Exam 3: Adjusting Accounts for Financial Statements

The amount of the month-end adjusting entry for Insurance Expense is $1,000. If the entry is not made then expenses are understated by $1,000 and profit is overstated by$1,000.

Attendance records showed that $2,600 of Unearned Admissions Revenue hasbeen earned in June. Compute the balance left in the following accounts:Unearned admission revenueAdmissions Revenue

What was Grow's insurance expense for 2018? 138)

In reviewing the accounts of Tumblers Co., you discovered that a credit of $1,000 to prepaid insurance was wrongly credited to accounts receivable, and an $800prepayment was remitted for a radio advertisement that was not posted. Which of the following statements reflects the effect of the errors?

The matching principle requires that revenue be assigned to the accounting period in which it is earned.

Before an adjusting entry for expired insurance is made, the amount in PrepaidInsurance is overstated and Insurance Expense is overstated.

If an accountant forgot to record depreciation on office equipment at the end of an accounting period, what is the effect on the statements prepared at that time?

On January 8, Gallery Corp. records $5,000 of accrued salaries. On January 15, $10,000 of salaries are paid. The entry on January 15 includes a debit to the Salaries Payableaccount.

The accrual basis of accounting reflects the understanding that the economic effect of revenue generally occurs when it is earned, not when cash is received.

Which of the following is false? 141)

In preparing financial statements from the trial balance, the balance sheet is prepared first.

An unadjusted trial balance is a listing of accounts prepared before adjustments arerecorded.

Discuss the purpose of an adjusted trial balance

A trial balance prepared after adjustments have been recorded is called a(n)

The broad principle that requires expenses to be reported in the same period as therevenues that were earned as a result of the expenses is the:

Financial statements are prepared in the following order

Under the alternative method for recording unearned revenue, the receipt of cash inadvance of performing services would be recorded as a credit to Unearned Revenue and a debit to Cash.

An adjusting entry can only affect income statement accounts

Correcting entries cannot involve cash

Even if no errors have been detected in the processing of accounting data, adjustingentries may be needed at the end of an accounting period.