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Financial Reporting questions: deferred revenue accounts,

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12. The balance in a deferred revenue account represents an amount that is

Earned Collected
a. Yes Yes
b. Yes No
c. No Yes
d. No No

13. A trial balance is useful because it indicates that
a. owners' equity is correct.
b. net income is correct.
c. all entries were made correctly.
d. total debits equal total credits.

14. The allowance for doubtful accounts is an example of a(n)
a. expense account.
b. contra account.
c. adjunct account.
d. control account.

15. Failure to record depreciation expense at the end of an accounting period results in
a. understated income.
b. understated assets.
c. overstated expenses.
d. overstated assets.

16. Arid Company paid $1,704 on June 1, 2013, for a two-year insurance policy and recorded the entire amount as Insurance Expense. The December 31, 2013, adjusting entry is
a. debit Prepaid Insurance and credit Insurance Expense, $497.
b. debit Insurance Expense and credit Prepaid Insurance, $497.
c. debit Insurance Expense and credit Prepaid Insurance, $1,207.
d. debit Prepaid Insurance and credit Insurance Expense, $1,207.

17. Which of the following accounts most likely would not appear in a post-closing trial balance?
a. Retained Earnings
b. Inventory
c. Sales Revenue
d. Common Stock

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Solution Preview

12. The balance in a deferred revenue account represents an amount that is

Earned Collected
a. Yes Yes
b. Yes No
c. No Yes
d. No No

It was collected but not yet earned. The entry was to debit cash and credit deferred revenue. Answer is c.

13. A trial balance is useful because it indicates that
a. owners' equity is correct.
b. net income is correct.
c. all entries were made correctly.
d. total ...

Solution Summary

In a sentence or two, each problem is explained and the correct answer given.

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See Also This Related BrainMass Solution

Apple, Inc: Revenue Recognition

Obtain Apple's annual report for the 2009 financial year. The filing date is: 2009-10-27. To make sure you have the correct file, I also provided the link: http://www.sec.gov/Archives/edgar/data/320193/000119312509214859/d10k.htm

Using the links provided, answer the following questions

Questions:
1. Refer to the revenue recognition discussion in Note 1 (page 62). In general when does Apple recognize revenue? Explain Apple's for revenue recognition criteria. Do they appear to be aligned with the revenue recognition criteria we discussed in class?
2. In the same footnote how did Apple recognize revenue for the sale of an iPhone? Record their recognition of revenue for the sale of an iPhone in the financial statements effect template. Now, obtain Apple' amended annual report (10-K/A) for the 2009 financial year.The filing date is: 2010-01-25. To make sure you have the correct file, I also provided the link: http://www.sec.gov/Archives/edgar/data/320193/000119312510012091/d10ka.htm
3. Refer to the revenue recognition discussion in Note 1 (page 30).What has changed compared to the old 10-K? Why do you think the changed occurred?
4. How does Apple now record the sale of an iPhone? Record their recognition of revenue for the sale of an IPhone under the new revenue recognition policy in the financial statements effect template.
5. What impact did the new accounting principle for revenue recognition have on Apple's balance sheet, income statement and statement of cash flow Did the new revenue recognition principle improve or weaken the company's gross margin for fiscal year 2009?

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