Exam 3: The Adjusting Process

What is the term for the difference between the Equipment account and the Accumulated depreciation account? A) Contra asset B) Market value C) Historical cost D) Book value

Pattie's Event Planning Service records prepaid expenses as expenses when cash is paid out,and records unearned revenues as revenues when cash is collected.She then makes adjusting entries as needed to bring her books up to the full accrual basis once a year at the end of the year.This year on December 15,she collected $1,000 from a customer in advance for a series of events that will start in late December and finish in mid-March.At the end of the year,she has finished approximately 10% of the services for her customer.Her adjusting entry at December 31 will include a debit to Service revenue of $900.

A business pays its insurance premium of $2,400 on November 1 of each year.On January 1 of the new year (after December 31 adjustments),the Prepaid insurance account has a debit balance of:

The entry to record depreciation includes a credit to which account?

Employees of Robert Rogers,CPA worked during the last two weeks of December.They received their paychecks on January 2.The matching principle would require that which of the following accounts appear on the income statement for the year ended December 31?

Accrued revenue is revenue that:

Pattie's Event Planning Service has just prepared the unadjusted trial balance,which shows the following balances: Salary expense: Debit $8,000 Service revenues: Credit $3,000 Interest expense: 0 Late in this month,she began working with a new client,providing event planning services for an upcoming event.When the event is complete,in the following month,she will collect the full amount of $900 from her client.As of the end of this month,she has rendered one-third of the services covered by the contract.She makes accrual adjustments monthly.The final adjusted balance of Service revenues,as shown on the adjusted trial balance,should be a:

Pattie's Event Planning Service has just prepared the unadjusted trial balance,which shows the following balances: Salary expense: Debit $\$ 8,000$ Service revenues: Credit $\$ 3,000$ Interest expense: 0 On the first day of January,Pattie borrowed $1,800 on a one-year note payable bearing interest at 4% per year.The note specifies that principal and interest is to be paid in full at the end of the one-year period.On June 30,the adjusted trial balance will show what amount for Interest expense?

The accountant for Barnes Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense.Which of the following is TRUE?

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

Pattie's Event Planning Service collects the fees from their customers in advance.At January 1,2012,the balance of her Unearned revenue account was a credit of $4,000.During January and February,she collected $2,000 and $1,000 respectively.During the two-month period,she rendered services of $5,500.At the end of February,her adjusted trial balance will show what balance in Unearned revenues?

ABC Company signed a one-year $12,000 note payable at 8% interest on May 1,2012.If ABC only adjusts their accounts once a year at year-end,how much interest expense must be accrued on December 31,2012? A) $960. B) $320. C) $640. D) $474.

The table below represents Able Company's supplies account.Please supply the missing amount. Beginning supplies ? Supplies purchased 7,000 Supplies expense 9,000 Ending supplies 4,000

ABC Company signed a one-year $12,000 note payable at 8% interest on May 1,2012.How much interest expense must be accrued on May 31,2012? A) $960 B) $320 C) $80 D) $40

The purposes of the adjusting process are:

At January 1,Smith has a beginning balance in Prepaid insurance expense of $1,200.Smith pays insurance premiums once a year,and his total premium is $4,800.As of the end of February,the balance in prepaid insurance is $2,000.

Which of the following is TRUE?

In cash-basis accounting,revenue is recognized when cash is received and expenses are recognized when they are paid.

The accountant for Noble Jewelry Repair Services forgot to make an adjusting entry for Depreciation expense for the current year.What is the effect of this error on total assets?

A business pays its employees' monthly salaries of $20,000,half on the 15^th day of each month,and half on the first day of the following month.On October 31,the business accrued salaries for the second half of October.On November 1,the business paid their employees $10,000 for the second half of October.Please provide the journal entry for the payment made on November 1.