Chapter 3: Q3-3DQ (page 139)
Question: What type of business is most likely to select a fiscal year that corresponds to its natural business year instead of the calendar year?
By seasonal businesses.
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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
B. Long-term investments
C. Plant assets
D. Intangible assets
E. Current liabilities
F. Long-term liabilities
G. Equity
5. Taxes payable
Question: 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 .
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.
Question: What is a prepaid expense, and where is it reported in the financial statements?
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
10. Office equipment
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