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Exam 3: The Adjusting Process

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Question 71

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Which of the following is an example of a prepaid expense?

A) Supplies
B) Accounts Receivable
C) Unearned Subscription Revenue
D) Unearned Fees

E) A) and B)
F) A) and C)

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Question 72

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Bloom's Company pays biweekly salaries of $40,000 every other Friday for a 10-day period ending on that day.The last payday of December is Friday,December 27.Assuming the next pay period begins on Monday,December 30,journalize the adjusting entry necessary at the end of the fiscal period (December 31).

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$40,000/10 days = $4...

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Question 73

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Match the type of account (a through e) with the business transactions that follow. -Retainer fee received from a client for future legal representation.

The balance in the office supplies account on January 1 was $7,000,supplies purchased during January were $3,000,and the supplies on hand on January 31 were $2,000.The amount to be used for the appropriate adjusting entry is

DogMart Company records depreciation for equipment.Depreciation for the period ending December 31 is $1,400 for office equipment and $2,650 for production equipment.Prepare the two entries to record the depreciation.

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

Using accrual accounting,expenses are recorded and reported only

For the year ending June 30,Island Clinical Services mistakenly omitted adjusting entries for (1)$1,500 of supplies that were used, (2)unearned revenue of $4,200 that was earned,and (3)insurance of $5,000 that expired.What is the combined effect of these errors on (a)revenues, (b)expenses,and (c)net income for the year ending June 30?

Accumulated Depreciation and Depreciation Expense are classified,respectively,as

A company realizes that the last two days' revenue for the month was billed but not recorded.The adjusting entry on December 31 is a debit to Accounts Receivable and a credit to Fees Earned.

Vertical analysis is useful for analyzing financial statement changes over time.

Which of the following accounts would likely be included in a deferral adjusting entry?

Vertical analysis compares each item in a financial statement with a total amount from the same statement.

Accruals are needed when an unrecorded expense has been incurred or an unrecorded revenue has been earned.

A business pays biweekly salaries of $20,000 every other Friday for a 10-day period ending on that day.The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a

If the adjustment of the unearned rent account at the end of the period to recognize the amount of rent earned is inadvertently omitted,the net income for the period will be understated.

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

Adjusting entries affect only expense and asset accounts.

On January 2,Dog Mart prepaid $30,000 rent for the year and recorded the prepayment in an asset account.Prepare the January 31 adjusting entry for rent expense.

The balance in the prepaid rent account before adjustment at the end of the year is $32,000,which represents four months' rent paid on December 1.The adjusting entry required on December 31 is