Exam 3: Adjusting the Accounts

At December 31, 2015, before any year-end adjustments, Murmur Company's Insurance Expense account had a balance of $2,450 and its Prepaid Insurance account had a balance of $3,800. It was determined that $2,800 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be

The adjusting entry at the end of the period to record an expired cost may be different depending on whether the cost was initially recorded as an asset or an expense.

A liability-revenue relationship exists with

Unearned revenues are

The balance in the supplies account on June 1 was $5,200, supplies purchased during June were $3,500, and the supplies on hand at June 30 were $3,000. The amount to be used for the appropriate adjusting entry is

On January 2, 2015, Superchunk purchased a general liability insurance policy for $2,700 for coverage for the calendar year. The entire $2,700 was charged to Insurance Expense on January 2, 2015. If the firm prepares monthly financial statements, the proper adjusting entry on January 31, 2015, will be: a. Insurance Expense $\quad$$\quad$ 2,475 $\quad$ Prepaid Insurance . $\quad$$\quad$ 2,475 b. Prepaid Insurance $\quad$$\quad$ 2,475 $\quad$ Insurance Expense $\quad$$\quad$ 2,475 c. Insurance Expense $\quad$$\quad$ 225 $\quad$ Prepaid Insurance. $\quad$$\quad$ 225 d. Prepaid Insurance $\quad$$\quad$ 225 $\quad$ Insurance Expense $\quad$$\quad$ 225

Pavement Company purchased a truck from Bee Thousand Corp. by issuing a 6-month, 8% note payable for $90,000 on November 1. On December 31, the accrued expense adjusting entry is a. No entry is required. b. Interest Expense $\quad$$\quad$ 7,200 $\quad$ Interest Payable $\quad$$\quad$ 7,200 c. Interest Expense $\quad$$\quad$ 3,600 $\quad$ Interest Payable $\quad$$\quad$ 3,600 d. Interest Expense $\quad$$\quad$ 1,200 $\quad$ Interest Payable $\quad$$\quad$ 1,200

The expense recognition principle states that expenses should be matched with revenues. Another way of stating the principle is to say that

Revaluation of land and buildings is permitted under

Cash-basis accounting is allowed under

Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments?

If an adjusting entry is not made for an accrued revenue,