ACC 205 Week 2
Week Two Exercise Assignment
Revenue and Expenses
1. Recognition of concepts. Jim Armstrong operates a small company that books entertainers for theaters, parties, conventions, and so forth. The company’s fiscal year ends on June 30. Consider the following items and classify each as either (1) prepaid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the foregoing.
a. Interest owed on the company's bank loan, to be paid in early July
Prepaid expense
b. Professional fees earned but not billed as of June 30
Accrued revenue
c. Office supplies on hand at year-end
Prepaid expense
d. An advance payment from a client for a performance next month at a convention
Unearned revenue
e. The payment in part (d) from the client's point of view
Prepaid expense
f. Amounts paid on June 30 for a 1-year insurance policy
Prepaid expense
g. The bank loan payable in part (a)
None of the foregoing
h. Repairs to the firm's copy machine, incurred and paid in June
None of the foregoing
2. Understanding the closing process. Examine the following list of accounts:
Note Payable | Accumulated Depreciation: Building |
Alex Kenzy, Drawing | Accounts Payable |
Product Revenue | Cash |
Accounts Receivable | Supplies Expense |
Utility Expense |
Which of the preceding accounts
a. Appear on a post-closing trial balance?
Note Payable, Accounts Payable, Cash, Accounts Receivable and Accumulated Depreciation: Building
b. are commonly known as temporary, or nominal, accounts?
Supplies Expense, UtilityExpense
c. generate a debit to Income Summary in the closing process?
Product Revenue
d. are closed to the capital account in the closing process?
Alex Kenzy, Drawing
3. Adjusting entries and financial statements. The following information pertains to Sally Corporation: * The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one half
Revenue and Expenses
1. Recognition of concepts. Jim Armstrong operates a small company that books entertainers for theaters, parties, conventions, and so forth. The company’s fiscal year ends on June 30. Consider the following items and classify each as either (1) prepaid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the foregoing.
a. Interest owed on the company's bank loan, to be paid in early July
Prepaid expense
b. Professional fees earned but not billed as of June 30
Accrued revenue
c. Office supplies on hand at year-end
Prepaid expense
d. An advance payment from a client for a performance next month at a convention
Unearned revenue
e. The payment in part (d) from the client's point of view
Prepaid expense
f. Amounts paid on June 30 for a 1-year insurance policy
Prepaid expense
g. The bank loan payable in part (a)
None of the foregoing
h. Repairs to the firm's copy machine, incurred and paid in June
None of the foregoing
2. Understanding the closing process. Examine the following list of accounts:
Note Payable | Accumulated Depreciation: Building |
Alex Kenzy, Drawing | Accounts Payable |
Product Revenue | Cash |
Accounts Receivable | Supplies Expense |
Utility Expense |
Which of the preceding accounts
a. Appear on a post-closing trial balance?
Note Payable, Accounts Payable, Cash, Accounts Receivable and Accumulated Depreciation: Building
b. are commonly known as temporary, or nominal, accounts?
Supplies Expense, UtilityExpense
c. generate a debit to Income Summary in the closing process?
Product Revenue
d. are closed to the capital account in the closing process?
Alex Kenzy, Drawing
3. Adjusting entries and financial statements. The following information pertains to Sally Corporation: * The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one half