WGU D103 Intermediate Accounting 1: Units 2-4 Pre-Assessment 100% Solved

WGU D103 Intermediate Accounting 1: Units 2-4 Pre-Assessment 100% Solved Report a $3500 sale on account Debit: Accounts Receivable $3500; Credit: Service Revenue $3500 Journalize depreciation for the equipment that is $5,000 Debit: Depreciation Expense $5000; Credit: Accumulated-Depreciation Equipment $5000 Journalize the adjusting entry for an employer that owes $1300 for payroll on Jan 10, 2021, for the payroll period ending December 31, 2020. Debit: Salaries and Wages Expense $1300; Credit: Salaries and Wages Payable $1300 Calculate and journalize the annual adjusting entry to be made after a six-month insurance policy was purchased on September 1, 2020, for $3,600. Period ending Dec 31.2020 Debit: Insurance Expense $2400; Credit: Prepaid Insurance $2400 Sales Revenue Sales-Income Statement Accounts Receivable Sales-Income Statement Sales Discounts Sales-Income Statement Sales Returns and Allowances Sales-Income Statement (revenue section) Advertising Expense Selling Expense-Income Statement Salaries-Sales Selling Expense-Income Statement Travel & Entertainment for Sales Personnel Selling Expense-Income Statement Insurance Expense Administrative Expense-Income Statement Salaries-Officers Administrative Expense-Income Statement Legal and Professional Services Administrative Expense-Income Statement Rent Revenue other revenues and gains-income statement Gain on sale of land other revenues and gains- income statement Interest on bonds and notes other expenses and losses-income statement Supplies Inventory current asset-balance sheet Prepaid Insurance current asset-balance sheet investments available for sale current asset-balance sheet Equity Investment long-term asset-balance sheet equipment property, plant, and equipment-balance sheet cash current asset-balance sheet Accumulated Depreciation - Equipment property, plant, and equipment-balance sheet Trademark intangible asset-balance sheet Accounts Payable current liabilities-balance sheet Salaries and Wages Payable current liabilities-balance sheet Unearned Service Revenue current liabilities-balance sheet bonds payable (due more than a year from now) long-term liabilities-balance sheet Notes Payable (due more than a year from now) long-term liabilities-balance sheet common stock Stockholders' Equity, Balance Sheet retained earnings Stockholder's Equity, Balance Sheet Gain on Sale of Investments negative for operating activities-statement of cash flows Accounts Receivable (statement of cash flows) negative for operating activities Depreciation expense (statement of cash flows) positive for operating activities sale of investments investing activities purchase of land investing activities (negative) Issuance of common stock financing activity Payment of cash dividends financing activity (negative) Retirement of notes payable financing activity (negative) Which basic objective is associated with the conceptual framework for financial reporting? Decision-Usefulness What entity requires that members prepare financial statements in accordance with GAAP? AICPA's Code of Professional Conduct What is addressed in Rule 203 of the Code of Professional Conduct? Financial statements being based on generally accepted accounting principles What organization provides implementation guidance within the framework of the Codification to reduce diversity in practice on a timely basis? AAA (American Accounting Association) The "why"-purpose of accounting Objective of financial reporting The conceptual framework for financial reporting consists of how many levels? 3 Qualitative Characteristics of Accounting Information and elements of financial statements Bridge level-2nd level "the how" - the implementation of accounting Measurement, recognition and disclosure concepts such as assumptions, principles, and constraints Comparability Enhancing quality Verifiability Enhancing quality Timeliness Enhancing quality Understandability Enhancing quality Relevance a fundamental quality of useful information: accounting information is considered relevant if it would make a difference in a business decision Faithful Representation the numbers and descriptions match what really existed or happened predictive value ingredient of relevance Confirmatory Value ingredient of relevance Materiality ingredient of relevance Completeness ingredient of faithful representation Neutrality ingredient of faithful representation Free from error ingredient of faithful representation implies that a company can divide its economic activities time periods such as monthly, quarterly, or yearly. periodicity assumption economic activity can be identified with a particular unit of accountability economic entity assumption According to the revenue recognition principle, at which point should revenue be recognized? When the performance obligation is satisfied What are the enhancing qualities of accounting information? Comparability, Verifiability, Timeliness, and Understandability Which organization enforces appropriate accounting practices for publicly traded companies? SEC Which ingredient supports faithful representation? Completeness Deferrals prepaid expenses and unearned revenues accruals accrued revenues and accrued expenses an adjusting entry for prepaid expenses debit expenses, credit assets an adjusting entry for unearned revenues debit liability, credit revenue deferrals understate or overstate net income? understate deferrals understate or overstate liabilities? overstate deferrals understate or overstate stockholder's equity? understate adjusting entry for accrued revenues debit asset, credit revenue adjusting entry for accrued expenses debit expense, credit liability accruals (blank) liabilities and interest expense understate accruals (blank) net income and stockholders' equity overstate The accounting period is the calendar year. Employees are paid every Friday for the five-day week ending on that day. Salaries amount to $4,000 per week. The accounting period ends on a Tuesday. Using the information given above, what is the necessary adjusting entry at December 31, 2020? Debit Salaries & Wages Expense, Credit Salaries & Wages Payable; $1,600 Cost of Goods Sold, Salaries & Wages, Depreciation, Utilities, Interest, and Advertising are ALL expenses Which approach does income reporting follow? modified all-inclusive concept where companies record most items, including unusual or infrequent ones, as part of net income. In addition, companies are required to highlight these items in the financial statements so that users can better determine the long-run earning power of the company. merchandise inventory balance is used to calculate the Cost of Goods (not a selling expense) net sales= Gross Billings - Returns & Allowances - Discounts Gross Profit= Net Sales - COGS A $280,000 write-down of equipment leased to others A $160,000 adjustment of accruals on long-term contracts A $240,000 write-off of obsolete inventory In its 2020 income statement, what amount should be reported as total unusual losses? $680,000 (all of these are unusual or infrequent losses) Purchased supplies on account for $850 debit supplies $850; credit accounts payable $850 accounts payable is a LIABILITY with a normal... credit balance interest revenue other revenues and gains- income statement Dividend Revenue other revenues and gains-income statment The last item on the income statement is net sales/losses Statement of Financial Position balance sheet What is the correct order to present current assets? Cash, accounts receivable, inventories, prepaid items (in order of liquidity) Are dividends on the balance sheet? NO What is included in an owners' equity section reported in the balance sheet? noncontrolling interest (Capital Stock, Additional Paid-in Capital, Retained Earnings, Accumulated Other Comprehensive Income, Treasury Stock, and Noncontrolling interests are reported in the Stockholders' Equity section of the balance sheet) received cash of $36,000 on September 1, 2020, for one year's rent in advance and recorded the transaction with credit to Unearned Rent Revenue. What is the correct representation of the December 31, 2020 adjusting entry? Debit Unearned Rent Revenue and credit Rent Revenue, $12,000 The supplies inventory on January 1, 2020 was $5,000. Supplies costing $16,000 were purchased during 2020 and debited to the asset account. A count on December 31, 2020 revealed supplies on hand of $3,000. Which is the adjusted journal entry prior to preparing the December 31 financial statement? Debit Supplies Expense $18,000; Credit Supply Inventory $18,000 The supplies purchased were posted to the inventory account. Therefore an adjusting entry for both the purchases and the difference in inventory must be made. $5,000 (beginning inventory) plus $16,000 (purchases) minus $3,000 (ending inventory) = $18,000; The correct adjusting journal entry: Debit Supplies Expense $18,000; Credit Supply Inventory $18,000 If $10,000 of salaries was paid in January, what was the balance in Salaries and Wages Payable at December 31, 2020? he entry in January to record salary expense was: Debit Salaries and Wages Expenses $7,200, Salaries & Wages Payable $2,800, Credit Cash $10,000. Therefore, the beginning balance os salaries and wages payable was: $3,200 (ending balance of salaries and wages payable) plus $2,800 (reduction of salaries and wages payable) = $6,000. What is the current cash debt coverage often used to assess? Liquidity- Liquidity refers to the "nearness to cash" of assets and liabilities - how quickly can they get and use their cash Cash debt coverage net cash provided by operating activities/average total liabilities Operating Activities involve the cash effects of transactions that enter into the determination of net income Financing Activities involve liability and owners' equity items. They include (a) obtaining resources from owners and providing them with a return on their investment, and (b) borrowing money from creditors and repaying the amounts borrowed. Investing Activities include making and collecting loans and acquiring and disposing of investments (both debt and equity) and property, plant, and equipment. In which section of a statement of cash flows should you report proceeds from issuing equity instruments? Financing activity Interest payments to lenders and other creditors should be classified in which secton on the statement of cash outflows? Operating Activity Receipts from sales of property, plant, and equipment and other productive assets should generally be classified in which section on the statement of cash inflows? Investing Activity Payment of dividends would come under which activity on the statement of cash flows? Financing- Financing activities involve owners' equity items including obtaining resources from owners and providing them with a return on their investment (dividends). Net cash from operating activities net income+depreciation expense-increase in accounts receivable+decrease in inventory-decrease in accounts payable net cash used for investing activities sale of land-purchase of equipment Net cash used for financing activities -retirement of bonds-payment of cash dividends