Exam 3: Adjusting the Accounts

James Corporation purchased a one-year insurance policy in January 2011 for € 48,000.The insurance policy is in effect from May 2011 through April 2012.If the company neglects to make the proper year-end adjustment for the expired insurance

The revenue recognition principle dictates that revenue should be recognized in the accounting records

If an adjustment is needed for unearned revenues, the

Accumulated Depreciation is

Sail \& Surf Cruises purchased a five-year insurance policy for its ships on April 1,2011 for $\$ 100,000$ . Assuming that April 1 is the effective date of the policy, the adjusting entry on December 31,2011 is

Depreciation is a ______________ allocation process rather than a process of ______________.

Expenses paid and recorded as assets before they are used are called

A company shows a balance in Salaries Payable of $\neq 40,000$ at the end of the month. The next payroll amounting to $¥ 45,000$ is to be paid in the following month. What will be the journal entry to record the payment of salaries?

If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future.

Adjustments would not be necessary if financial statements were prepared to reflect net income from

The ______________ principle gives accountants guidance as to when revenue is to be recorded.

The expense recognition principle matches

Expenses sometimes make their contribution to revenue in a different period than when the expense is paid.When wages are incurred in one period and paid in the next period, this often leads to which account appearing on the balance sheet at the end of the time period?

Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal.

When a company receives cash for future service it debits unearned revenue on the income statement and credits cash on the statement of financial position.

What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, € 20,500, and unexpired amounts per analysis of policies of € 6,000?

Depreciation expense for a period is an ______________ rather than a factual measurement of cost that has expired.

Which of the following statements concerning accrual-basis accounting is incorrect?

The expense recognition principle requires that expenses be matched with revenues.

The total amount of debits on the adjusted trial balance will equal the amount of assets on the statement of financial position.