Exam 3: The Adjusting Process

Robert Rogers, CPA performed accounting services for a client in December. A bill was mailed to the client on December 30. Roberts received a check in the mail on January 5. The revenue principle would require that which of the following accounts appear on the income statement for the year ended December 31?

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

In the case of Unearned revenue, the cash is received first, and the revenue is earned later.

Which of the following statements BEST mirrors the matching principle?

What is the effect of the adjusting entry for Depreciation expense?

The beginning balance in the Supplies account was $3,000. Purchases of supplies during the year were $25,000. The business makes adjusting entries for supplies once a year. A count of supplies at year-end revealed that the ending balance in the Supplies account should be $1,500. What is the amount of the adjusting entry?

The purposes of the adjusting process are:

Under cash-basis accounting, revenue is recorded when it is earned, regardless of when cash is received.

The Supplies account for Vulcan Cleaning Services had a debit balance of $200 at the beginning of the month. Additional supplies of $1,400 were purchased during the month. A physical count of supplies revealed that $600 of supplies was still on hand at the end of the month. What was total Supplies expense for the month?

Century Security Services had a new customer come in to their office and request their services for a two-month period. Century will collect a total of $10,000 from the customer at the end of the two-month period. Century began providing services on June 1. On June 30, Century accrued service revenue for the first one-month period. On July 31, Century completed the services and collected $10,000 from the customer. Please provide the journal entry made to record the collection of cash from the customer on July 31.

Which of the following accounts would be used under the accrual method of accounting, but NOT under the cash-basis method of accounting.

Ensuring that accounting information is updated each period is the purpose of the:

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

Which of the following is a contra account?

Which of the following is the time-period concept?

What is the term for the difference between the Equipment account and the Accumulated depreciation account?

Fleet Tutoring Services borrowed $12,000 and signed a one-year note payable on December 1, 2012. The note bears interest at a rate of 5% per year. Fleet will repay the principal amount of $12,000 plus one year's interest of $600 on November 30 of the following year. Fleet accrues interest expense every month. What adjusting entry is needed on December 31?

Which of the following reports a company's financial position?

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

The Accumulated depreciation account is: