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Exam 3: The Adjusting Process

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Question 51

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The general term used to indicate delaying the recognition of an expense already paid or of a revenue already received is

A) depreciation
B) deferral
C) accrual
D) inventory

E) None of the above
F) C) and D)

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Question 52

Multiple Choice

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The revenue recognition concept

A) is not in conflict with the cash method of accounting
B) determines when revenue is credited to a revenue account
C) states that revenue is not recorded until the cash is received
D) controls all revenue reporting for the cash basis of accounting

E) A) and D)
F) A) and C)

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Question 53

Multiple Choice

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Adjusting entries always include

The adjusting entry to adjust supplies was omitted at the end of the year. This would effect the income statement by having

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.

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

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 number(s) in the appropriate box.

Complete the missing items in the following chart:

At year-end, the balance in the prepaid insurance account, prior to any adjustments, is $6,000. The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

One of the accounting concepts upon which deferrals and accruals are based is

The unexpired insurance at the end of the fiscal period represents

Depreciation Expense and Accumulated Depreciation are classified, respectively, as

When preparing an income statement vertical analysis, each revenue and expense is expressed as a percent of net income.

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

Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the trial balance?

Adjusting entries affect at least one

Adjusting entries affect only expense and asset accounts.

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

Depreciation on equipment for the year is $6,300. (a) Record the journal entry if the company adjusts its account once a year. (b) Record the journal entry if the company adjusts its account on a monthly basis.

A company purchases a one-year insurance policy on June 1 for $2,760. The adjusting entry on December 31 is