Exam 3: The Adjusting Process

Prepaid rent,representing rent for the next six months' occupancy,would be reported on the tenant's balance sheet as an

The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting

The balance in the unearned fees account,before adjustment at the end of the year,is $10,250.Journalize the adjusting entry required if the amount of unearned fees at the end of the year is $3,125.

Indicate whether the following error would cause the adjusted trial balance totals to be unequal.If the error would cause the adjusted trial balance totals to be unequal,indicate whether the debit or credit total is higher and by how much. The entry for $975 of supplies used during the period was journalized as a debit to Supplies Expense for $795 and credit to Supplies for $975.

For most large businesses,the cash basis of accounting will provide accurate financial statements for user needs.

The accounting concept upon which deferrals and accruals are based is

For the year ending December 31,Orion,Inc.mistakenly omitted adjusting entries for $1,500 of supplies that were used,2 unearned revenue of $4,200 that was earned,and 3 insurance of $5,000 that expired.For the year ending December 31,what is the effect of these errors on revenues,expenses,and net income?

An adjusting entry would adjust an expense account so the expense is reported when incurred.

A company depreciates its equipment $500 a year.The adjusting entry on December 31 is a debit to Depreciation Expense,$500,and a credit to Equipment,$500.

What is the purpose of an adjusted trial balance? What types of error does it detect? What types of error does it not detect?

Vertical analysis compares each item in a financial statement with a total amount from the same statement.

Accumulated depreciation accounts are liability accounts.

List the four basic types of accounts that require adjusting entries and give an example of each.

When is the adjusted trial balance prepared?

A business pays biweekly salaries of $20,000 every other Friday for a ten-day period ending on that day.The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a

By matching revenues and expenses in the same period in which they are incurred

For the year ending December 31,Beard Clinical Supplies Co.mistakenly omitted adjusting entries for 1 $9,800 of unearned revenue that was earned,2 earned revenue that was not billed of $10,200,and 3 accrued wages of $7,000.Indicate the combined effect of the errors on a- revenues,b- expenses,and c- net income.

Record journal entries for the following transactions. a. On December 1,$18,000 was received for a service contract to be performed from December 1 through April 30. b. Assuming the work is performed evenly throughout the contract period,prepare the adjusting journal entry on December 31.

Adjusting entries affect at least one

If the debit portion of an adjusting entry is to an asset account,then the credit portion must be to a liability account.