Exam 3: The Adjusting Process

Vertical analysis is useful for analyzing financial statement changes over time.

Identify the effect (a - h) that omitting each of the following items would have on the balance sheet.a.Assets and stockholders' equity overstated b.Assets and stockholders' equity understated c.Assets overstated and stockholders' equity understated d.Assets understated and stockholders' equity overstated e.Liabilities and stockholders' equity overstated f.Liabilities and stockholders' equity understated g.Liabilities overstated and stockholders' equity understated h.Liabilities understated and stockholders' equity overstated -Interest earned on a note receivable was not recorded.

For the year ending June 30, Island Clinical Services mistakenly omitted adjusting entries for (1) $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired. What is the combined effect of these errors on (a) revenues, (b) expenses, and (c) net income for the year ending June 30?

Which of the following is an example of an accrued expense?

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

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

The balance in the unearned fees account, before adjustment at the end of the year, is $10,250. Journalize the adjusting entry required if the amount of unearned fees at the end of the year is $3,125.

On December 31, a business estimates depreciation on equipment used during the first year of operations to be $2,900. (a) Journalize the adjusting entry required on December 31. (b) If the adjusting entry in (a) were omitted, which items would be erroneously stated on (1) the income statement for the year and (2) the balance sheet as of December 31?

At year-end, the balance in the prepaid insurance account, prior to any adjustments, is $6,000. The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

Accumulated Depreciation and Depreciation Expense are classified, respectively, as

Deferred revenue is revenue that is

When is the adjusted trial balance prepared?

For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance total to be unequal, indicate whether the debit or credit total is higher and by how much.a)The adjustment for unearned fees of $3,260 was journalized as a debit to Accounts Payable for $3,260 and a credit to Fees Earned of $3,260.b)The adjustment for supplies expense of $425 was journalized as a debit to Supplies Expense for $542 and a credit to Supplies for $425.

An adjusting entry to accrue an incurred expense will affect total liabilities.

The unadjusted and adjusted trial balances for Ellen's Coiffures is shown below. Assume that all balances in the unadjusted trial balance column and the amounts of the adjustments are correct. Further assume that $400 of insurance expired during the year. Locate the errors in the accountant's adjusting entries, assuming that none of the accounts was affected by more than one adjusting entry.​

At the end of the fiscal year, the usual adjusting entry to recognize accrued revenues was omitted. Which of the following is true?

Match the type of account (a - e) with the business transactions that follow. -Paid 6 months of rental payments to the landlord. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

The estimated amount of depreciation on equipment for the current year is $5,300. Journalize the adjusting entry to record the depreciation.

At the end of the fiscal year, the usual adjusting entry to accrue wages due on the last day of the fiscal period was omitted. Which of the following is true?

Prepare the required entries for the following transactions: (a)Austin Company pays daily wages of $645 (Monday - Friday). Paydays are every other Friday. Prepare the Monday, January 31 adjusting entry, assuming that the previous payday was Friday, January 21.(b)Prepare the journal entry to record the Austin Company's payroll on Friday, February 4.(c)Annual depreciation expense on the company's fixed assets is $39,600. Prepare the adjusting entry to recognize depreciation for the month of January.(d)The company's office supplies account shows a debit balance of $3,755. A count of office supplies on hand on January 31 shows $635 worth of supplies on hand. Prepare the January 31 adjusting entry for Office Supplies.