Adjusting Entries
ABC Co. owes its employees $1,000 on 12/31 but does not play to pay them until January. ABC Co. uses the accrual method of accounting. What adjusting entry does ABC Co. need to make on 12/31?
Salaries Expense 1,000
Salaries Payable 1,000
Which board determines the generally accepted accounting principles in the U.S.?
Financial Accounting Standards Board
ABC Co. receives $10,000 of cash in exchange for common stock. What journal entry should ABC Co. record?
Cash 10,000
C/S 10,000
State the revenue recognition principle.
What does the D in DEA-LOR stand for?
Dividends
ABC Co. owes its employees $1,000 on 12/31 but does not play to pay them until January. ABC Co. uses the cash method of accounting. What adjusting entry does ABC Co. need to make on 12/31?
ABC Co. will not record an expense until it pays its employees in January.
Which governmental entity requires public companies in the U.S. to file annual financial statements?
Securities and Exchange Commission
Bunting Corp. purchases $10,000 of supplies on account. What journal entry does Bunting Corp need to record?
Supplies 10,000
Accounts Payable 10,000
What is the fraud triangle?
A theory that three elements (opportunity, motivation, rationalization) are present when fraud occurs.
Which of the following accounts have a credit balance (increase with a credit)?
Cash, Supplies, Deferred Revenue, Retained Earnings
Deferred Revenue and Retained Earnings
ABC Co. borrows $10,000 on March 31, 2024 at a 2% interest rate. Interest is due in 2025. ABC Co. does not record any adjusting entries related to interest until December 31, 2024. What adjusting entry does ABC Co. need to record on December 31?
Interest Expense 150
Interest Payable 150
Which important piece of legislation was passed after several accounting scandals occurred in the early 2000s?
Sarbanes-Oxley Act 2002
On July 1, Antrim Co. pays $10,000 for one year of rent. What journal entry does Antrim Co. need to record on July 1?
Prepaid Rent 10,000
Cash 10,000
Name one purpose of financial accounting.
1) Measure business transactions
2) Communicate those measurements to external parties (like investors and creditors)
Which DEA - LOR accounts are temporary accounts?
Dividends, Expenses, Revenue
ABC Co. purchases a vehicle for $60,000 on 11/1. The vehicle has an estimated useful life of five years. What adjusting entry does ABC Co. need to record on 12/31?
Depreciation Expense 2,000
A/D 2,000
What are the international accounting rules called? Over 120 countries follow these rules
International Financial Reporting Standards
Malvern Corp. provides services of $130,000 in January and invoices customers. What journal entry should Malvern Corp record?
Accounts Receivable 130,000
Service Revenue 130,000
Expenses should be recorded in the same period as the revenues that they help to generate.
In 2024, ABC Co. recorded $200,000 of revenue on its income statement. What is ABC's closing entry for revenue?
Revenue 200,000
R/E 200,000
ABC Co. has a $0 balance in supplies at 1/1. ABC Co. purchases supplies for $500 on 1/7. ABC Co. has $100 of supplies remaining on 1/31. ABC Co. uses the accrual method of accounting. What adjusting entry does ABC Co. need to make on 1/31?
Supplies Expense 400
Supplies 400
How many members comprise the FASB?
Seven
Bops Co. plans to release a new album on February 14. Customers pay Bops Co. $1,000 in advance for the new album to be delivered on February 14. Bops Co. receives an additional $2,000 for albums on February 14. What journal entry does Bops Co. record on February 14?
Cash 2,000
Deferred Revenue 1,000
Sales Revenue 3,000
Define Retained Earnings.
Cumulative profits of a company since its inception that it has kept and not paid out in dividends.
In 2024, ABC Co. paid $5,000 total in dividends. What is ABC Co.'s closing entry related to dividends?
R/E 5,000
Dividends 5,000