), what is the total of Current Liabilities?The following financial statements were prepared at the end of the month of May: TOPS IN TOPIARY - INCOME STATEMENT FOR the month of May Revenue $2,540 |Expenses Rent Expense $500 Advertising Expense $500 Wages Expense $200 $1,200 Net Income $1,340 TOPS IN TOPIARY - STATEMENT OF OWNER'S EQUITY FOR the month of MAY Owner's Equity at May 1 $0 plus: Investment 2,000 plus: Net Income 1,340 less: Withdrawals Owner's Equity at May 31$3,340 TOPS IN TOPIARY - BALANCE SHEET AS OF MAY 31 ASSETS IABILITES AND OWNER'S EQUITY Current Assets: Current Liabilities: Cash $1,380 Accounts Payable $300 Accounts Receivable $1,500 Advertising Payable $500 Prepaid Rent $ 500 Advances from Customers $200 Prepaid Advertising $ 500 Supplies $ 100 $3,980 Equipment $ 360 Owner's Equity $3,340 Total Assets $4,340 Total Liabilities & OE $4,340 During June the following transactions occurred: 1) Paid the helper the $1,000 owed from works done in May (the amount owed is in Accounts Payable). 2) Completed the job for which the customer paid $200 in May. Tops in Topiary collected $2000 in cash once finished. 3) Paid $500 for the rent of July. 4) At the end of June notices that there are no supplies left. Makes a note to buy some in July. 5) At the end of June notices that there are few flyers left (used for advertising) worth $200 and decides to order some for July. Before ordering, the printer (supplier of flyers) asks to be paid $600 of the amount owed for the flyers done in May. Tops in Topiary pays $600. 6) In June collected in cash $3,000 for 3 jobs are done for a total of $4,500, the rest is owed in account by the customers. 7) In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years. 8) In June 23rd Edward Scissorhands withdrew some cash for personal reasons ($2,000). Prepare "T" Accounts in ACCRUAL Basis for the period ended on June 30th and then answer the questions. At the end of the accounting period (June 30th, T account after AJE), what is the balance of Supplies Expense