Exam 3: Adjusting the Accounts

Cindi's Candies paid employee wages on and through Friday, January 26, and the next payroll will be paid in February. There are three more working days in January (29-31). Employees work 5 days a week and the company pays $\$ 700$ a day in wages. What will be the adjusting entry to accrue wages expense at the end of January?

Bread Basket provides baking supplies to restaurants and grocery stores.On November 1, 2011, Bread Basket signed a €500,000, 6-month note payable.The note requires Bread Basket to pay interest at an annual rate of 12%.Assuming Bread Basket makes the appropriate adjusting entry, what is the impact on its December 31, 2011 statement of financial position?

Types of adjusting entries include deferral of unearned revenue, which requires the company to record a liability on the statement of financial position.

The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.

The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset.

Southwestern City College sold season tickets for the 2011 football season for $180,000.A total of 8 games will be played during September, October and November.In September, two games were played.In October, three games were played.The balance in Unearned Revenue at October 31 is

Which of the following is not a common time period chosen by businesses as their accounting period?

In a service-type business, revenue is considered earned

The expense recognition principle refers to

Bread Basket provides baking supplies to restaurants and grocery stores.On November 1, 2011, Bread Basket signed a €500,000, 6-month note payable.The note requires Bread Basket to pay interest at an annual rate of 12%.Bread Basket's accountant is a recent college graduate who lacks practical experiences.Therefore, the appropriate adjusting entry is not made.What is the impact on its December 31, 2011 statement of financial position?

On July 1, Runner's Sports Store paid $8,000 to Acme Realty for 4 months rent beginning July 1.Prepaid Rent was debited for the full amount.If financial statements are prepared on July 31, the adjusting entry to be made by Runner's Sports Store is

The time period assumption is often referred to as the expense recognition principle.

Depreciation expense for a period is computed by taking the

Under International Financial Reporting Standards (IFRS) the time period assumption means companies must issue financial statements using a calendar year time period.

Use the following information for questions Ling Company had the following transactions during 2011: $\bullet$ Sales of ¥9,000 on account $\bullet$ Collected ¥4,000 for services to be performed in 2012 $\bullet$ Paid ¥1,250 cash in salaries $\bullet$ Purchased airline tickets for ¥500 in December for a trip to take place in 2012 -What is Ling's 2011 net income using accrual accounting?

In general, the shorter the time period, the difficulty of making the proper adjustments to accounts

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause

Depreciation is the process of

An adjusting entry for accrued revenues increases an asset account on the statement of financial position and increases a revenue account on the income statement.

Accrued expenses result in an adjustment to both the income statement and the statement of financial position.