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Exam 3: The Adjusting Process

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Question 31

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

A) Insurance Expense
B) Prepaid Rent
C) Interest Expense
D) Unearned Rent

E) A) and D)
F) B) and D)

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Question 32

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Using accrual accounting,revenue is recorded and reported only

A) when cash is received without regard to when the services are rendered
B) when the services are rendered without regard to when cash is received
C) when cash is received at the time services are rendered
D) if cash is received after the services are rendered

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

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Question 33

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Adjusting entries always include

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

The account type and normal balance of Prepaid Expense is

The account type and normal balance of Unearned Revenue is

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

Prepare the required entries for the following transactions:

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

Indicate whether the following error would cause the adjusted trial balance totals to be unequal.If the error would cause the adjusted trial balance totals to be unequal,indicate whether the debit or credit total is higher and by how much. ​ The entry for $975 of supplies used during the period was journalized as a debit to Supplies Expense for $795 and credit to Supplies for $975.

The matching principle supports matching expenses with the related revenues.

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

Generally accepted accounting principles require accrual-basis accounting.

On January 1,DogMart Company purchased a two-year liability insurance policy for $22,800 cash.The purchase was recorded to Prepaid Insurance.Prepare the January 31 adjusting entry.

Prepaid rent,representing rent for the next six months' occupancy,would be reported on the tenant's balance sheet as a(n)

Which of the following is considered to be an accrued expense?

Zoey Bella Corp.has a payroll of $10,000 for a five-day workweek.Its employees are paid each Friday for the five-day workweek.Prepare the adjusting entry on December 31 assuming the year ends on Thursday. ​

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

Adjusting entries affect only expense and asset accounts.

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.