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Exam 3: Adjustments: Accruals and Deferrals

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Question 31

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

A) True
B) False

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Question 32

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Jordon James started JJJ Consulting on January 1. 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, $200 Unbilled consulting revenue, $700 Rent expense for the month, $1,000 Depreciation on equipment, $90 (a) Prepare the required adjusting entries, adding accounts as needed. (b) Prepare an adjusted trial balance for JJJ Consulting as of January 31. ​

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Question 33

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

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. ​

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

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

Under the accrual basis, some accounts in the ledger require updating at the end of the period. Discuss the three main reasons for this updating and give an example of each.

The adjusted trial balance verifies that total debits equals total credits before the adjusting entries are prepared.

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

The adjusting entry to record the depreciation of a building for the fiscal period is

Prepaid advertising, representing payment for the next quarter, would be reported on the balance sheet as a(n)

How will the following adjusting journal entry affect the accounting equation?

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.

Prior to the adjusting process, accrued expenses have

A company depreciates its equipment $500 a year. The adjusting entry on December 31 is a debit to Depreciation Expense, $500, and a credit to Equipment, $500.

For the year ending December 31, Beard Clinical Supplies Co. mistakenly omitted adjusting entries for (1) $9,800 of unearned revenue that was earned, (2) earned revenue that was not billed of $10,200, and (3) accrued wages of $7,000. Indicate the combined effect of the errors on (a) revenues, (b) expenses, and (c) net income.

The difference between the balance of a fixed asset account and the balance of its related accumulated depreciation account is termed the book value of the asset.

A one-year insurance policy was purchased on June 1 for $2,400. The adjusting entry on December 31 would be:

When is the adjusted trial balance prepared?

An adjusting entry would adjust revenue so it is reported when earned and not when cash is received.