FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 3: The Adjusting Process

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Essay

Review LaterAdd Note

Review Later

The company determines that the interest expense on a note payable for the period ending December 31 is $775.This amount is payable on January 1.Prepare the journal entries required on December 31 and January 1.

Correct Answer

verified

Show Answer

Question 22

Essay

Review LaterAdd Note

Review Later

A one-year insurance policy was purchased on June 1 for $2,400.The adjusting entry on December 31 would be:

Correct Answer

verified

$2,400/12 = $200 per month × 7 months = ...

View Answer

Show Answer

Question 23

True/False

Review LaterAdd Note

The system of accounting where revenues are recorded when they are earned and expenses are recorded when they are incurred is called the cash basis of accounting.

Deferred revenue is revenue that is

Listed below are accounts to use for transactions a through j, each identified by a number. Following this list are the transactions. You are to indicate for each transaction the accounts that should be debited and credited by placing the account numbers in the appropriate box. 1. Accounts Payable 2. Accounts Receivable 3. Accumulated Depreciation—Office Equipment 4. Building 5. Common Stock 6. Cash 7. Depreciation Expense—Office Equipment 8. Dividends 9. Insurance Expense 10. Insurance Payable 11. Interest Expense 12. Interest Payable 13. Interest Receivable 14. Land 15. Notes Payable 16. Office Supplies 17. Office Supplies Expense 18. Prepaid Insurance 19. Service Revenue 20. Unearned Service Revenue 21. Utilities Expense 22. Utilities Payable

Which of the following is considered to be unearned revenue?

A company pays $36,000 for twelve months' rent on October 1,recording the prepayment as an asset.The adjusting entry on December 31 is a debit to Rent Expense,$9,000,and a credit to Prepaid Rent,$9,000.

If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted,the assets at the end of the period will be understated.

All of the following statements regarding vertical analysis are true except

The balance in the accumulated depreciation account is the sum of the depreciation expense recorded in past periods.

The adjustment for accrued fees was debited to Accounts Payable instead of Accounts Receivable.This error will be detected when the adjusted trial balance is prepared.

If the adjustment for accrued salaries at the end of the period is inadvertently omitted,both liabilities and stockholders' equity will be understated for the period.

Deferrals are recorded transactions that delay the recognition of an expense or revenue.

An adjusting entry to accrue an incurred expense will affect total liabilities.

Generally accepted accounting principles require accrual-basis accounting.

On January 1,Power House Co.prepaid the annual rent of $10,140.Prepare the journal entry to record this transaction.

The account type and normal balance of Prepaid Expense is

Buster Industries pays weekly salaries of $30,000 on Friday for a five-day week ending on that day.The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

Two income statements for Midnight Enterprises are shown below: Midnight Enterprises Income Statement For Year 1 and Year 2,Ended December 31 $\begin{array}{lcc}&\underline { \text { Year 2 } } & \underline { \text { Year 1} } \\\text { Fees earned } & \$ {\$ 74,350} & \$ 520,600 \\\text { Operating expenses } & \underline{472,045} & \underline { \$ 33,390 }\\\text { Operating income } &\underline{\$ 202,305}& \underline { \$ 282,210}\end{array}$ a- Prepare a vertical analysis of Midnight Enterprises' income statements. b- Does the vertical analysis indicate a favorable or unfavorable trend?

On December 31,the balance in the office supplies account is $1,385.A physical count shows $435 worth of supplies on hand.Prepare the adjusting entry for supplies.