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Exam 3: The Adjusting Process

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Question 31

Multiple Choice

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The entry to adjust for the cost of supplies used during the accounting period is

A) debit Supplies Expense; credit Supplies
B) debit Retained Earnings; credit Supplies
C) debit Accounts Payable; credit Supplies
D) debit Supplies; credit Retained Earnings

E) None of the above
F) A) and B)

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Question 32

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The matching concept requires expenses be recorded in the same period that the related revenue is recorded.

A) True
B) False

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Question 33

Multiple Choice

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

A one-year insurance policy was purchased on October 1, 2011 for $4,200. The adjusting entry on December 31, 2011 would be

Austin, Inc. made a Prepaid Rent payment of $2,800 on January 1st. The company's monthly rent is $700. The amount of Prepaid Rent that would appear on the January 31 balance sheet after adjustment is:

On November 1st, clients of Great Designs Company prepaid $2,800 for services to be provided in the future at a rate of $70 per hour. (a) Journalize the receipt of this cash. (b) As of November 30th, Great Designs shows that 16 hours of services have been provided on this agreement. Prepare the necessary journal entry to record this. (c) Determine the total unearned fees in hours and dollars at November 30th.

The account type and normal balance of Prepaid Expense is

Explain the difference between accrual-basis accounting and cash-basis accounting.

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

A contra asset account for Land will normally appear in the balance sheet.

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

Depreciation Expense is reported on the balance sheet as an addition to the related asset.

Depreciation on equipment for the year is $900. (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.

Accumulated Depreciation accounts are liability accounts.

Prior to the adjusting process, accrued revenue has

Jacki Lopez started JVL Consulting on January 1, 2011. The following are the account balances at the end of the first month of business, before adjusting entries were recorded: Adjustment data: Supplies on hand at the end of the month: $300 Unbilled consulting revenue: $850 Rent expense for the month: $2,000 Depreciation on equipment: $150 (a) Prepare the required adjusting entries, adding accounts as needed. (b) Prepare an Adjusted Trial Balance for JVL Consulting as of January 31, 2011.

The Supplies account had a beginning balance of $1,750. Supplies purchased during the period totaled $3,500. At the end of the period before adjustment, $350 of supplies were on hand. Prepare the adjusting entry for supplies.

If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry?

Deferred revenue is revenue that is

All of the following statements regarding vertical analysis are true except