At December 31, 2010, McToil, Inc. owes its employees 20,000 for work performed in 2010. Payday is not until the first week in January 2011. What is the effect of the December 31, 2010 adjusting entry on the company's total assets?
A) increase
B) decrease
C) no effect
D) changed in a way that cannot be predicted
(
Q. 2) To reconcile the bank statement, which of the following amounts would be subtracted from the checkbook balance?
a. service charge
b. outstanding checks
c. deposits in transit
d. amounts collected by the bank for the depositor's account
(
Q. 3) Dividends are ________.
A) the same as expenses
B) a reduction in retained earnings
C) owners' contributions to the firm
D) another term for each partner's share of partnership income
(
Q. 4) When the perpetual inventory system is used, the inventory sold is debited to
a. Supplies Expense
b. Cost of Merchandise Sold
c. Merchandise Inventory
d. Sales
(
Q. 5) The employees of Curel, Inc get paid every Friday for a 5-day workweek (Monday through Friday). The total payroll is 6,000 per day of work.
If the accounting period ends on Tuesday of a given week, what adjustment must be made to the company's accounting records?
A) Increase Salaries payable by 12,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
B) Increase Salaries payable by 12,000 and increase shareholders' equity by recognizing Salaries expense for the same amount.
C) Decrease Cash by 12,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
D) No adjustment is necessary because there is no expense until the employees are paid on Friday.
(
Q. 6) South Seas reported the following items on its financial statements. Determine the amount of net income. Then calculate the ending balance for retained earnings.
Sales 300,000
Cost of goods sold 180,000
Operating expenses 40,000
Net income ??
Dividends 2,000
Beginning retained earnings 30,500
Quick Reply
