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Exam 3: The Adjusting Process

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Question 71

Multiple Choice

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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) B) and C)
F) All of the above

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Question 72

True/False

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Adjusting entries are made at the end of an accounting period to adjust accounts on the balance sheet.

A) True
B) False

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Question 73

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Proper reporting of revenues and expenses in a period is due to the accounting period concept.

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day.The last pay day of December is Friday,December 27.Assuming the next pay period begins on Monday,December 30 and the proper adjusting entry is journalized at the end of the fiscal period (December 31) .The entry for the payment of the payroll on Friday,January 10 includes a:

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

By ignoring and not posting the adjusting journal entries to the appropriate accounts,net income will always be overstated.

At the end of the current year,$3,700 fees have been earned but have not been billed to clients.Journalize the adjusting entry to record the accrued fees.

Salaries of $6,400 are paid for a five-day week on Friday.Prepare the adjusting journal entry that is required if the month ends on Thursday.

For the year ending December 31,Orion,Inc.mistakenly omitted adjusting entries for $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned,and (3) insurance of $5,000 that expired.For the year ending December 31,what is the effect of these errors on revenues,expenses,and net income?

What is the purpose of an adjusted trial balance? What types of errors does it detect? What types of errors does it not detect?

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?

The unexpired insurance at the end of the fiscal period represents

The company determines that the interest expense on a note payable for period ending December 31st is $775.This amount is payable on January 1st.Prepare the journal entries required on December 31st and January 1st.

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

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

What effect will this adjusting journal entry have on the accounting records?

Which of the accounting steps in the accounting process below would be completed last?

Prior to the adjusting process,accrued expenses have

Depreciation on Office Equipment is $3,300.The adjusting entry on December 31,2011 would be

The matching concept