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All Textbook Solutions for Principles of Accounting Volume 1
Accounting is sometimes called the language of _____. A. Wall Street B. business C. Main Street D. financial statementsFinancial accounting information ________. A. should be incomplete in order to confuse competitors B. should be prepared differently by each company C. provides investors guarantees about the future D. summarizes what has already occurredExternal users of financial accounting information include all of the following except ________. A. lenders such as bankers B. governmental agencies such as the IRS C. employees of a business D. potential investorsWhich of the following groups would have access to managerial accounting information? A. bankers B. investors C. competitors of the business D. managersAll of the following are examples of managerial accounting activities except ________. A. preparing external financial statements in compliance with GAAP B. deciding whether or not to use automation C. making equipment repair or replacement decisions D. deciding whether or not to use automationWhich of the following is not true? A. Organizations share a common purpose or mission. B. Organizations have inflows and outflows of resources. C. Organizations add value to society. D. Organizations need accounting information.The primary purpose of what type of business is to serve a particular need in the community? A. for-profit B. not-for-profit C. manufacturing D. retailWhich of the following is not an example of a retailer? A. electronics store B. grocery store C. car dealership D. computer manufacturer E. jewelry storeA governmental agency can best be described by which of the following statements? A. has a primary purpose of making a profit B. has a primary purpose of using taxpayer funds to provide services C. produces goods for sale to the public D. has regular shareholder meetingsWhich of the following is likely not a type of not-for-profit entity? A. public library B. community foundation C. university D. local movie theaterWhich of the following is not considered a stakeholder of an organization? A. creditors B. lenders C. employees D. community residents E. a business in another industryStockholders can best be defined as which of the following? A. investors who lend money to a business for a short period of time B. investors who lend money to a business for a long period of time C. investors who purchase an ownership in the business D. analysts who rate the financial performance of the businessWhich of the following sell stock on an organized stock exchange such as the New York Stock Exchange? A. publicly traded companies B. not-for-profit businesses C. governmental agencies D. privately held companies E. government-sponsored entitiesAll of the following are sustainable methods businesses can use to raise capital (funding) except for ________. A. borrowing from lenders B. selling ownership shares C. profitable operations D. tax refundsThe accounting information of a privately held company is generally available to all of the following except for ________. A. governmental agencies B. investors C. creditors and lenders D. competitorsWhich of the following skills/attributes is not a primary skill for accountants to possess? A. written communication B. verbal communication C. ability to work independently D. analytical thinking E. extensive computer programing backgroundWhich of the following is typically required for entry-level positions in the accounting profession? A. bachelors degree B. masters degree C. Certified Public Accountant (CPA) D. Certified Management Accountant (CMA) E. only a high school diplomaTypical accounting tasks include all of the following tasks except ________. A. auditing B. recording and tracking costs C. tax compliance and planning D. consulting E. purchasing direct materialsWhat type of organization primarily offers tax compliance, auditing, and consulting services? A. corporations B. public accounting firms C. governmental entities D. universitiesMost states require 150 semester hours of college credit for which professional certification? A. Certified Management Accountant (CMA) B. Certified Internal Auditor (CIA) C. Certified Public Accountant (CPA) D. Certified Financial Planner (CFP)Research your top five career choices. Identify financial factors that might influence your career choice. The following websites might be helpful in answering this question. Occupational Outlook Handbook: https://www.bls.gov/ooh/ National Association of Colleges and Employers: http://www.naceweb.org/ O*Net OnLine: https://www.onetonline.org/find/Using the same top five career choices, identify nonfinancial factors that might influence your career choice. The following websites might be helpful in answering this question. Occupational Outlook Handbook: https://www.bls.gov/ooh/ National Association of Colleges and Employers: http://www.naceweb.org/ O*Net OnLine: https://www.onetonline.org/find/Think about a recent purchase you made. Describe what financial and nonfinancial factors went into that purchase. Rank the factors, and explain how you made the final decision to purchase the item.Computerized accounting systems help businesses efficiently record and utilize financial information. QuickBooks is a popular software package for small businesses. Explore the QuickBooks website at https://quickbooks.intuit.com/. Select one of the QuickBooks plans, and discuss some of the capabilities of the software. Taking the perspective of a small business owner, explain how this software might help the business.The following information was taken from the Netflix financial statements. For Netflix, sales is the product of the number of subscribers and the price charged for each subscription. What observations can you make about the previous three years of Netflixs sales? Given this data, provide any predictions you can make about the future financial performance of Netflix. What nonfinancial factors influenced that prediction?The following chart shows the price of Netflix stock for the six-month period from August 2017 to January 2018. Assume you are considering purchasing Netflix stock. What considerations would influence your decision? Relative to Netflixs financial performance, what factors would influence the decision, and how would those factors rank in your decision? What about the nonfinancial factors?Use the internet to research one for-profit, one governmental, and one not-for-profit entity. For each entity, describe the following: A. the primary purpose of the entity B. the types of activities that accountants would record (hint: what is the source of the entitys funding, and what costs might the entity have?) C. the types of decisions that might be made in this organization and how financial and nonfinancial information might help the decision-making processUse the internet to research one manufacturing, one retail (or merchandising), and one service business. For each business, describe the following: A. the primary purpose of the entity B. the types of activities that accountants would record (hint: what is the source of the business funding, and what costs might the business have?) C. the types of decisions that might be made in this organization and how financial and nonfinancial information might help the decision-making processAssume you are considering opening a retail business. You are trying to decide whether to have a traditional brick-and-mortar store or to sell only online. Explain how the activities and costs differ between these two retail arrangements.Uber and Lyft are two popular ride-sharing services. Imagine that you are visiting New York City for a family vacation. You are trying to decide whether to use one of these ride-sharing services to get around the city or rent a car and drive yourself. Considering the perspectives of the passengers (your family), the drivers, and the company (Uber or Lyft), explain the following: A. why ride-sharing services have gained in popularity B. the financial considerations relevant to your decision C. the nonfinancial considerations relevant to your decisionHow would you categorize or classify a company like Disney?Charity Navigator (https://www.charitynavigator.org) is a website dedicated to providing information regarding not-for-profit charitable organizations. A. After reviewing the website, explain how not-for-profit organizations are rated. B. Explain why there is a need for the type of information provided by Charity Navigator. C. Choose one to two charities listed in the website. Explain the information provided about the charity (financial and nonfinancial), the rating of the charity, and any other relevant factors.Use the internet to visit the Securities and Exchange Commission (SEC) website (https://www.sec.gov/). Write a report discussing the following: A. several of the services provided by the SEC B. why the services are important to the investing public C. why you think the SEC would require publicly traded companies to file financial informationImagine that you have just been elected president of your universitys student senate. Assume the university is considering constructing a new student union—a place that offers a variety of stores, restaurants, and entertainment option for students—and has asked the student senate to develop a formal position in support or opposition of the new student union. A. Identify the stakeholders involved in this decision. Discuss the relevant considerations that each stakeholder might have. B. Discuss the financial information that might be helpful in formulating the student senate position. C. Discuss the nonfinancial information that might be helpful in formulating the student senate position.According to a company press release, on January 5, 2012, Hansen Natural Corporation changed its name to Monster Beverage Corporation. According to Yahoo Finance, on that day the value of the company stock (symbol: MNST) was $15.64 per share. On January 5, 2018, the stock closed at $63.49 per share. This represents an increase of nearly 306%. A. Discuss the factors that might influence the increase in share price. B. Consider yourself as a potential shareholder. What factors would you consider when deciding whether or not to purchase shares in Monster Beverage Corporation today?The Dow Jones Industrial Average (DJIA) is often cited as a key metric for business activity. The average is a mathematical formula that uses the stock prices of thirty companies traded on the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation (NASDAQ) system. A. Identify several of the companies that are included in the DJIA. B. Explain why this metric might be commonly used to measure business activity. C. Research the history of the DJIA and note some interesting facts. When did the Dow begin? What was the first value? What was the lowest value? The following is an example of a website that may be helpful: http://www.dow-jones-djia.com/history-of-dow-jones-industrial-average-index/. D. What is the current value of the DJIA? What factors might contribute to the difference between early and current values of the DJIA?Many professional certifications now have requirements for ethics training. A. Define ethics. B. Why does the accounting profession put so much emphasis on acting ethically?The Certified Public Accountant (CPA) exam is a uniform exam that is administered by a national organization. Licenses, however, are issued by individual states. A. Explain why you think each state is responsible for issuing CPA licenses. B. Choose two to three states, and compare and contrast the requirements to become a CPA. Are they fairly consistent or drastically different from each other? A helpful resource is https://www.thiswaytocpa.com/. You may also find it helpful to search the board of accountancy for each state. C. Tax preparation is a large part of what many CPAs do. Students may be interested to know that a CPA (or any other licensing) is not required to prepare tax returns. Assume you know two friends who prepare tax returns for others, one is a CPA and one is not. Assume that both friends intend to move next year and will, therefore, prepare taxes in another state. Analyze this situation.Which of these statements is not one of the financial statements? A. income statement B. balance sheet C. statement of cash flows D. statement of owner investmentsStakeholders are less likely to include which of the following groups? A. owners B. employees C. community leaders D. competitorsIdentify the correct components of the income statement. A. revenues, losses, expenses, and gains B. assets, liabilities, and owners equity C. revenues, expenses, investments by owners, distributions to owners D. assets, liabilities, and dividendsThe balance sheet lists which of the following? A. assets, liabilities, and owners equity B. revenues, expenses, gains, and losses C. assets, liabilities, and investments by owners D. revenues, expenses, gains, and distributions to ownersAssume a company has a $350 credit (not cash) sale. How would the transaction appear if the business uses accrual accounting? A. $350 would show up on the balance sheet as a sale. B. $350 would show up on the income statement as a sale. C. $350 would show up on the statement of cash flows as a cash outflow. D. The transaction would not be reported because the cash was not exchanged.Which of the following statements is true? A. Tangible assets lack physical substance. B. Tangible assets will be consumed in a year or less. C. Tangible assets have physical substance. D. Tangible assets will be consumed in over a year.Owners have no personal liability under which legal business structure? A. a corporation B. a partnership C. a sole proprietorship D. There is liability in every legal business structure.The accounting equation is expressed as ________. A. B. C. D.Which of the following decreases owners equity? A. investments by owners B. losses C. gains D. short-term loansExchanges of assets for assets have what effect on equity? A. increase equity B. may have no impact on equity C. decrease equity D. There is no relationship between assets and equity.All of the following increase owners equity except for which one? A. gains B. investments by owners C. revenues D. acquisitions of assets by incurring liabilitiesWhich of the following is not an element of the financial statements? A. future potential sales price of inventory B. assets C. liabilities D. equityWhich of the following is the correct order of preparing the financial statements? A. income statement, statement of cash flows, balance sheet, statement of owners equity B. income statement, statement of owners equity, balance sheet, statement of cash flows C. income statement, balance sheet, statement of owners equity, statement of cash flows D. income statement, balance sheet, statement of cash flows, statement of owners equityThe three heading lines of financial statements typically include which of the following? A. company, statement title, time period of report B. company headquarters, statement title, name of preparer C. statement title, time period of report, name of preparer D. name of auditor, statement title, fiscal year endWhich financial statement shows the financial performance of the company on a cash basis? A. balance sheet B. statement of owners equity C. statement of cash flows D. income statementWhich financial statement shows the financial position of the company? A. balance sheet B. statement of owners equity C. statement of cash flows D. income statementWorking capital is an indication of the firms ________. A. asset utilization B. amount of noncurrent liabilities C. liquidity D. amount of noncurrent assetsIdentify the four financial statements and describe the purpose of each.Define the term stakeholders. Identify two stakeholder groups, and explain how each group might use the information contained in the financial statements.Identify one similarity and one difference between revenues and gains. Why is this distinction important to stakeholders?Identify one similarity and one difference between expenses and losses. Why is this distinction important to stakeholders?Explain the concept of equity, and identify some activities that affect equity of a business.Explain the difference between current and noncurrent assets and liabilities. Why is this distinction important to stakeholders?Identify/discuss one similarity and one difference between tangible and intangible assets.Name the three types of legal business structure. Describe one advantage and one disadvantage of each.What is the accounting equation? List two examples of business transactions, and explain how the accounting equation would be impacted by these transactions.Identify the order in which the four financial statements are prepared, and explain how the first three statements are interrelated.Explain how the following items affect equity: revenue, expenses, investments by owners, and distributions to owners.Explain the purpose of the statement of cash flows and why this statement is needed.For each independent situation below, calculate the missing values.For each independent situation below, calculate the missing values for owners equityFor each independent situation below, calculate the missing values.For each independent situation below, place an (X) by the transactions that would be included in the statement of cash flows. Table 2.3For each of the following items, identify whether the item is considered current or noncurrent, and explain why. Table 2.4For the items listed below, indicate how the item affects equity (increase, decrease, or no impact. Table 2.5Forest Company had the following transactions during the month of December. What is the December 31 cash balance?Here are facts for the Hudson Roofing Company for December. Assuming no investments or withdrawals, what is the ending balance in the owners capital account?Prepare an income statement using the following information for DL Enterprises for the month of July 2018.Prepare a statement of owners equity using the information provided for Pirate Landing for the month of October 2018.Prepare a balance sheet using the following information for the Ginger Company as of March 31, 2019.For each independent situation below, calculate the missing values.For each independent situation below, calculate the missing values for Owners Equity.For each independent situation below, calculate the missing values.For each of the following independent situations, place an (X) by the transactions that would be included in the statement of cash flows. Table 2.6For each of the following items, identify whether the item is considered current or noncurrent, and explain why. Table 2.7For the items listed below, indicate how the item affects equity (increase, decrease, or no impact). Table 2.8Gumbo Company had the following transactions during the month of December. What was the December 1 cash balance?Here are facts for Haileys Collision Service for January. Assuming no investments or withdrawals, what is the ending balance in the owners capital account?Prepare an income statement using the following information for CK Company for the month of February 2019.Prepare a statement of owners equity using the following information for the Can Due Shop for the month of September 2018.Prepare a balance sheet using the following information for Mikes Consulting as of January 31, 2019.The following information is taken from the records of Baklava Bakery for the year 2019. A. Calculate net income or net loss for January. B. Calculate net income or net loss for February. C. Calculate net income or net loss for March. D. For each situation, comment on how a stakeholder might view the firms performance. (Hint: Think about the source of the income or loss.)Each situation below relates to an independent companys owners equity. A. Calculate the missing values. B. Based on your calculations, make observations about each company.The following information is from a new business. Comment on the year-to-year changes in the accounts and possible sources and uses of funds (how were the funds obtained and used).Each of the following situations relates to a different company. A. For each of these independent situations, find the missing amounts. B. How would stakeholders view the financial performance of each company? Explain.For each of the following independent transactions, indicate whether there was an increase, a decrease, or no impact for each financial statement element. Table 2.9Olivias Apple Orchard had the following transactions during the month of September, the first month in business. Complete the chart to determine the ending balances. As an example, the first transaction has been completed. Note: Negative amounts should be indicated with minus signs and unaffected should be noted as $0. (Hints: 1. each transaction will involve two financial statement elements; 2. the net impact of the transaction may be $0.)Using the information in PA6, determine the amount of revenue and expenses for Olivias Apple Orchard for the month of September.The following ten transactions occurred during the July grand opening of the Pancake Palace. Assume all Retained Earnings transactions relate to the primary purpose of the business. A. Calculate the ending balance for each account. B. Create the income statement. C. Create the statement of owners equity. D. Create the balance sheet.The following information is taken from the records of Rosebloom Flowers for the year 2019. A. Calculate net income or net loss for January. B. Calculate net income or net loss for February. C. Calculate net income or net loss for March. D. For each situation, comment on how a stakeholder might view the firms performance. (Hint: think about the source of the income or loss.)Each situation below relates to an independent companys Owners Equity. A. Calculate the missing values. B. Based on your calculations, make observations about each company.The following information is from a new business. Comment on the year-to-year changes in the accounts and possible sources and uses funds (how were the funds obtained and used).Each of the following situations relates to a different company. A. For each of these independent situations, find the missing amounts. B. How would stakeholders view the financial performance of each company? Explain.For each of the following independent transactions, indicate whether there was an increase, decrease, or no impact on each financial statement element. Table 2.10Mateos Maple Syrup had the following transactions during the month of February, its first month in business. Complete the chart to determine the ending balances. As an example, the first transaction has been completed. Note: negative amounts should be indicated with minus signs . (Hints: 1. each transaction will involve two financial statement elements; 2. the net impact of the transaction may be $0.)Using the information in PB6, determine the amount of revenue and expenses for Mateos Maple Syrup for the month of February.Choose three stakeholders (or stakeholder groups) for Walmart and prepare a written response for each stakeholder. In your written response, consider the factors about the business the particular stakeholder would be interested in. Consider the financial and any nonfinancial factors that would be relevant to the stakeholder (or stakeholder group). Explain why these factors are important. Do some research and see if you can find support for your points.Assume you purchased ten shares of Roku during the companys IPO. Comment on why this might be a good investment. Consider factors such as what you expect to get from your investment, why you think Roku would become a publicly traded company, and what you think is the landscape of the industry Roku is in. What other factors might be relevant to your decision to invest in Roku?A trademark is an intangible asset that has value to a business. Assume that you are an accountant with the responsibility of valuing the trademark of a well-known company such as Nike or McDonalds. What makes each of these companies unique and adds value? While the value of a trademark may not necessarily be recorded on the companys balance sheet, discuss what factors you think would affect (increase or decrease) the value of the companys trademark? Consider your answer through the perspective of various stakeholders.For each of the following ten independent transactions, provide a written description of what occurred in each transaction. Figure 2.4 might help you.The following historical information is from Assisi Community Markets. Calculate the working capital and current ratio for each year. What observations do you make, and what actions might the owner consider taking?That a business may only report activities on financial statements that are specifically related to company operations, not those activities that affect the owner personally, is known as which of the following? A. separate entity concept B. monetary measurement concept C. going concern assumption D. time period assumptionThat companies can present useful information in shorter time periods such as years, quarters, or months is known as which of the following? A. separate entity concept B. monetary measurement concept C. going concern assumption D. time period assumptionThe system of using a monetary unit, such as the US dollar, to value the transaction is known as which of the following? A. separate entity concept B. monetary measurement concept C. going concern assumption D. time period assumptionWhich of the following terms is used when assuming a business will continue to operate in the foreseeable future? A. separate entity concept B. monetary measurement concept C. going concern assumption D. time period assumptionThe independent, nonprofit organization that sets financial accounting and reporting standards for both public- and private-sector businesses that use generally accepted accounting principles (GAAP) in the United States is which of the following? A. Financial Accounting Standards Board (FASB) B. generally accepted accounting principles (GAAP) C. Securities and Exchange Commission (SEC) D. conceptual frameworkThe standards, procedures, and principles companies must follow when preparing their financial statements are known as which of the following? A. Financial Accounting Standards Board (FASB) B. generally accepted accounting principles (GAAP) C. Securities and Exchange Commission (SEC) D. conceptual frameworkThese are used by the FASB, and it is a set of concepts that guide financial reporting. A. Financial Accounting Standards Board (FASB) B. generally accepted accounting principles (GAAP) C. Securities and Exchange Commission (SEC) D. conceptual frameworkThis is the independent federal agency protecting the interests of investors, regulating stock markets, and ensuring companies adhere to GAAP requirements. A. Financial Accounting Standards Board (FASB) B. generally accepted accounting principles (GAAP) C. Securities and Exchange Commission (SEC) D. conceptual frameworkWhich of the following is the principle that a company must recognize revenue in the period in which it is earned; it is not considered earned until a product or service has been provided? A. revenue recognition principle B. expense recognition (matching) principle C. cost principle D. full disclosure principleWhich of the following is the principle that a business must report any business activities that could affect what is reported on the financial statements? A. revenue recognition principle B. expense recognition (matching) principle C. cost principle D. full disclosure principleAlso known as the historical cost principle, ________ states that everything the company owns or controls (assets) must be recorded at their value at the date of acquisition. A. revenue recognition principle B. expense recognition (matching) principle C. cost principle D. full disclosure principleWhich of the following principles matches expenses with associated revenues in the period in which the revenues were generated? A. revenue recognition principle B. expense recognition (matching) principle C. cost principle D. full disclosure principleWhich of the following does not accurately represent the accounting equation? A. B. C. D.Which of these statements is false? A. B. C. D.Which of these accounts is an asset? A. Common Stock B. Supplies C. Accounts Payable D. Fees EarnedWhich of these accounts is a liability? A. Accounts Receivable B. Supplies C. Salaries Expense D. Accounts PayableIf equity equals $100,000, which of the following is true? A. Assets exceed liabilities by $100,000. B. Liabilities exceed equity by $100,000. C. . D. None of the above is true.Which process of the accounting cycle often requires the most analytical thought? A. making a journal entry B. posting transactions to accounts C. summarizing the trial balance D. preparing the financial statementsThe step-by-step process to record business activities and events to keep financial records up to date is ________. A. day-to-day cycle B. accounting cycle C. general ledger D. journalOne operating cycle of a business, which could be a month, quarter, or year, is commonly referred to as which of the following? A. period B. round C. tally D. mark________ takes all transactions from the journal during a period and moves the information to a general ledger (ledger). A. Hitching B. Posting C. Vetting D. LaxingWhich of these events will not be recognized? A. A service is performed, but the payment is not collected on the same day. B. Supplies are purchased. They are not paid for; the company will be billed. C. A copy machine is ordered. It will be delivered in two weeks. D. Electricity has been used but has not been paid for.A company purchased a building twenty years ago for $150,000. The building currently has an appraised market value of $235,000. The company reports the building on its balance sheet at $235,000. What concept or principle has been violated? A. separate entity concept B. recognition principle C. monetary measurement concept D. cost principleWhat is the impact on the accounting equation when a current months utility expense is paid? A. both sides increase B. both sides decrease C. only the Asset side changes D. neither side changesWhat is the impact on the accounting equation when a payment of account payable is made? A. both sides increase B. both sides decrease C. only the Asset side changes D. neither side changesWhat is the impact on the accounting equation when an accounts receivable is collected? A. both sides increase B. both sides decrease C. only the Asset side changes D. the total of neither side changesWhat is the impact on the accounting equation when a sale occurs? A. both sides increase B. both sides decrease C. only the Asset side changes D. neither side changesWhat is the impact on the accounting equation when stock is issued, in exchange for assets? A. both sides increase B. both sides decrease C. only the Asset side changes D. neither side changesWhich of the following accounts is increased by a debit? A. Common Stock B. Accounts Payable C. Supplies D. Service RevenueWhich of the following accounts does not increase with a debit entry? A. Retained Earnings B. Buildings C. Prepaid Rent D. Electricity ExpenseWhich of the following pairs increase with credit entries? A. supplies and retained earnings B. rent expense and unearned revenue C. prepaid rent and common stock D. unearned service revenue and accounts payableWhich of the following pairs of accounts are impacted the same with debits and credits? A. Cash and Unearned Service Revenue B. Electricity Expense and Office Supplies C. Accounts Receivable and Accounts Payable D. Buildings and Common StockWhich of the following accounts will normally have a debit balance? A. Common Stock B. Fees Earned C. Supplies D. Accounts PayableWhat type of account is prepaid insurance? A. Stockholders Equity B. Expense C. Liability D. AssetUnearned service revenue occurs when which of the following occurs? A. company receives cash from a customer before performing the service B. company pays cash before receiving a service from a supplier C. company pays cash after receiving a service from a supplier D. company receives cash from a customer after performing a serviceWhich set of accounts has the same type of normal balance? A. Cash, accounts payable B. Prepaid rent, unearned service revenue C. Dividends, common stock D. Accounts payable, retained earningsWhich of these transactions requires a debit entry to Cash? A. paid balance due to suppliers B. sold merchandise on account C. collected balance due from customers D. purchased supplies for cashWhich of these transactions requires a credit entry to Revenue? A. received cash from services performed this month B. collected balance due from customers C. received cash from bank loan D. refunded a customer for a defective productWhich of these accounts commonly requires both debit and credit entries? A. Sales Revenue B. Utilities Expense C. Accounts Receivable D. Common StockWhich of the following accounting records is the main source of information used to prepare the financial statements? A. journal entries B. T-accounts C. trial balance D. chart of accountsWhich of the following financial statements should be prepared first? A. Balance Sheet B. Income Statement C. Retained Earnings Statement D. Statement of Cash FlowsExplain what conservatism means, and give an example in your own words.State the accounting equation, and explain what each part represents.How do revenues and expenses affect the accounting equation?Does every transaction affect both sides of the accounting equation? Explain your answer.Which is the book of original entry?What is the effect on the accounting equation when a business purchases supplies on account?What is the effect on the accounting equation when a business pays the balance due on accounts payable?Is it still necessary to record a transaction if it has no net effect on the accounting equation? Explain your answer.Why does the combined total of the companys liabilities and equity always equal the total of the companys assets?What do the terms debit and credit mean?Will an accounts receivable balance increase with a debit or a credit entry? How do you know?What types of accounts will increase with a credit?What is a journal?Why is a journal referred to as the book of original entry?What does the term recognize mean?What are the rules you should follow when recording journal entries?What is the general ledger?Explain the steps in posting.What is a T-account? When would we use T-accounts?Explain normal balances. Give three examples of accounts that will normally have a debit balance and three accounts that will normally have a credit balance.What is a prepaid account? What type of account is it?What is an unearned account? What type of account is it?Explain what a T-account is and what purpose it serves.Can a credit entry be described as a generally positive or negative transaction? Explain.What types of accounts are increased with a debit?What types of accounts are increased with a credit?What does an accounts normal balance indicate?Does the order in which financial statements are prepared matter?Answer the following questions about the trial balance: What is the purpose of it? What is the primary usefulness of it?Match the correct term with its definition. A. cost principle i. if uncertainty in a potential financial estimate, a company should err on the side of caution and report the most conservative amount B. full disclosure principle ii. also known as the historical cost principle, states that everything the company owns or controls (assets) must be recorded at their value at the date of acquisition C. separate iii. (also referred to as the matching principle) matches expenses with associated revenues in the period in which the revenues were generated. D. monetary iv. business must report any business activities that could affect what is reported on the financial statements E. conservatism v. system of using a monetary unit by which to value the transaction, such as the US dollar. F. revenue vi. period of time in which you performed the service or gave the customer the product is the period in which revenue is recognized. G. expense vii. business may only report activities on financial statements that are specifically related to company operations, not those activities that affect the owner personally.Consider the following accounts, and determine if the account is an asset (A), a liability (L), or equity (E). A. Accounts Payable B. Cash C. Dividends D. Notes PayableProvide the missing amounts of the accounting equation for each of the following companies.Identify the financial statement on which each of the following accounts would appear: the income statement (IS), the retained earnings statement (RE), or the Balance Sheet (BS). A. Insurance Expense B. Accounts Receivable C. Office Supplies D. Sales Revenue E. Common Stock F. Notes PayableCromwell Company has the following trial balance account balances, given in no certain order, as of December 31, 2018. Using the information provided, prepare Cromwells annual financial statements (omit the Statement of Cash Flows).From the following list, identify which items are considered original sources: A. prepaid insurance B. bank statement C. sales ticket D. general journal E. trial balance F. balance sheet G. telephone bill H. invoice from supplier I. company sales account J. income statementIndicate what impact the following transactions would have on the accounting equation, . Table 3.4For the following accounts please indicate whether the normal balance is a debit or a credit. A. Sales B. Dividends C. Office Supplies D. Retained Earnings E. Accounts Receivable F. Prepaid Rent G. Prepaid Insurance H. Wages Payable I. Building J. Wages ExpenseIndicate what impact the following transactions would have on the accounting equation, . Table 3.5Identify the normal balance for each of the following accounts. Choose Dr for Debit; Cr for Credit. Table 3.6Identify whether each of the following transactions would be recorded with a debit (Dr) or credit (Cr) entry. Table 3.7Identify whether each of the following transactions would be recorded with a debit (Dr) or credit (Cr) entry. Table 3.8Identify whether ongoing transactions posted to the following accounts would normally have only debit entries (Dr), only credit entries (Cr), or both debit and credit entries (both). Table 3.9Determine whether the balance in each of the following accounts increases with a debit or a credit. A. Cash B. Common Stock C. Equipment D. Accounts Payable E. Fees Earned F. Electricity ExpenseJournalize for Harper and Co. each of the following transactions or state no entry required and explain why. Be sure to follow proper journal writing rules. A. A corporation is started with an investment of $50,000 in exchange for stock. B. Equipment worth $4,800 is ordered. C. Office supplies worth $750 are purchased on account. D. A part-time worker is hired. The employee will work 15–20 hours per week starting next Monday at a rate of $18 per hour. E. The equipment is received along with the invoice. Payment is due in three equal monthly installments, with the first payment due in sixty days.Discuss how each of the following transactions for Watson, International, will affect assets, liabilities, and stockholders equity, and prove the companys accounts will still be in balance. A. An investor invests an additional $25,000 into a company receiving stock in exchange. B. Services are performed for customers for a total of $4,500. Sixty percent was paid in cash, and the remaining customers asked to be billed. C. An electric bill was received for $35. Payment is due in thirty days. D. Part-time workers earned $750 and were paid. E. The electric bill in C is paid.For each item that follows, indicate whether a debit or a credit applies. A. increase in prepaid insurance B. increase in utilities expense C. increase in commissions earned D. increase in supplies E. decrease in retained earnings F. decrease in income taxes payable G. increase in unearned revenue H. increase in salaries expense I. decrease in notes receivable J. increase in common stockIndicate whether each account that follows has a normal debit or credit balance. A. Unearned Revenue B. Office Machines C. Prepaid Rent D. Cash E. Legal Fees Earned F. Salaries Payable G. Dividends H. Accounts Receivable I. Advertising Expense J. Retained EarningA business has the following transactions: The business is started by receiving cash from an investor in exchange for common stock $20,000 The business purchases supplies on account $500 The business purchases furniture on account $2,000 The business renders services to various clients on account totaling $9,000 The business pays salaries $2,000 The business pays this months rent $3,000 The business pays for the supplies purchased on account. The business collects from one of its clients for services rendered earlier in the month $1,500. What is total income for the month?Prepare journal entries to record the following transactions. A. January 22, purchased, an asset, merchandise inventory B. on account for $2,800. C. February 10, paid creditor for part of January 22 purchase, $1,600Prepare journal entries to record the following transactions. A. July 1, issued common stock for cash, $15,000 B. July 15, purchased supplies, on account, $1,800 C. July 25, billed customer for accounting services provided, $950Prepare journal entries to record the following transactions. A. March 1, purchased land for cash, $20,000 B. March 11, purchased merchandise inventory, on account, $18,500 C. March 15, Sold merchandise to customer for cash, $555Post the following February transactions to T-accounts for Accounts Receivable and Cash, indicating the ending balance (assume no beginning balances in these accounts). A. provided legal services to customers for cash, $5,600 B. provided legal services to customers on account, $4,700 C. collected cash from customer accounts, $3,500Post the following November transactions to T-accounts for Accounts Payable and Inventory, indicating the ending balance (assume no beginning balances in these accounts). A. purchased merchandise inventory on account, $22,000 B. paid vendors for part of inventory purchased earlier in month, $14,000 C. purchased merchandise inventory for cash, $6,500Prepare an unadjusted trial balance, in correct format, from the alphabetized account information as follows. Assume all accounts have normal balances.Match the correct term with its definition. A. Financial Accounting Standards Board FASB) i. used by the FASB, which is a set of concepts that guide financial reporting B. generally accepted accounting principles (GAAP) ii. independent, nonprofit organization that sets financial accounting and reporting standards for both public- and private-sector businesses that use generally accepted accounting principles (GAAP) here in the United States C. Securities and Exchange Commission SEC) iii. standards, procedures, and principles companies must follow when preparing their financial statements D. conceptual framework iv. assumes a business will continue to operate in the foreseeable future E. going concern assumption v. independent federal agency protecting the interests of investors, regulating stock markets, and ensuring companies adhere to GAAP requirements F. time period assumption vi. companies can present useful information in shorter time periods such as years, quarters, or monthsConsider the following accounts and determine if the account is an asset (A), a liability (L), or equity (E). A. Accounts Receivable B. Sales Revenue C. Land D. Unearned RevenueProvide the missing amounts of the accounting equation for each of the following companies.From the following list, identify which items are considered original sources: A. accounts receivable B. receipt from post office for post office box C. purchase order D. general ledger E. adjusted trial balance F. statement of retained earnings G. electric bill H. packing slip I. company expense account J. statement of cash flowsIndicate what impact the following transactions would have on the accounting equation, . Table 3.10For the following accounts indicate whether the normal balance is a debit or a credit. A. Unearned Revenue B. Interest Expense C. Rent Expense D. Rent Revenue E. Accounts Payable F. Cash G. Supplies H. Accounts Payable I. Equipment J. Utilities ExpenseWhich two accounts are affected by each of the following transactions? Table 3.11Identify the normal balance for each of the following accounts. Choose Dr for Debit; Cr for Credit. Table 3.12Identify whether each of the following transactions would be recorded with a debit (Dr) or credit (Cr) entry. Table 3.13Identify whether each of the following transactions would be recorded with a debit (Dr) or credit (Cr) entry. Table 3.14Identify whether ongoing transactions posted to the following accounts would normally have only debit entries (Dr), only credit entries (Cr), or both debit and credit entries (both). Table 3.15West End Inc., an auto mechanic shop, has the following account balances, given in no certain order, for the quarter ended March 31, 2019. Based on the information provided, prepare West Ends annual financial statements (omit the Statement of Cash Flows). Prepare West Ends annual financial statements. (Omit the Statement of Cash Flows.)State whether the balance in each of the following accounts increases with a debit or a credit. A. Office Supplies B. Retained Earnings C. Salaries Expense D. Accounts Receivable E. Service RevenueJournalize each of the following transactions or state no entry required and explain why. Be sure to follow proper journal writing rules. A. A company is started with an investment of a machine worth $40,000. Common stock is received in exchange. B. Office furniture is ordered. The furniture worth $7,850 will be delivered in one week. The payment will be due forty-five days after delivery. C. An advertisement was run in the newspaper at a total cost of $250. Cash was paid when the order was placed. D. The office furniture is delivered. E. Services are performed for a client. The client was billed for $535.Discuss how each of the following transactions will affect assets, liabilities, and stockholders equity, and prove the companys accounts will still be in balance. A. A company purchased $450 worth of office supplies on credit. B. The company parking lot was plowed after a blizzard. A check for $75 was given to the plow truck operator. C. $250 was paid on account. D. A customer paid $350 on account. E. Provided services for a customer, $500. The customer asked to be billed.For each of the following items, indicate whether a debit or a credit applies. A. increase in retained earnings B. decrease in prepaid rent C. increase in dividends D. decrease in salaries payable E. increase in accounts receivable F. decrease in common stock G. decrease in prepaid insurance H. decrease in advertising expense I. decrease in unearned service fees J. increase in office equipmentIndicate whether each of the following accounts has a normal debit or credit balance. A. prepaid landscaping expense B. common stock C. delivery vans D. maintenance expense E. retained earnings F. office supplies G. revenue earned H. accounts payable I. unearned painting revenue J. interest payableKrespy Corp. has a cash balance of $7,500 before the following transactions occur: A. received customer payments of $965 B. supplies purchased on account $435 C. services worth $850 performed, 25% is paid in cash the rest will be billed D. corporation pays $275 for an ad in the newspaper E. bill is received for electricity used $235. F. dividends of $2,500 are distributed What is the balance in cash after these transactions are journalized and posted?A business has the following transactions: A. The business is started by receiving cash from an investor in exchange for common stock $10,000. B. Rent of $1,250 is paid for the first month. C. Office supplies are purchased for $375. D. Services worth $3,450 are performed. Cash is received for half. E. Customers pay $1,250 for services to be performed next month. F. $6,000 is paid for a one year insurance policy. G. We receive 25% of the money owed by customers in D. H. A customer has placed an order for $475 of services to be done this coming week. How much total revenue does the company have?Prepare journal entries to record the following transactions. A. November 19, purchased merchandise inventory, on account, $12,000 B. November 29, paid creditor for part of November 19 purchase, $10,000Prepare journal entries to record the following transactions: A. December 1, collected balance due from customer account, $5,500 B. December 12, paid creditors for supplies purchased last month, $4,200 C. December 31, paid cash dividend to stockholders, $1,000Prepare journal entries to record the following transactions: A. October 9, issued common stock in exchange for building, $40,000 B. October 12, purchased supplies on account, $3,600 C. October 24, paid cash dividend to stockholders, $2,500Post the following August transactions to T-accounts for Accounts Payable and Supplies, indicating the ending balance (assume no beginning balances in these accounts): A. purchased supplies on account, $600 B. paid vendors for supplies delivered earlier in month, $500 C. purchased supplies for cash, $450Post the following July transactions to T-accounts for Accounts Receivable and Cash, indicating the ending balance (assume no beginning balances in these accounts): A. sold products to customers for cash, $8,500 B. sold products to customers on account, $2,900 C. collected cash from customer accounts, $1,600Prepare an unadjusted trial balance, in correct format, from the alphabetized account information as follows. Assume all accounts have normal balances.For each of the following situations write the principle, assumption, or concept that justifies or explains what occurred. A. A landscaper received a customers order and cash prepayment to install sod at a house that would not be ready for installation until March of next year. The owner should record the revenue from the customer order in March of next year, not in December of this year. B. A company divides its income statements into four quarters for the year. C. Land is purchased for $205,000 cash; the land is reported on the balance sheet of the purchaser at $205,000. D. Brandys Flower Shop is forecasting its balance sheet for the next five years. E. When preparing financials for a company, the owner makes sure that the expense transactions are kept separate from expenses of the other company that he owns. F. A company records the expenses incurred to generate the revenues reported.Assuming the following account balances, what is the missing value?Assuming the following account balance changes for the period, what is the missing value?Assuming the following account balance changes for the period, what is the missing value?Identify the financial statement on which each of the following account categories would appear: the balance sheet (BS), the income statement (IS), or the retained earnings statement (RE). Indicate the normal balance (Dr for debit; Cr for credit) for each account category. Table 3.16Indicate what impact ( for increase; for decrease) the following transactions would have on the accounting equation, . Table 3.17Indicate how changes in the following types of accounts would be recorded (Dr for debit; Cr for credit). Table 3.18Identify the normal balance (Dr for Debit; Cr for Credit) and type of account (A for asset, L for liability, E for equity, E-rev for revenue, E-exp for expense, and E-eq for equity) for each of the following items. Table 3.19Indicate the net effect ( for increase; for decrease; 0 for no effect) of each of the following transactions on each part of the accounting equation, . For example, for payment of an accounts payable balance, . A. sale of merchandise to customer on account B. payment on note payable C. purchase of equipment for cash D. collection of accounts receivable E. purchase of supplies on accountIdentify whether the following transactions would be recorded with a debit (Dr) or credit (Cr) entry. Indicate the normal balance of the account. Table 3.20The following information is provided for the first month of operations for Legal Services Inc.: A. The business was started by selling $100,000 worth of common stock. B. Six months rent was paid in advance, $4,500. C. Provided services in the amount of $1,000. The customer will pay at a later date. D. An office worker was hired. The worker will be paid $275 per week. E. Received $500 in payment from the customer in C. F. Purchased $250 worth of supplies on credit. G. Received the electricity bill. We will pay the $110 in thirty days. H. Paid the worker hired in D for one weeks work. I. Received $100 from a customer for services we will provide next week. J. Dividends in the amount of $1,500 were distributed. Prepare the necessary journal entries to record these transactions. If an entry is not required for any of these transactions, state this and explain why.Sewn for You had the following transactions in its first week of business. A. Jessica Johansen started Sewn for You, a seamstress business, by contributing $20,000 and receiving stock in exchange. B. Paid $2,250 to cover the first three months rent. C. Purchased $500 of sewing supplies. She paid cash for the purchase. D. Purchased a sewing machine for $1,500 paying $200 cash and signing a note for the balance. E. Finished a job for a customer earning $180. The customer paid cash. F. Received a $500 down payment to make a wedding dress. G. Received an electric bill for $125 which is due to be paid in three weeks. H. Completed an altering job for $45. The customer asked to be billed. Prepare the necessary journal entries to record these transactions. If an entry is not required for any of these transactions, state this and explain why.George Hoskin started his own business, Hoskin Hauling. The following transactions occurred in the first two weeks: A. George Hoskin contributed cash of $12,000 and a truck worth $10,000 to start the business. He received Common Stock in return. B. Paid two months rent in advance, $800. C. Agreed to do a hauling job for a price of $1,200. D. Performed the hauling job discussed in C. We will get paid later. E. Received payment of $600 on the hauling job done in D. F. Purchased gasoline on credit, $50. G. Performed another hauling job. Earned $750, was paid cash. Record the following transactions in T-accounts. Label each entry with the appropriate letter. Total the T-accounts when you are done.Prepare journal entries to record the following transactions. Create a T-account for Cash, post any entries that affect the account, and calculate the ending balance for the account. Assume a Cash beginning balance of $16,333. A. February 2, issued stock to shareholders, for cash, $25,000 B. March 10, paid cash to purchase equipment, $16,000Prepare journal entries to record the following transactions. Create a T-account for Accounts Payable, post any entries that affect the account, and tally ending balance for the account. Assume an Accounts Payable beginning balance of $5,000. A. February 2, purchased an asset, merchandise inventory, on account, $30,000 B. March 10, paid creditor for part of February purchase, $12,000Prepare journal entries to record the following transactions for the month of July: A. on first day of the month, paid rent for current month, $2,000 B. on tenth day of month, paid prior month balance due on accounts, $3,100 C. on twelfth day of month, collected cash for services provided, $5,500 D. on twenty-first day of month, paid salaries to employees, $3,600 E. on thirty-first day of month, paid for dividends to shareholders, $800Prepare journal entries to record the following transactions for the month of November: A. on first day of the month, issued common stock for cash, $20,000 B. on third day of month, purchased equipment for cash, $10,500 C. on tenth day of month, received cash for accounting services, $14,250 D. on fifteenth day of month, paid miscellaneous expenses, $3,200 E. on last day of month, paid employee salaries, $8,600Post the following July transactions to T-accounts for Accounts Receivable, Sales Revenue, and Cash, indicating the ending balance. Assume no beginning balances in these accounts. A. on first day of the month, sold products to customers for cash, $13,660 B. on fifth day of month, sold products to customers on account, $22,100 C. on tenth day of month, collected cash from customer accounts, $18,500Post the following November transactions to T-accounts for Accounts Payable, Inventory, and Cash, indicating the ending balance. Assume no beginning balances in Accounts Payable and Inventory, and a beginning Cash balance of $36,500. A. purchased merchandise inventory on account, $16,000 B. paid vendors for part of inventory purchased earlier in month, $12,000 C. purchased merchandise inventory for cash, $10,500Prepare an unadjusted trial balance, in correct format, from the following alphabetized account information. Assume accounts have normal balances.Prepare an unadjusted trial balance, in correct format, from the following alphabetized account information. Assume all the accounts have normal balances.Assuming the following account balances, what is the missing value?Assuming the following account balance changes for the period, what is the missing value?Assuming the following account balance changes for the period, what is the missing value?Identify the financial statement on which each of the following account categories would appear: the balance sheet (BS), the income statement (IS), or the retained earnings statement (RE). Table 3.21Indicate what impact ( for increase; for decrease) the following transactions would have on the accounting equation, . Table 3.22Indicate how changes in these types of accounts would be recorded (Dr for debit; Cr for credit). Table 3.23Identify the normal balance (Dr for Debit; Cr for Credit) and type of account (A for asset, L for liability, E for equity, E-rev for revenue, E-exp for expense, and E-eq for equity) for each of the following accounts. Table 3.24Indicate the net effect ( for increase; for decrease; 0 for no effect) of each of the following transactions on each part of the accounting equation, . For example, for payment of an accounts payable balance, . A. Payment of principal balance of note payable B. Purchase of supplies for cash C. Payment of dividends to stockholders D. Issuance of stock for cash E. Billing customer for physician services providedPrepare journal entries to record the following transactions. Create a T-account for Cash, post any entries that affect the account, and calculate the ending balance for the account. Assume a Cash beginning balance of $37,400. A. May 12, collected balance due from customers on account, $16,000 B. June 10, purchased supplies for cash, $4,444Prepare journal entries to record the following transactions. Create a T-account for Accounts Payable, post any entries that affect the account, and calculate the ending balance for the account. Assume an Accounts Payable beginning balance of $7,500. A. May 12, purchased merchandise inventory on account. $9,200 B. June 10, paid creditor for part of previous months purchase, $11,350Prepare journal entries to record the following transactions that occurred in April: A. on first day of the month, issued common stock for cash, $15,000 B. on eighth day of month, purchased supplies, on account, $1,800 C. on twentieth day of month, billed customer for services provided, $950 D. on twenty-fifth day of month, paid salaries to employees, $2,000 E. on thirtieth day of month, paid for dividends to shareholders, $500Prepare journal entries to record the following transactions that occurred in March: A. on first day of the month, purchased building for cash, $75,000 B. on fourth day of month, purchased inventory, on account, $6,875 C. on eleventh day of month, billed customer for services provided, $8,390 D. on nineteenth day of month, paid current month utility bill, $2,000 E. on last day of month, paid suppliers for previous purchases, $2,850Post the following November transactions to T-accounts for Accounts Payable, Inventory, and Cash, indicating the ending balance. Assume no beginning balances in Accounts Payable and Inventory, and a beginning Cash balance of $21,220. A. purchased merchandise inventory on account, $9,900 B. paid vendors for part of inventory purchased earlier in month, $6,500 C. purchased merchandise inventory for cash, $4,750Post the following July transactions to T-accounts for Accounts Receivable, Sales Revenue, and Cash, indicating the ending balance. Assume no beginning balances in these accounts. A. sold products to customers for cash, $7,500 B. sold products to customers on account, $12,650 C. collected cash from customer accounts, $9,500Prepare an unadjusted trial balance, in correct format, from the following alphabetized account information. Assume all accounts have normal balances.Prepare an unadjusted trial balance, in correct format, from the following alphabetized account information. Assume all accounts have normal balances.Prepare an unadjusted trial balance, in correct format, from the following alphabetized account information. Assume all accounts have normal balances.Prepare an unadjusted trial balance, in correct format, from the following alphabetized account information. Assume all accounts have normal balances.Is it possible to be too conservative? Explain your answer.Why is it important to learn all of this terminology when accounting is a quantitative subject?Assume that you are the controller of a business that provides legal services to clients. Suppose that the company has had a tough year, so the revenues have been lagging behind, based on previous years standards. What would you do if your boss (the chief executive officer [CEO] of the company) asked to reclassify a transaction to report loan proceeds of $150,000 as if the cash came from service fee revenue from clients instead. Would following the CEOs advice impact the companys accounting equation? How would reclassifying this one transaction change the outcome of the balance sheet, the income statement, and the statement of retained earnings? Would making this reclassification change the perception that users of the financial statements would have of the companys current year success and future year potential? Write a memo, detailing your willingness (or not) to embrace this suggestion, giving reasons behind your decision. Remember to exercise diplomacy, even if you must dissent from the opinion of a supervisor. Note that the challenge of the assignment is to keep your integrity intact, while also keeping your job, if possible.Is the order in which we place information in the journal and ledger important?Analyze Trusty Companys trial balance and the additional information provided to determine the following: A. what is causing the trial balance to be out of balance B. any other errors that require corrections that are identified during your analysis C. the effect (if any) that correcting the errors will have on the accounting equation A review of transactions revealed the following facts: A service fee of $18,000 was earned (but not yet collected) by the end of the period but was accidentally not recorded as revenue at that time. A transposition error occurred when transferring the account balances from the ledger to the trial balance. Salaries expense should have been listed on the trial balance as $64,500 but was inadvertently recorded as $46,500. Two machines that cost $9,000 each were purchased on account but were not recorded in company accounting records.Which of the following is any reporting period shorter than a full year (fiscal or calendar) and can encompass monthly, quarterly, or half-year statements? A. fiscal year B. interim period C. calendar year D. fixed yearWhich of the following is the federal, independent agency that provides oversight of public companies to maintain fair representation of company financial activities for investors to make informed decisions? A. IRS (Internal Revenue Service) B. SEC (Securities and Exchange Commission) C. FASB (Financial Accounting Standards Board) D. FDIC (Federal Deposit Insurance Corporation)Revenues and expenses must be recorded in the accounting period in which they were earned or incurred, no matter when cash receipts or outlays occur under which of the following accounting methods? A. accrual basis accounting B. cash basis accounting C. tax basis accounting D. revenue basis accountingWhich of the following breaks down company financial information into specific time spans, and can cover a month, quarter, half-year, or full year? A. accounting period B. yearly period C. monthly period D. fiscal periodWhich of the following is a twelve-month reporting cycle that can begin in any month, except January 1, and records financial data for that twelve-month consecutive period? A. fixed year B. interim period C. calendar year D. fiscal yearWhich type of adjustment occurs when cash is either collected or paid, but the related income or expense is not reportable in the current period? A. accrual B. deferral C. estimate D. cullWhich type of adjustment occurs when cash is not collected or paid, but the related income or expense is reportable in the current period? A. accrual B. deferral C. estimate D. cullIf an adjustment includes an entry to a payable or receivable account, which type of adjustment is it? A. accrual B. deferral C. estimate D. cullIf an adjustment includes an entry to Accumulated Depreciation, which type of adjustment is it? A. accrual B. deferral C. estimate D. cullRent collected in advance is an example of which of the following? A. accrued expense B. accrued revenue C. deferred expense (prepaid expense) D. deferred revenue (unearned revenue)Rent paid in advance is an example of which of the following? A. accrued expense B. accrued revenue C. deferred expense (prepaid expense) D. deferred revenue (unearned revenue)Salaries owed but not yet paid is an example of which of the following? A. accrued expense B. accrued revenue C. deferred expense (prepaid expense) D. deferred revenue (unearned revenue)Revenue earned but not yet collected is an example of which of the following? A. accrued expense B. accrued revenue C. deferred expense (prepaid expense) D. deferred revenue (unearned revenue)What adjusting journal entry is needed to record depreciation expense for the period? A. a debit to Depreciation Expense; a credit to Cash B. a debit to Accumulated Depreciation; a credit to Depreciation Expense C. a debit to Depreciation Expense; a credit to Accumulated Depreciation D. a debit to Accumulated Depreciation; a credit to CashWhich of these transactions requires an adjusting entry (debit) to Unearned Revenue? A. revenue earned but not yet collected B. revenue collected but not yet earned C. revenue earned before being collected, when it is later collected D. revenue collected before being earned, when it is later earnedWhat critical purpose does the adjusted trial balance serve? A. It proves that transactions have been posted correctly B. It is the source document from which to prepare the financial statements C. It shows the beginning balances of every account, to be used to start the new years records D. It proves that all journal entries have been made correctly.Which of the following accounts balance would be a different number on the Balance Sheet than it is on the adjusted trial balance? A. accumulated depreciation B. unearned service revenue C. retained earnings D. dividendsOn which financial statement would the Supplies account appear? A. Balance Sheet B. Income Statement C. Retained Earnings Statement D. Statement of Cash FlowsOn which financial statement would the Dividends account appear? A. Balance Sheet B. Income Statement C. Retained Earnings Statement D. Statement of Cash FlowsOn which financial statement would the Accumulated Depreciation account appear? A. Balance Sheet B. Income Statement C. Retained Earnings Statement D. Statement of Cash FlowsOn which two financial statements would the Retained Earnings account appear? A. Balance Sheet B. Income Statement C. Retained Earnings Statement D. Statement of Cash FlowsDescribe the revenue recognition principle. Give specifics.Describe the expense recognition principle (matching principle). Give specifics.What parts of the accounting cycle require analytical processes, rather than methodical processes? Explain.Why is the adjusting process needed?Name two types of adjusting journal entries that are commonly made before preparing financial statements? Explain, with examples.Are there any accounts that would never have an adjusting entry? Explain.