Exam 3: The Adjusting Process

Classic Artists' Services has hired a maintenance man to maintain a building they use for instruction.He will begin work on 1 February and work through till 31 May.Classic Artists' will pay the maintenance man $16,000 at the end of May.It accrues Maintenance expense at the end of every month.What is the balance in the Accounts payable account for amounts owed to the maintenance man at the end of March?

Healthy Living,a diet magazine,collected $1,440,000 in subscription revenue on 31 May.Healthy Living earns a minimum of $1,080,000 from the buyers who are not the subscribers.Each subscriber will receive an issue of the magazine for each of the next 12 months,beginning with the June issue.The company uses the accrual method of accounting.By the end of December,what is the amount of Subscription revenue that has been earned?

If supplies have been used up during the accounting period,the correct adjusting entry would be:

Ursula Tax Planning Service has the following plant assets: Communications equipment: Cost,$7120 with useful life of eight years;Furniture: Cost,$24,000 with useful life of 12 years;and Computer: Cost,$13,600 with useful life of four years. Ursula's monthly depreciation expense calculated using the straight-line method is: (Assume salvage value of all the assets to be zero)

Patricia Event Planning Service collects fees from their customers in advance.On 1 January 2016,the balance of her Unearned revenue account had a balance of $5000 (Cr. ).During January and February,she collected $3000 and $700 as advance fees.During the two-month period,she rendered services of $7500 .What is the balance in Unearned revenue at the end of February?

The Accumulated depreciation account is:

How do the adjusting entries differ from other journal entries?

Which of the following lists a company's assets,liabilities and equity to report its financial position?

In the case of Unearned revenue,the adjusting entry at the end of the period includes a credit to Service revenue.

Which of the following strategies may be considered an unethical way to increase reported profit?

Viva Ltd had bought machine X for $15,900 2 years ago.The machine had no residual value and had an estimated useful life of 10 years.If the company uses the straight-line depreciation method,calculate the current book value of the machine.

To accrue revenue means that the cash receipt is recorded before the revenue is earned.

The following information is available for Able Company's Office supplies account. Beginning balance \ 1600 Office supplies expensed 7000 Ending balance 4000 From the above information,calculate the amount of office supplies purchased.

Understating expenses occurs by:

The end-of-period process starts with the:

In the case of a prepaid expense,the adjusting entry required at the end of a period consists of a credit to Prepaid expense.

In the case of Unearned revenue,the adjusting entry at the end of the period includes a debit to Service revenue.

Which of the following situations would result in an increase in profit under the accrual method of accounting,but would NOT result in an increase in profit under the cash-basis method of accounting?

Every time supplies are used during the accounting period,the asset 'supplies' should be reduced and the 'supplies expense' should be increased.

Prepaid insurance is an asset account.