4.6: Practice Questions

Multiple Choice

1.

LO 4.1Which of the following is any reporting period shorter than a full year (fiscal or calendar) and can encompass monthly, quarterly, or half-year statements?

1. fiscal year
2. interim period
3. calendar year
4. fixed year

2.

LO 4.1Which of the following is the federal, independent agency that provides oversight of public companies to maintain fair representation of company financial activities for investors to make informed decisions?

1. IRS (Internal Revenue Service)
2. SEC (Securities and Exchange Commission)
3. FASB (Financial Accounting Standards Board)
4. FDIC (Federal Deposit Insurance Corporation)

3.

LO 4.1Revenues and expenses must be recorded in the accounting period in which they were earned or incurred, no matter when cash receipts or outlays occur under which of the following accounting methods?

1. accrual basis accounting
2. cash basis accounting
3. tax basis accounting
4. revenue basis accounting

4.

LO 4.1Which of the following breaks down company financial information into specific time spans, and can cover a month, quarter, half-year, or full year?

1. accounting period
2. yearly period
3. monthly period
4. fiscal period

5.

LO 4.1Which of the following is a twelve-month reporting cycle that can begin in any month, except January 1, and records financial data for that twelve-month consecutive period?

1. fixed year
2. interim period
3. calendar year
4. fiscal year

6.

LO 4.2Which type of adjustment occurs when cash is either collected or paid, but the related income or expense is notreportable in the current period?

1. accrual
2. deferral
3. estimate
4. cull

7.

LO 4.2Which type of adjustment occurs when cash is not collected or paid, but the related income or expense is reportable in the current period?

1. accrual
2. deferral
3. estimate
4. cull

8.

LO 4.2If an adjustment includes an entry to a payable or receivable account, which type of adjustment is it?

1. accrual
2. deferral
3. estimate
4. cull

9.

LO 4.2If an adjustment includes an entry to Accumulated Depreciation, which type of adjustment is it?

1. accrual
2. deferral
3. estimate
4. cull

10.

LO 4.2Rent collected in advance is an example of which of the following?

1. accrued expense
2. accrued revenue
3. deferred expense (prepaid expense)
4. deferred revenue (unearned revenue)

11.

LO 4.2Rent paid in advance is an example of which of the following?

1. accrued expense
2. accrued revenue
3. deferred expense (prepaid expense)
4. deferred revenue (unearned revenue)

12.

LO 4.2Salaries owed but not yet paid is an example of which of the following?

1. accrued expense
2. accrued revenue
3. deferred expense (prepaid expense)
4. deferred revenue (unearned revenue)

13.

LO 4.2Revenue earned but not yet collected is an example of which of the following?

1. accrued expense
2. accrued revenue
3. deferred expense (prepaid expense)
4. deferred revenue (unearned revenue)

14.

LO 4.3What adjusting journal entry is needed to record depreciation expense for the period?

1. a debit to Depreciation Expense; a credit to Cash
2. a debit to Accumulated Depreciation; a credit to Depreciation Expense
3. a debit to Depreciation Expense; a credit to Accumulated Depreciation
4. a debit to Accumulated Depreciation; a credit to Cash

15.

LO 4.3Which of these transactions requires an adjusting entry (debit) to Unearned Revenue?

1. revenue earned but not yet collected
2. revenue collected but not yet earned
3. revenue earned before being collected, when it is later collected
4. revenue collected before being earned, when it is later earned

16.

LO 4.4What critical purpose does the adjusted trial balance serve?

1. It proves that transactions have been posted correctly
2. It is the source document from which to prepare the financial statements
3. It shows the beginning balances of every account, to be used to start the new year’s records
4. It proves that all journal entries have been made correctly.

17.

LO 4.4Which of the following accounts’ balance would be a different number on the Balance Sheet than it is on the adjusted trial balance?

1. accumulated depreciation
2. unearned service revenue
3. retained earnings
4. dividends

18.

LO 4.5On which financial statement would the Supplies account appear?

1. Balance Sheet
2. Income Statement
3. Retained Earnings Statement
4. Statement of Cash Flows

19.

LO 4.5On which financial statement would the Dividends account appear?

1. Balance Sheet
2. Income Statement
3. Retained Earnings Statement
4. Statement of Cash Flows

20.

LO 4.5On which financial statement would the Accumulated Depreciation account appear?

1. Balance Sheet
2. Income Statement
3. Retained Earnings Statement
4. Statement of Cash Flows

21.

LO 4.5On which two financial statements would the Retained Earnings account appear?

1. Balance Sheet
2. Income Statement
3. Retained Earnings Statement
4. Statement of Cash Flows

Questions

1.

LO 4.1Describe the revenue recognition principle. Give specifics.

2.

LO 4.1Describe the expense recognition principle (matching principle). Give specifics.

3.

LO 4.2What parts of the accounting cycle require analytical processes, rather than methodical processes? Explain.

4.

LO 4.2Why is the adjusting process needed?

5.

LO 4.2Name two types of adjusting journal entries that are commonly made before preparing financial statements? Explain, with examples.

6.

LO 4.2Are there any accounts that would never have an adjusting entry? Explain.

7.

LO 4.2Why do adjusting entries always include both balance sheet and income statement accounts?

8.

LO 4.2Why are adjusting journal entries needed?

9.

LO 4.3If the Supplies account had an ending balance of $1,200 and the actual count for the remaining supplies was $400 at the end of the period, what adjustment would be needed?

10.

LO 4.3When a company collects cash from customers before performing the contracted service, what is the impact, and how should it be recorded?

11.

LO 4.3If the Prepaid Insurance account had a balance of $12,000, representing one year’s policy premium, which was paid on July 1, what entry would be needed to adjust the Prepaid Insurance account at the end of December, before preparing the financial statements?

12.

LO 4.3If adjusting entries include these listed accounts, what other account must be in that entry as well? (A) Depreciation expense; (B) Unearned Service Revenue; (C) Prepaid Insurance; (D) Interest Payable.

13.

LO 4.4What is the difference between the trial balance and the adjusted trial balance?

14.

LO 4.4Why is the adjusted trial balance trusted as a reliable source for building the financial statements?

15.

LO 4.5Indicate on which financial statement the following accounts (from the adjusted trial balance) would appear: (A) Sales Revenue; (B) Unearned Rent Revenue; (C) Prepaid Advertising; (D) Advertising Expense; (E) Dividends; (F) Cash.

Exercise Set A

EA1.

LO 4.2Identify whether each of the following transactions, which are related to revenue recognition, are accrual, deferral, or neither.

1. sold goods to customers on credit
2. collected cash from customer accounts
3. sold goods to customers for cash
4. collected cash in advance for goods to be delivered later

EA2.

LO 4.2Identify whether each of the following transactions, which are related to expense recognition, are accrual, deferral, or neither.

1. paid an expense for the current month
2. prepaid an expense for future months
3. made a payment to reduce accounts payable
4. incurred a current-month expense, to be paid next month

EA3.

LO 4.2Identify which type of adjustment is indicated by these transactions. Choose accrued revenue, accrued expense, deferred revenue, or deferred expense.

1. rent paid in advance for use of property
2. cash received in advance for future services
3. supplies inventory purchased
4. fees earned but not yet collected

EA4.

LO 4.2The following accounts were used to make year-end adjustments. Identify the related account that is associated with this account (the other account in the adjusting entry).

1. Salaries Payable
2. Depreciation Expense
3. Supplies
4. Unearned Rent

EA5.

LO 4.3Reviewing insurance policies revealed that a single policy was purchased on August 1, for one year’s coverage, in the amount of $6,000. There was no previous balance in the Prepaid Insurance account at that time. Based on the information provided:

1. Make the December 31 adjusting journal entry to bring the balances to correct.
2. Show the impact that these transactions had.

EA6.

LO 4.3On July 1, a client paid an advance payment (retainer) of $5,000 to cover future legal services. During the period, the company completed $3,500 of the agreed-on services for the client. There was no beginning balance in the Unearned Revenue account for the period. Based on the information provided,

1. Make the December 31 adjusting journal entry to bring the balances to correct.
2. Show the impact that these transactions had.

EA7.

LO 4.3Reviewing payroll records indicates that employee salaries that are due to be paid on January 3 include $3,575 in wages for the last week of December. There was no previous balance in the Salaries Payable account at that time. Based on the information provided, make the December 31 adjusting journal entry to bring the balances to correct.

EA8.

LO 4.3Supplies were purchased on January 1, to be used throughout the year, in the amount of $8,500. On December 31, a physical count revealed that the remaining supplies totaled $1,200. There was no beginning of the year balance in the Supplies account. Based on the information provided:

1. Create journal entries for the original transaction
2. Create journal entries for the December 31 adjustment needed to bring the balances to correct
3. Show the activity, with ending balance

EA9.

LO 4.3Prepare journal entries to record the following business transaction and related adjusting entry.

1. January 12, purchased supplies for cash, to be used all year, $3,850
2. December 31, physical count of remaining supplies, $800

EA10.

LO 4.3Prepare journal entries to record the following adjustments.

1. Insurance that expired this period, $18,000
2. Depreciation on assets, $4,800
3. Salaries earned by employees but unpaid, $1,200

EA11.

LO 4.3Prepare adjusting journal entries, as needed, considering the account balances excerpted from the unadjusted trial balance and the adjustment data.

1. depreciation on fixed assets, $ 8,500
2. unexpired prepaid rent, $12,500
3. remaining balance of unearned revenue, $555

EA12.

LO 4.4Prepare an adjusted trial balance from the following adjusted account balances (assume accounts have normal balances).

EA13.

LO 4.4Prepare an adjusted trial balance from the following account information, considering the adjustment data provided (assume accounts have normal balances).

Adjustments needed:

Salaries due to administrative employees, but unpaid at period end, $2,000

Insurance still unexpired at end of the period, $12,000

EA14.

LO 4.5From the following Company A adjusted trial balance, prepare simple financial statements, as follows:

1. Income Statement
2. Retained Earnings Statement
3. Balance Sheet

Exercise Set B

EB1.

LO 4.2Identify whether each of the following transactions, which are related to revenue recognition, are accrual, deferral, or neither.

1. provided legal services to client, who paid at the time of service
2. received cash for legal services performed last month
3. received cash from clients for future services to be provided
4. provided legal services to client, to be collected next month

EB2.

LO 4.2Identify whether each of the following transactions, which are related to expense recognition, are accrual, deferral, or neither.

1. recorded employee salaries earned, to be paid in future month
2. paid employees for current month salaries
3. paid employee salaries for work performed in a prior month
4. gave an employee an advance on future wages

EB3.

LO 4.2Indicate what impact the following adjustments have on the accounting equation, Assets = Liabilities + Equity (assume normal balances).

		Impact 1	Impact 2
A.	Prepaid Insurance adjusted from $5,000 to $3,600
B.	Interest Payable adjusted from $5,300 to $6,800
C.	Prepaid Insurance adjusted from $18,500 to $6,300
D.	Supplies account balance $500, actual count $220

Table4.5

EB4.

LO 4.2What two accounts are affected by the needed adjusting entries?

1. supplies actual counts are lower than account balance
2. employee salaries are due but not paid at year end
3. insurance premiums that were paid in advance have expired

EB5.

LO 4.3Reviewing insurance policies revealed that a single policy was purchased on March 1, for one year's coverage, in the amount of $9,000. There was no previous balance in the Prepaid Insurance account at that time. Based on the information provided,

1. Make the December 31 adjusting journal entry to bring the balances to correct.
2. Show the impact that these transactions had.

EB6.

LO 4.3On September 1, a company received an advance rental payment of $12,000, to cover six months’ rent on an office building. There was no beginning balance in the Unearned Rent account for the period. Based on the information provided,

1. Make the December 31 adjusting journal entry to bring the balances to correct.
2. Show the impact that these transactions had.

EB7.

LO 4.3Reviewing payroll records indicates that one-fifth of employee salaries that are due to be paid on the first payday in January, totaling $15,000, are actually for hours worked in December. There was no previous balance in the Salaries Payable account at that time. Based on the information provided, make the December 31 adjusting journal entry to bring the balances to correct.

EB8.

LO 4.3On July 1, a client paid an advance payment (retainer) of $10,000, to cover future legal services. During the period, the company completed $6,200 of the agreed-on services for the client. There was no beginning balance in the Unearned Revenue account for the period. Based on the information provided, make the journal entries needed to bring the balances to correct for:

1. original transaction
2. December 31 adjustment

EB9.

LO 4.3Prepare journal entries to record the business transaction and related adjusting entry for the following:

1. March 1, paid cash for one year premium on insurance contract, $18,000
2. December 31, remaining unexpired balance of insurance, $3,000

EB10.

LO 4.3Prepare journal entries to record the following adjustments:

1. revenue earned but not collected, nor recorded, $14,000
2. revenue earned that had originally been collected in advance, $8,500
3. taxes due but not yet paid, $ 2,750

EB11.

LO 4.3Prepare adjusting journal entries, as needed, considering the account balances excerpted from the unadjusted trial balance and the adjustment data.

1. amount due for employee salaries, $4,800
2. actual count of supplies inventory, $ 2,300
3. depreciation on equipment, $3,000

EB12.

LO 4.4Prepare an adjusted trial balance from the following adjusted account balances (assume accounts have normal balances).

EB13.

LO 4.4Prepare an adjusted trial balance from the following account information, considering the adjustment data provided (assume accounts have normal balances).

Adjustments needed:

• Physical count of supplies inventory remaining at end of period, $2,150
• Taxes payable at end of period, $3,850

EB14.

LO 4.5From the following Company B adjusted trial balance, prepare simple financial statements, as follows:

1. Income Statement
2. Retained Earnings Statement
3. Balance Sheet

Problem Set A

PA1.

LO 4.2Identify whether each of the following transactions, which are related to revenue recognition, are accrual, deferral, or neither.

1. earn now, collect now
2. earn now, collect later
3. earn later, collect now

PA2.

LO 4.1To demonstrate the difference between cash account activity and accrual basis profits (net income), note the amount each transaction affects cash and the amount each transaction affects net income.

1. paid balance due for accounts payable $6,900
2. charged clients for legal services provided $5,200
3. purchased supplies on account $1,750
4. collected legal service fees from clients for current month $3,700
5. issued stock in exchange for a note payable $10,000

PA3.

LO 4.2Identify which type of adjustment is indicated by these transactions. Choose accrued revenue, accrued expense, deferred revenue, deferred expense, or estimate.

1. utilities owed but not paid
2. cash received in advance for future services
3. supplies inventory purchased
4. fees earned but not yet collected
5. depreciation expense recorded
6. insurance paid for future periods

PA4.

LO 4.2Identify which type of adjustment is associated with this account, and what is the other account in the adjustment? Choose accrued revenue, accrued expense, deferred revenue, or deferred expense.

1. accounts receivable
2. interest payable
3. prepaid insurance
4. unearned rent

PA5.

LO 4.2Indicate what impact the following adjustments have on the accounting equation, Assets = Liabilities + Equity (assume normal balances).

		Impact 1	Impact 2
A.	Unearned Fees adjusted from $7,000 to $5,000
B.	Recorded depreciation expense of $12,000
C.	Prepaid Insurance adjusted from $18,500 to $6,300
D.	Supplies account balance $500, actual count $220

Table4.6

PA6.

LO 4.2What two accounts are affected by each of these adjustments?

1. billed customers for services provided
2. adjusted prepaid insurance to correct
3. recorded depreciation expense
4. recorded unpaid utility bill
5. adjusted supplies inventory to correct

PA7.

LO 4.3Using the following information:

1. make the December 31 adjusting journal entry for depreciation
2. determine the net book value (NBV) of the asset on December 31

• Cost of asset, $250,000
• Accumulated depreciation, beginning of year, $80,000
• Current year depreciation, $25,000

PA8.

LO 4.3Use the following account T-balances (assume normal balances) and correct balance information to make the December 31 adjusting journal entries.

PA9.

LO 4.3Use the following account T-balances (assume normal balances) and correct balance information to make the December 31 adjusting journal entries.

PA10.

LO 4.3Prepare journal entries to record the following transactions. Create a T-account for Interest Payable, post any entries that affect the account, and tally the ending balance for the account (assume Interest Payable beginning balance of $2,500).

1. March 1, paid interest due on note, $2,500
2. December 31, interest accrued on note payable, $4,250

PA11.

LO 4.3Prepare journal entries to record the following transactions. Create a T-account for Prepaid Insurance, post any entries that affect the account, and tally the ending balance for the account (assume Prepaid Insurance beginning balance of $9,000).

1. April 1, paid cash for one-year policy, $18,000
2. December 31, unexpired premiums, $4,500

PA12.

LO 4.3Determine the amount of cash expended for Salaries during the month, based on the entries in the following accounts (assume 0 beginning balances).

PA13.

LO 4.3Prepare adjusting journal entries, as needed, considering the account balances excerpted from the unadjusted trial balance and the adjustment data.

1. supplies actual count at year end, $6,500
2. remaining unexpired insurance, $6,000
3. remaining unearned service revenue, $1,200
4. salaries owed to employees, $2,400
5. depreciation on property plant and equipment, $18,000

PA14.

LO 4.4Prepare an adjusted trial balance from the adjusted account balances; solve for the one missing account balance: Cash (assume accounts have normal balances).

PA15.

LO 4.4Prepare an adjusted trial balance from the following account information, considering the adjustment data provided (assume accounts have normal balances). Equipment was recently purchased, so there is neither depreciation expense nor accumulated depreciation.

Adjustments needed:

• Salaries due to employees, but unpaid at the end of the period, $2,000
• Insurance still unexpired at end of the period, $12,000

PA16.

LO 4.4Prepare an adjusted trial balance from the following account information, and also considering the adjustment data provided (assume accounts have normal balances). Equipment was recently purchased, so there is neither depreciation expense nor accumulated depreciation.

Adjustments needed:

• Remaining unpaid Salaries due to employees at the end of the period, $0
• Accrued Interest Payable at the end of the period, $7,700

PA17.

LO 4.5Using the following Company W information, prepare a Retained Earnings Statement.

• Retained earnings balance January 1, 2019, $43,500
• Net income for year 2019, $55,289
• Dividends declared and paid for year 2019, $18,000

PA18.

LO 4.5From the following Company Y adjusted trial balance, prepare simple financial statements, as follows:

1. Income Statement
2. Retained Earnings Statement
3. Balance Sheet

Problem Set B

PB1.

LO 4.1Identify whether each of the following transactions, which are related to revenue recognition, are accrual, deferral, or neither.

1. expense now, pay now
2. expense later, pay now
3. expense now, pay later

PB2.

LO 4.1To demonstrate the difference between cash account activity and accrual basis profits (net income), note the amount each transaction affects cash and the amount each transaction affects net income.

1. issued stock for cash $20,000
2. purchased supplies inventory on account $1,800
3. paid employee salaries; assume it was current day’s expenses $950
4. paid note payment to bank (principal only) $1,200
5. collected balance on accounts receivable $4,750

PB3.

LO 4.2Identify which type of adjustment is indicated by these transactions. Choose accrued revenue, accrued expense, deferred revenue, or deferred expense.

1. fees earned and billed, but not collected
2. recorded depreciation expense
3. fees collected in advance of services
4. salaries owed but not yet paid
5. property rentals costs, prepaid for future months
6. inventory purchased for cash

PB4.

LO 4.2Identify which type of adjustment is associated with this account, and what the other account is in the adjustment. Choose accrued revenue, accrued expense, deferred revenue, or deferred expense.

1. Salaries Payable
2. Interest Receivable
3. Unearned Fee Revenue
4. Prepaid Rent

PB5.

LO 4.2Indicate what impact the following adjustments have on the accounting equation: Assets = Liabilities + Equity (assume normal balances).

		Impact 1	Impact 2
A.	Unearned Rent adjusted from $15,000 to $9,500
B.	Recorded salaries payable of $3,750
C.	Prepaid Rent adjusted from $6,000 to $4,000
D.	Recorded depreciation expense of $5,500

Table4.7

PB6.

LO 4.2What two accounts are affected by each of these adjustments?

1. recorded accrued interest on note payable
2. adjusted unearned rent to correct
3. recorded depreciation for the year
4. adjusted salaries payable to correct
5. sold merchandise to customers on account

PB7.

LO 4.3Using the following information,

1. Make the December 31 adjusting journal entry for depreciation.
2. Determine the net book value (NBV) of the asset on December 31.

• Cost of asset, $195,000
• Accumulated depreciation, beginning of year, $26,000
• Current year depreciation, $13,000

PB8.

LO 4.3Use the following account T-balances (assume normal balances) and correct balance information to make the December 31 adjusting journal entries.

PB9.

LO 4.3Use the following account T-balances (assume normal balances) and correct balance information to make the December 31 adjusting journal entries.

PB10.

LO 4.3Prepare journal entries to record the following transactions. Create a T-account for Supplies, post any entries that affect the account, and tally ending balance for the account (assume Supplies beginning balance of $6,550).

1. January 26, purchased additional supplies for cash, $9,500
2. December 31, actual count of supplies, $8,500

PB11.

LO 4.3Prepare journal entries to record the following transactions. Create a T-account for Unearned Revenue, post any entries that affect the account, tally ending balance for the account (assume Unearned Revenue beginning balance of $12,500).

1. May 1, collected an advance payment from client, $15,000
2. December 31, remaining unearned advances, $7,500

PB12.

LO 4.3Determine the amount of cash expended for Insurance Premiums during the month, based on the entries in the following accounts (assume 0 beginning balances).

PB13.

LO 4.3Prepare adjusting journal entries, as needed, considering the account balances excerpted from the unadjusted trial balance and the adjustment data.

1. depreciation on buildings and equipment, $17,500
2. advertising still prepaid at year end, $2,200
3. interest due on notes payable, $4,300
4. unearned rental revenue, $6,900
5. interest receivable on notes receivable, $1,200

PB14.

LO 4.4Prepare an adjusted trial balance from the adjusted account balances; solve for the one missing account balance: Dividends (assume accounts have normal balances). Equipment was recently purchased, so there is neither depreciation expense nor accumulated depreciation.

PB15.

LO 4.4Prepare an adjusted trial balance from the following account information, considering the adjustment data provided (assume accounts have normal balances). Building and Equipment were recently purchased, so there is neither depreciation expense nor accumulated depreciation.

Adjustments needed:

• Physical count of supplies inventory remaining at end of period, $3,300
• Customer fees collected in advance (payments were recorded as Fees Earned), $18,500

PB16.

LO 4.4Prepare an adjusted trial balance from the following account information, and also considering the adjustment data provided (assume accounts have normal balances).

Adjustments needed:

• Accrued interest revenue on investments at period end, $2,200
• Insurance still unexpired at end of the period, $12,000

PB17.

LO 4.5Using the following Company X information, prepare a Retained Earnings Statement:

• Retained earnings balance January 1, 2019, $121,500
• Net income for year 2019, $145,800
• Dividends declared and paid for year 2019, $53,000

PB18.

LO 4.5From the following Company Z adjusted trial balance, prepare simple financial statements, as follows:

1. Income Statement
2. Retained Earnings Statement
3. Balance Sheet

Thought Provokers

TP1.

LO 4.1Assume you are the controller of a large corporation, and the chief executive officer (CEO) has requested that you explain to them why the net income that you are reporting for the year is so low, when the CEO knows for a fact that the cash accounts are much higher at the end of the year than they were at the beginning of the year. Write a memo to the CEO to offer some possible explanations for the disparity between financial statement net income and the change in cash during the year.

TP2.

LO 4.2Search the US Securities and Exchange Commission website (https://www.sec.gov/edgar/searchedga...anysearch.html), and locate the latest Form 10-K for a company you would like to analyze. Submit a short memo:

• State the name and ticker symbol of the company you have chosen.
• Review the company’s end-of-period Balance Sheet for the most recent annual report, in search of accruals and deferrals.
• List the name and account balance of at least four accounts that represent accruals or deferrals—these could be accrued revenues, accrued expenses, deferred (unearned) revenues, or deferred (prepaid) expenses.
• Provide the web link to the company’s Form 10-K, to allow accurate verification of your answers.

TP3.

LO 4.3Search the web for instances of possible impropriety relating to earnings management. This could be news reports, Securities and Exchange Commission violation reports, fraud charges, or any other source of alleged financial statement judgment lapse.

• Write down the name and industry type of the company you are discussing.
• Describe the purported indiscretion, and how it relates to mis-reporting earnings or shady accounting.
• Estimate the impact of the potential misrepresented amount.
• Note: You do not have to have proof that a compromise occurred, but you do need to have a source of your reporting of the potential trouble.
• Provide the web link to the information you found, to allow accurate verification of your answers.

TP4.

LO 4.4Assume you are employed as the chief financial officer of a corporation and are responsible for preparation of the financial statements, including the adjusting process and preparation of the adjusted trial balance. The company is facing a slow year, and after your adjusting entries, the financial statements are accurately reflecting that fact. However, as you are discussing the matter with your boss, the chief executive officer (CEO), he suggests that you have the power to make further adjustments to the statements, and that you should use that power to “adjust” the profits and equity into a stronger position, so that investor confidence in the company’s prospects will be restored.

Write a short memo to the CEO, stating your intentions about what you can and/or will do to make the financial statements more appealing. Be specific about any planned adjustments that could be made, assuming that normal period-end adjustments have already been reflected accurately in the financial statements that you prepared.

TP5.

LO 4.5Search the SEC website (https://www.sec.gov/edgar/searchedga...anysearch.html) and locate the latest Form 10-K for a company you would like to analyze. Submit a short memo:

• State the name and ticker symbol of the company you have chosen.
• Review the company’s end-of-period Balance Sheet, Income Statement, and Statement of Retained Earnings.
• Reconstruct an adjusted trial balance for the company, from the information presented in the three specified financial statements.
• Provide the web link to the company’s Form 10-K, to allow accurate verification of your answers.