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Chapter 3: Q1QS_1 (page 139)

Choose from the following list of terms/phrases to best complete the statements below.
a. Fiscal year d. Accounting period g. Natural business year
b. Timeliness e. Annual financial statements h. Time period assumption
c. Calendar year f. Interim financial statements i. Quarterly statements
1. presumes that an organization’s activities can be divided into specific time periods.
2. Financial reports covering a one-year period are known as .
3. A(n) consists of any 12 consecutive months.
4. A(n) consists of 12 consecutive months ending on December 31.
5. The value of information is often linked to its .

Short Answer

Expert verified

Time periods assumption is the correct option.

Step by step solution

01

Definition of organization’s activities

An organization’s activities mean those activities that the organization performs.

02

Specific time period

The assumption that assumes specific time periods' activities is known as the time period assumption. Under this, all activities are divided based on their time periods. Time periods assumption is the used to divide the life of company in different time periods. This help in the prepration of financial reports preodically.

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Most popular questions from this chapter

In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank.

A. Current assets E. Current liabilities

B. Long-term investments F. Long-term liabilities

C. Plant assets G. Equity

D. Intangible assets

12. Salaries payable

What are the steps in recording closing entries?

Adjusting entries affect at least one balance sheet account and at least one income statement account.

For the entries below, identify the account to be debited and the account to be credited from the following

accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated

Depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense;

Depreciation Expense. Indicate which of the accounts is the income statement account and which is

the balance sheet account.

a. Entry to record revenue earned that was previously received as cash in advance.

b. Entry to record wage expenses incurred but not yet paid (nor recorded).

c. Entry to record revenue earned but not yet billed (nor recorded).

d. Entry to record expiration of prepaid insurance.

e. Entry to record annual depreciation expense.

Prepare adjusting journal entries for the year ended (date of) December 31, 2017, for each of these separate situations.

(Entries can draw from the following partial chart of accounts: Cash; Accounts Receivable; Supplies;

Prepaid Insurance; Equipment; Accumulated Depreciation—Equipment; Wages Payable; Unearned Revenue;

Revenue; Wages Expense; Supplies Expense; Insurance Expense; Depreciation Expense—Equipment.)

a. Depreciation on the company’s equipment for 2017 is computed to be \(18,000.

b. The Prepaid Insurance account had a \)6,000 debit balance at December 31, 2017, before adjusting for

the costs of any expired coverage. An analysis of the company’s insurance policies showed that \(1,100

of unexpired insurance coverage remains.

c. The Office Supplies account had a \)700 debit balance on December 31, 2016; and \(3,480 of office

supplies were purchased during the year. The December 31, 2017, physical count showed \)300 of supplies

available.

d. Two-thirds of the work related to \(15,000 of cash received in advance was performed this period.

e. The Prepaid Insurance account had a \)6,800 debit balance at December 31, 2017, before adjusting for the

costs of any expired coverage. An analysis of insurance policies showed that \(5,800 of coverage had expired.

f. Wage expenses of \)3,200 have been incurred but are not paid as of December 31, 2017.

Refer to Samsung’s financial statements in Appendix A. What journal entry was likely recorded as of December 31, 2015, to close its Income Summary account?

See all solutions

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