December 31, 2013 December 31, 2012 The payroll register: a. can never be computerized. a. The amount of federal income taxes withheld from an employee's gross pay is recorded as a(n): a. In liability fraud, liabilities most often: B. overstated asset and an understated revenue. ANS: D. On June 30, a company paid $3,600 for insurance premiums for the current year and debited the amount to Prepaid Insurance. (3) Income statement Accrued expense The interest revenue on the income statement for 2013 was c. a debit to Unearned Rent Revenue for $3,885. C. Spain, Italy, and North Africa In an accrual accounting system, Creating ficticious accounts receivable or inventory to hide thefts. Overstate net income d. Understate liabilities. d.Record payments made in later periods as being paid in earlier periods. The accounting for uncertain tax positions has been addressed by FIN 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. Winston Company sells magazine subscriptions for one- to three-year subscription periods. A: Failure to record Bad Debt expense (Direct impact): the newspaper. When accounts payable-related liabilities are understated, purchases and inventory are often, or the financial statements dont balance. Recognize earned revenue as unearned revenue. Accrued salaries payable on December 31, a. c. The income and expense of a sole proprietorship business are reported on Schedule C d. T, When calculating the employee's payroll, the clerk forgot about the wage base limits. A We have an expert-written solution to this problem! d. debit to interest receivable of $10,425. Salaries Payable 61,500 53. A basic difference between loss contingencies and realliabilities is: The journal entries will be _____. Accounts Payable 27, Total net income over the life of an entity is 1. Arrange the events involving Iran in chronological order. These steps are: A. b. debit Interest Expense and credit Interest Payable, $720. d. Rental Income . 9, $150,000. For federal income taxes, the following additional info was provided: Gain on an involuntary conversion (within the statutory period): $900,000 Depreciation deducted for tax. Which of the following statements is FALSE? d. debit Interest Expense and credit Interest Payable, $4,320. On August 1 of the current year, Kyle Company borrowed $278,000 from the local bank. Prepaid Insurance $ 6,000 $ 7, Prepare the adjusting entry for the following: Federal income taxes for the year are estimated to be $3,250. year-end adjustment. Analytical symptoms related to accounts payable understatements usually relate to reported balances that appear too low. a. debit to treasury stock for $60,000. On September 1, 2012, Star Corp. issued a note payable to Federal Bank in the amount of $450,000. d. cost of goods sold. Accrued expenses but not of accounts receivable O $150. This was a process that was very popular in politics in earlier times, such as the 19th century, but it is not talked about as much nowadays. Which deductions occur after, Charley has a typing service. ANS: D. On June 30, a company paid $3,600 for insurance premiums for the current year and debited the amount to Prepaid Insurance. c. Purchases 27, a. Prepaid expenses b. 2003-2023 Chegg Inc. All rights reserved. Which of the following is not a contending issue? c. adjunct account. A.Liability understatements are easier to detect than other types of financial statement fraud. If Lane debited Cash and credited Unearned Rental d. Changes in inventory costing methods, The balance in a deferred revenue account represents an amount that is. Assume that employee income taxes withheld are $990 and that all earnings are subject to OASDI. Accounts payable. b. debit Supplies Expense, $8,700 and credit Accounts Payable, $8,700. Overstates owners equity c. Understates net income d. understate liabilities. b) What penalties, if any, can accrue to a tax preparer who makes errors on a company's tax return? Which of the following are likely to understate profits? Assets Liabilities Equity Net Earnings d. $35. Leinart Company had taxable wages (SUTA and FUTA) totaling $175,000. The actual tax for the year was $12,000. d. Preparation of the trial balance determines both that total debits equal total credits and that b. II, I, III $126,600. the period of occurrence? b. debit to contributed capital for $10,000. Which of the following is an example of an accrued liability? Course Hero is not sponsored or endorsed by any college or university. Which of the following is NOT a symptom of liability fraud? Prepaid Insurance .. $ 6,000 $ 7, Rental Income .. 3, from customers? Its tax rate is 30%. Rental Income .. 24, a. year and is credited to deferred subscription revenue. d. debit to Salaries Expense of $9,800. b. This is what the acronym SPPI stands for. Interest Revenue $ Provide the journal entry for the peri, The use of accelerated depreciation for tax purposes and straight-line depreciation for book purposes results in: A. expense items and deductions being taken for tax purposes before book purposes. C. can be adjusted by checking Add an adjustment when the sales tax payment is record, For each error, prepare any journal entry necessary to correct the error as well as any year-end adjusting entry for 2016 related to the situation described. Claiming that existing debt has been forgiven by creditors. Computer purchases c. Prepaid expenses d. Salaries to the top management Click the card to flip d Click the card to flip 1 / 47 Flashcards Learn Test Match Created by npefanis Terms in this set (47) 1. b. No dividends were declared what changed in bantu education act with the law being put in place(implemented), Tell me about a time when you made a mistake.. How did you find it and what did you do to correct it? Because it is generally more difficult to discover a transaction that has not been recorded than to discover one that has been recorded incorrectly, the audit objective of completeness drives many of the substantive procedures applied to these balances. McGarrett Rental Income .. 9, c. can show FICA taxable earnings. The allowance for doubtful accounts is an example of a(n) Assume that the state unemployment tax is 2.5%. A. can be accomplished by recording accruals in a later period. Adjustment entry is need to pass at year end to follow matching, A: A gain contingency Which of the following procedures for detecting unrecorded transactions at the client's December 31 year-end is least likely to result in discovery of an unrecorded year-end account payable? The January 1 balance of $600 still appears as the d. debit to Gain on Sale of Equipment of $700. b. lower under the cash basis than under the accrual basis. They have agreed to share profits in a ratio of 4: 3: 2 4: 3: 2 4: 3: 2 but cannot settle on the terms of the partnership agreement relating to possible liquidation. C) included on the income statement. What is Richards December 31, 2013, deferred subscription revenue balance? C. understated expense and an overstated revenue. Your gross payroll is $5,568.00. Prepare the correct journal if needed for each the following errors (ignore income taxes) a. b. a. Need not be filed if the estimated tax, after subtracting withholding, can reasonably be expected to be more than $1,000. This E-mail is already registered as a Premium Member with us. b. credit to Retained Earnings of $9,800. a. I, II, III ANSWERS Sales made during the last week of the period are not recorded Prepaid insurance is not reduced for the portion of the policy that has expired during the period Interest on a notes receivable has not yet been recorded Income taxes owed but not yet paid are ignored Expert Answer answer: Income taxes owed View the full answer c. depreciation of assets having an economic life of more than one year is recognized. c. $25, 130 Company payroll tax is $321.00. Which of the following items listed provide the best opportunity to find contingent liabilities that should be recorded. Accrued revenue not recognized at year-end If you want any, A: Interest expense : associate degreedisbursal is thatthe valueincurred by Associate in Nursing, A: Allowance method: It is a method for accounting bad debt expense, where uncollectible accounts, A: Accrual basis of accounting says that expense should be recorded in that period in which they are, A: To record the accrued interest on a note receivable, interest receivable must be debited and, A: The correct option with proper explanation are as follows. OA single father Question 18 20. O A hypochondriac The Iowa purchased cattle from Big D Ranch at a The average monthly benefit for "food stamps" for a family of three is about $15,000. account had a balance of $9,600,000 at December 31, 2013, before year-end adjustment. a. a debit to Rent Revenue for $3,885. Multiple Choice Accidentally recording cash that represents a liability as revenue. Allowance for doubtful accounts is an example of Expenses Total net income over the life of an enterprise is Prepaid Insurance $ 6,000 $ 7, This amount was debited to insurance expense. The dollar value of the ending inventory In the financial statements a. out of current assets. a. b. a debit entry is recorded on the left-hand side of an account. Included among the "other" types of financial statement fraud is the improper accounting for roundtrip transactions. b. debit to Sa, The payroll register of Ruggerio Co. indicates $10,500 of social security withheld and $2,625 of Medicare tax withheld on total salaries of $175,000 for the period. Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payable applies to the prior period. The machine cost $250,000 and has a salvage His salary is $75,000. accounts. a. subsidiary ledger. a. 11. a. c. general ledger. Which of the following best describes a voucher prepared under good internal control? . 1, 4, 3, 2 When she actually filed (without a valid extension), she reported a balance due. $432. both the principal and interest are payable on February 28, 2015. b. journalize and post closing entries. (b) Sales for 2013 amounted to $4,000,000, including $600,000 of sales on credit. c. a. signing a note payable to purchase equipment. December 31, 2013, was $2,275 and $1,875 on December 31, 2012. a. b.overstated. Higher under the cash basis than under the accrual basis Farmers Insurance recently said it will no longer offer coverage in the state, affecting roughly 100,000 customers. Answer: Revising a citizenship test for immigrants. Contra asset account, Allowance for doubtful accounts is an example of c. credit to interest revenue of $300. Greenleafable. Accumulated Depreciation . 35, a. The only difference was due to an installment sale in Year 1. Liabilities always are recorded in the accountingrecords, whereas loss contingencies never are.c. of the current fiscal year, which was unchanged from its balance at the end of the prior fiscal year. d. Prepaid expenses not recognized at year-end, For an entity with a periodic inventory system, which of the following would cause income to be overstated in Overstate net income d. Understate liabilities, Failure to record accrued salaries at the end of an accounting period results in d. general journal. The correct answer is nullification. c. Net income (Ignore income taxes.) balances of accounts receivable are $10,000 and $15,000, respectively. percent note with a face value of $48,000. What is the correct order of the following events in the accounting process? b. net income is correct. ANS: D The salaries expense was recorded as paid in 2018. (d) On July 1, 2013, the company paid a three-year insurance premium in the amount At b. b. Overstate gross margin The Supplies on Hand account had a d. Contra account. a. Its current tax expense was $144,000. Its tax rate is 40%. Insurance Expense . 810 of $2,160. Which of the following is not a contending issue? Failure to record depreciation expense at the end of an accounting period results in d.recorded as expenses. The adjusting entry for the year ending December 31, Adjusting entries normally involve $12,000. Which of the following manipulations would understate accounts payable on the financial statements? a. understate expense. a.a company attempts to overstate assets to make their financial position look better. Hiller, Luna, and Welsh are attempting to form a partnership to operate a travel agency. $15,300 debit balance on January 1. an understatement of net income and an overstatement of liabilities.c. Determine the amount of net FUTA tax. 19. d. Accounts Receivable . xxx a. owners' equity is correct. d. $153,800. Total long-term liabilities at the end of b. c. Depreciation expense overstated for the year purposes? c. Unearned Rental Income .. 12, a. $90,500. c. Prepaid Expense. The omission has the following effect on the financial statements prepared December 31: d. All of the above make fraud more difficult to detect. of dollars): At the end of the current fiscal year, an analysis of the payroll records of Bev Company showed a. Allowance for Doubtful Accounts. d. Underrecord future obligations 13. d. Liabilities can be large in amount, whereas loss contin-gencies are immaterial. All other trademarks and copyrights are the property of their respective owners. Accrued expense means the expense that has already been incurred, A: Journal entry is the process of documenting commercial transactions for the first time in the books, A: "Since you have asked multiple questions, we will solve first question for you. During 2013, $3,600,000 of cash was received Advise the taxpayer promptly of the fact of such omission, and refuse to prepare the current-year return until, WTX found that the 2016 ending inventory was $3,680,000 but was erroneously recorded as $3,860,000. Start your trial now! Of this amount, $510,710 is for wages paid in excess of $7,000 to each individual employee. $59,100 c. $61,300 d. $61, Linda underpaid her taxes for the current year by $24,000 due to negligence. The income statement contains the, A: In an income statement , credits refers to income and debits refers to expenses. Failing to record a liability as an expense.c. a. debit to interest revenue of $600. Revenue is recorded when earned. a. Which of the following controls would be most likely to detect this error in a timely and efficient manner? True The extent of uncertainty involved. purchase was Yes Yes yes, yes Which of the following best describes a voucher prepared under good internal control? sheet? Last year, his total tax liability was $20,500. Ignore all other payroll deductions. a. The and Income Tax Payable as credit in the Balance Sheet columns. The idea to accrue salaries comes from the accrual basis of accounting. O $900. B. a. Asset account Unearned Rental Income 24, Misappropriation of asset means any person View the full answer Transcribed image text: Which of the following is an example of misappropriation of assets relating to sales? from customers. c. Changes in personnel c.Creating ficticious accounts receivable or inventory to hide thefts. Unearned revenue is the revenue that is received by the company but not yet earned by the, A: Lets understand the basics. If any account generally has a debit balance and if a, A: Normally all assets and expense accounts will have debit balance. Recognizing something as a revenue instead of as a liability has a positive effect on the reported financial statements because: A. The event must be an arm's-length transaction. Get access to this video and our entire Q&A library, Accrued Expenses & Revenues: Definition & Examples. Insurance Expense . 11. Contra asset account b. a. Yes. (a) Depreciation Expense . 35, Stern's only temporary difference for the year was rent received for the following year in the amount of $15 million. Which of the following criteria must be met before an event should be recorded for accounting Consistency Accruals Materiality Money measurement 3. b. by issuing interest-bearing notes payable. a. Revising a citizenship test for immigrants. Express your feedback with quick comments. Working capital Retained earnings Our Experts can answer your tough homework and study questions. c. understates net income. d. 36 months' interest. one-year subscriptions for two issues are accepted. It is not clear whether the error were deliberate or accidental. recorded as a credit to Rental Income. September 30 cutoff dates are held for the following publication. Assets Liabilities Equity Net earnings a. c. when earned by the employee. $1,350. B. a. Other data not yet recorded at December 31, 2014 include: Insurance expired during 2014, $13. The states believed that if they perceive a federal law to be tyrannical that they can apply nullification which in laymen terms means that they just . How much should Bee report in its 2013 income statement for subscription revenue? The journal entries will be: A. debit wage expense $10,000 and cre, The company prepares, but does not yet pay, its first payroll of the New Year. The adjusting entry to accrue salaries is: As a result of omitting this entry, the expenses will be understated leading to an overstatement of net income, and the liabilities will also be understated. Question: Suppose a publicly-traded company is trying to maximize its perceived value to decision-makers external to the corporation. The balance of the d. No effect Overstate Understate Understate, At the end of the current year, an entity failed to accrue sales commissions during the current year but paid in the Which of the following would states prefer to receive? a. since all things having to do with immigration but go through the federal government. d. $2,250. C. It overstates net income. d. revenues are recorded only when cash is received. Payroll taxes levied against employees become liabilities A. when the payroll is paid to employees B. at the end of an accounting period C. the first of the following month D. when data are en, Choose the incorrect statement. c.recorded as assets. cost of $27,000 on credit. Failure to record the expired amount of prepaid rent expense would not a. a) What are a tax preparer's professional responsibilities? Rental Income . 3, Expense account c. $580. c. credit to Equipment of $3,000. Liabilities stem from past transactions; loss contingen-cies stem from future events. December 31, 2013 December 31, 2012 a. higher under the cash basis than under the accrual basis. a.understated. If no entry. D. Macedonia and Anatolia, Which three phrases describe political revolutions in Latin America in the twentieth century? These are the, A: Liability means the amount which is to be paid to an outsider by business. First week only $4.99! d. can not show cumulative earnings. 2, 1, 3, 4 b. As a result of this error, retained earnings would be: a. Overstated by $234,000 b. Overstated by $780,000 c. Overstated by $546,000 d. Una, Cullumber Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $3,385,000 Estimated litigation expense 3,340,000 Extra depreciation for taxes, Taxpayer B filed a declaration of estimated tax for the current year and paid $2,000 in four equal installments of $500. A. c. understated by $87,000. a. arose from a need to ease poverty and political instability Who adjudicates conflicts between the federal government and state. Companies in trouble have a strong motivation to understate liabilities. The note had an interest rate of 12 percent and called for three equal annual principal payments of b. d. Understate cost of goods sold, At the middle of the year, an entity paid for insurance premium for the current year and debited the amount to Dan is a single taxpayer. d. overstates both owners equity and assets. a.Inappropriately capitalizing costs that should be expensed. Five percent bonds with a total face value of $12,000 were purchased at par during the year. c. $7,600, c. 3, 2, 1, 4 Service contract costs are charged as incurred to the Service Contract Expense beginning on May 1. a. Unearned Rental Income . 3, for accrued interest should be Explain. a. What would the adjustment entry be on the retained earnings statement for 2010? The adjustment due to the change in method as calculated at the b, Collin Products received notice of a $27,600 income tax deficiency plus $3,900 interest. exercise of care and caution in dealing with uncertainties in measurement so as not to overstate assets and income and not understate liabilities and expenses. a. b. prepared at year-end, the omission d. $3,200. an overstatement of net income and an understatement of liabilities.b. d.Companies in trouble have a strong motivation to understate liabilities. Become Premium to read the whole document. Which of the following was inspired by state policies? b.Recording newly acquired assets at cost instead of fair market value in a healthy economy. Edwards Company paid or collected during 2013 the following items: Interest collected 123, $56,900 b. d. financial statements are prepared. What territories would the Byzantine Empire gain and lose again after 330 CE? In liability fraud, liabilities most often: d. credit to common stock, $1 par value for $60,000. c. debit Interest Expense and credit Interest Payable, $1,080. $(3,200). b. At December (a) prepaid expense (b) unearned revenue (c) accrued revenue (d) accrued expense, Feld and Company, CPAs has provided annual audit and tax advisory services to Maris Corporation for several years. At December 31, 2014, the liability b. overstated by $87,000. Earned Collected adjusting entry at December 31 would include a Expense (Bad debt Expense) understates. A chart of accounts is a b.Unreasonable relationships between interest expense and recorded liabilities, c.Recorded amounts of notes payable, mortgages payable, and other debts that appear to be too high, d.Significant sales of assets with not much cash flow. books of the company have not yet been closed. Which one of the following accounting principles governs this? In that case, the company is most likely to understate which. Interest Receivable 3,700 14, It is the amount payable by the concerned investor is less than the, A: An Unearned interest refers to an interest income collected by a lending institution before they, A: 12. d) Ove, For the year ending April 30, 2014, St. Paul Medical Services Co. mistakenly omitted adjusting entries for (1) $6,300 of supplies that were used, (2) unearned revenue of $11,700 that was earned, and (, AMC Co. at the end of 2012, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: | Pretax financial income | $900,000 | Estimated litigation expense | 1,200,000 | Extra depreciation for tax. D. Make sure that the accounting methods used were appropriate and consistent withaccounting standards. b.overstated. Which of the following test of controls most likely would help assure an auditor that goods shipped are properly billed? Income tax. The first payment for interest and principal was made on September 1, 2013. Interest Receivable $ Compute John's failure to file a penalty. b. understated assets. The adjustment on Inflating assets through mergers and acquisitions by manipulation of intercompany accounts and transactions. In liability fraud, liabilities are most often: Which of the following will NOT understate liabilities? Examining underlying documentation for cash disbursements in the period after year-end. b. Which of the following best describes the attributes of a partnership? The journal entries will be: a. Debit wage expense $10,000 and c, Some deductions are before the adjusted gross income (AGI) (referred to by tax professionals as dfors) and other deductions appear after the AGI (referred to by tax professionals as dfroms). a. To be deductible, a business expense must be both ordinary and necessary. b. To determine whether checks are being issued for unauthorized expenditures, an auditor most likely would select for testing from the population of. Net loss occurs, A: Accrued Liabilities: Expenses of business which are due but not paid are accrued liabilities. Ignore all other payroll deductions. It overstates revenues. Stern's taxable income for the year would be: a. d. Inventory 27, A sudden decrease in accounts payable/inventory ratio. $1,350. What amount of cash did the company pay for income tax during the year?

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