Exam 3: The Adjusting Process

At the end of the current year, the accountant for Colorful Graphics forgot to make an adjusting entry to accrue Wages Payable to the company's employees for the last week in December. The wages will be paid to the employees in January. Which of the following is an effect of this error?

A contra account's normal balance (debit or credit)is the opposite of the normal balance of the related account.

The accountant for Noble Jewelry Repair Services forgot to make an adjusting entry for Depreciation Expense for the current year. Which of the following is an effect of this error?

The salaries are $6,000 per week of 5 working days and are paid weekly at the end of Fridays. The end of the month falls on a Thursday. Patricia made the appropriate accrual adjustment and posted it to the ledger. The final adjusted balance of Salaries Payable, as shown on the adjusted trial balance, will be a: (Assume that there was no beginning balance in the Salaries Payable account.)

Accumulated Depreciation is a ________ account and carries a ________ normal balance.

On January 1, 2015, the Accounts Receivable of Linda Company had a debit balance of $20,000. During January, the company provided services for $600,000 on account. The company collected $250,000 from its customers on account in January. What was the ending balance in the Accounts Receivable account at the end of January?

A depreciable asset's cost minus accumulated depreciation is called:

What type of account is Prepaid Rent and what is its normal balance?

The accounting records of Patricia Event Planning Service include the following select unadjusted balances on December 31, 2014: Salaries Expense, $6,000; Service Revenue: $20,000; Unearned Revenue, $400; Supplies Expense, $600; Rent Expense, $300; Depreciation Expense-Equipment, $200. Later in December, she worked with a new client and provided event planning services for an upcoming event. When the event is complete in January, 2015, she will collect the full amount of $1,200 from her client. As of the end of December, 2015, she rendered one-third of the services covered by the contract. She made the accrual adjustments. The final adjusted balance of Service Revenue, as shown on the adjusted trial balance, should be a:

Which of the following accounts would be used under the accrual method of accounting, but not under the cash basis accounting?

Deborah Consultants had the following accounts and account balances after adjusting entries. Assume all accounts have normal balances. Calculate the amount of service revenue and prepare the adjusted trial balance for Deborah Consultants as of December 31, 2015.

The accounting principle that ensures that all expenses are recorded when they are incurred during the period, and compares those expenses against the revenues of the period is called the ________ principle.

On April 1, Balsa Company purchased office supplies for $1,500. At the end of April, they took a count of the remaining supplies and found that there was $500 of supplies left. Please provide the adjusting entry needed at the end of April. Assume the office supplies were initially recorded as an asset. Assume there were no office supplies on hand prior to the purchase on April 1.

The contra asset accounts, like Accumulated Depreciation, always have normal debit balances.

The accountant for Jones Auto Repair Company failed to make an adjusting entry to record $5,000 of unpaid salaries for the last 2 weeks of the year. Which of the following is an impact of this omission?

Robert Rogers, CPA, owns a computer that is used in his consultancy services. As per the matching principle, the related account that should appear on the balance sheet as of December 31, 2014 is:

Which of the following statements is true of accrual basis accounting?

The value of a depreciable asset at the end of its useful life is called:

Healthy Living, a diet magazine, collected $500,000 in subscription revenue in May. 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. Provide the journal entry for collection of cash in May. Assume the magazine initially records a liability for the subscription revenue.

Financial statements are prepared from the balances in a(n):