Chapter 4 Group Project

Expenses that have been incurred but not yet recorded because cash will be paid after the goods or services are used. These need to be adjusted at the end of the accounting period to reflect the amount incurred and the relatable payable account.

Revenues that have been earned but not yet recorded because cash will be received after the services are performed or goods are delivered. All of these need to be adjusted at the end of the accounting period to reflect the amount earned and the related receivable account.

An example of deferred revenue is when a cleaning company accepts the prepayment of its monthly fee for its services in advance for a whole year.

Estraven started a new company named The Wonderful Whammies. The first year their number of shares outstanding was 33,500. At the end of the following quarter The Wonderful Whammies had a net income of $72,000. If the number of shares increased by 15,000 during the quarter, what is the EPS (Earnings per share) ratio?

These are entries necessary at the end of the accounting period to measure all revenues and expenses of that period. Here, revenues are recorded when they are earned, expenses are recorded when they are incurred to generate revenue, assets are reported at amounts that represent the probable future benefits remaining at the end of such period, and liabilities are reported at amount that represent the probable future sacrifices of assests or services owed at the end of the period.

Previously recorded liabilities that need to be adjusted at the end of the accounting period to reflect the amount of revenue earned. This unearned revenue is a liability representing the company’s promise to perform or deliver goods or services in the future. Recording the revenue is postponed until the company meets its obligation.

are income statement accounts that are closed to Retained Earnings at the end of the accounting period. These are the recordings of revenue, expense, gain, and loss accounts to accumulate data for the current accounting period only.

Bob needs to pay his employees a total of $27,000 for wages worked through December. However, the next payroll won’t be until the next month, January. This is a(n)

Krusty Krums reported their company’s pretax income as $140,000 during the end of the year. If their depreciation expenses = $10,500, accrued service revenues = $12,000, accrued expenses = $5,000, insurance = $6,000, and rent revenue = $8,000 but the rent was initially prepaid and credited towards unearned rent income; what is the final pre-tax after adjustments.

On Feb 1, 2015, Buzzbee company signed a $175,000, one year, 6% note payable. If the principal and interest will be paid on Jan 31st, 2016, how much interest expense should be reported on the income statement for the year ended Dec 31st, 2015?

This transfers balances in temporary accounts (Income statement accounts) to Retained Earnings and establishes zero balances in temporary accounts to start the accumulation in the next accounting period.

The only purposes of closing entry is to transfer the balance in the temporary accounts to retained earnings.

Accounts that are directly linked to another account, but with an opposite balance. An offset to, or reduction of, the primary account.

In Dec 31st, 2012, Funky pizza reported a total of $170,000 in liabilities. The company’s total liability cost equals to $190,000 after adjusting entries when the following is...
-depreciation expense: $30,000
-accrued services: $25,000
-accrued expenses: $12,000
-Used Insurance: $8,000 (recorded as prepaid)
-rent revenue: $10,000 (rent is prepaid, and credited to unearned rent revenue)

The total asset turnover ratio is average sales/average total assets.

This is prepared as an additional step of the accounting cycle to check that debits equals credits and all temporary accounts have been closed. This finalizes the accounting cycle for this period.

A one year insurance policy was purchased for $4,500 cash on May 1st, 2012. If the insurance coverage begins on that date and books are adjusted only at the end of the year, which of the follow describes the effect on the financial statement on Dec 31st, 2012?

Revenues that have been earned but not yet recorded because cash will be received after the services are performed or goods are delivered is deferred revenues.

Which of the following is an example of contra asset?

Previously acquired assets that need to be adjusted at the end of the period to reflect the amount of expense incurred in using the assets to generate revenue.

Jan 1st, 2015, Xony’s company paid a 5 year premium insurance policy of $12,000. If the company recorded as prepaid insurance; what would be the ending balance in Xony’s prepaid insurance account at the end of the year in Dec 31st, 2015?

are the balance sheet accounts that carry their ending balances into the next accounting period. These are not reduced to a zero balance at the end of the accounting period.

Net Book Value of an asset is the difference between its acquisition cost and accumulated depreciation, its related contra-account.