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Exam 3: The Adjusting Process

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Question 21

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Which one of the accounts below would likely be included in an accrual adjusting entry?

A) Insurance Expense
B) Prepaid Rent
C) Interest Expense
D) Unearned Rent

E) B) and D)
F) B) and C)

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Question 22

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

A) True
B) False

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Question 23

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Select with a True or False whether or not each of the following accounts would, under normal circumstances, require an adjusting entry.

Adjusting entries are made at the end of an accounting period to adjust accounts on the balance sheet.

Data for an adjusting entry described as "accrued wages, $2,020" means to debit

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

Adjustments for accruals are needed to record a revenue that has been earned or an expense that has been incurred but not recorded.

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

The Accumulated Depreciation's account balance is the sum of the depreciation expense recorded in past periods.

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The last pay day of December is Friday, December 27. Assuming the next pay period begins on Monday, December 30 and the proper adjusting entry is journalized at the end of the fiscal period (December 31) . The entry for the payment of the payroll on Friday, January 10 includes a:

If there is a balance in the unearned subscriptions account after adjusting entries are made, it represents a(n)

Revenue recognition concept requires that the reporting of revenue be included in the period when cash for the service is received.

At the end of the current year, $3,700 fees have been earned but have not been billed to clients. Journalize the adjusting entry to record the accrued fees.

Accumulated Depreciation accounts are liability accounts.

Using accrual accounting, revenue is recorded and reported only

The revenue recognition concept states that revenue should be recorded in the same period as the cash is received.

Prepare adjusting entries for the following transactions:

Even though GAAP requires the accrual basis of accounting, some businesses prefer using the cash basis of accounting.

Salaries of $6,400 are paid for a five-day week on Friday. Prepare the adjusting journal entry that is required if the month ends on Thursday.

List the four basic types of accounts that require adjusting entries and give an example of each.