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Exam 3: The Adjusting Process

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Question 61

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A company receives $6,500 for two season tickets sold on September 1.If $2,500 is earned by December 31,the adjusting entry made at that time is a debit to Cash of $2,500,and a credit to Ticket Revenue of $2,500.

A) True
B) False

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Question 62

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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.

A) True
B) False

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Question 63

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The unearned rent account has a balance of $72,000.If $18,000 of the $72,000 is unearned at the end of the accounting period,the amount of the adjusting entry is

Revenues and expenses should be recorded in the same period to which they relate.

A business pays biweekly salaries of $20,000 every other Friday for a 10-day period ending on that day.The last payday of December is Friday,December 27.Assume 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

The account type and normal balance of Unearned Revenue would be

An adjusting entry would adjust an expense account so the expense is reported when incurred.

Deferred revenue is revenue that is

On January 1,Newman Company estimated its property tax to be $5,100 for the year.​

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day.Journalize the necessary adjusting entry at the end of the accounting period,assuming that the period ends on Wednesday.

Accrued salaries of $600 owed to employees for December 29,30,and 31 are not taken into consideration in preparing the financial statements for the year ended December 31.Indicate which items will be erroneously stated,because of the error,on (a)the income statement for the year and (b)the balance sheet as of December 31.Also indicate whether the items in error will be overstated or understated.

On November 15,Great Designs Company purchased an advertising campaign for the month of December.Great Designs paid cash of $2,700 in advance.The advertising campaign ran in December and was completed on December 31.​ (a) Prepare all necessary journal entries for the advertising campaign for November and December. (b) Explain why you prepared this/these journal entries.

An example of deferred revenue is Unearned Rent.

The updating of accounts when financial statements are prepared is called the adjusting process.

On December 15,Great Designs Company hired an independent contractor for a project.The contractor completed the project on December 29 and submitted an invoice for $2,425 which was due on January 15.The amount was duly paid on January 15.​ (a) Prepare the journal entry or entries necessary to record these transactions. (b) Explain why you prepared this/these journal entries.

The balance in the unearned fees account,before adjustment at the end of the year,is $10,250.Journalize the adjusting entry required if the amount of unearned fees at the end of the year is $3,125.

Prior to the adjusting process,accrued revenue has

As time passes,fixed assets other than land lose their capacity to provide useful services.To account for this decrease in usefulness,the cost of fixed assets is systematically allocated to expense through a process called

The adjusting entry for gym memberships earned that were previously recorded in the unearned gym memberships account is

Identify the effect (a through h) that omitting each of the following items would have on the balance sheet. -Property taxes are paid annually.The estimated monthly amount for the taxes was not recorded.