Exam 3: The Adjusting Process

Zoey Bella Corp.has a payroll of $10,000 for a five-day workweek.Its employees are paid each Friday for the five-day workweek.Prepare the adjusting entry on December 31 assuming the year ends on Thursday.

If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account,which of the following describes the effect of the debit portion of the entry?

What effect will the following adjusting journal entry have on the accounting records?

Even though GAAP requires the accrual basis of accounting,some businesses prefer using the cash basis of accounting.

Smokey Company purchases a one-year insurance policy on July 1 for $3,600.The adjusting entry on December 31 is

Supplies are recorded as assets when purchased.Therefore,the credit to Supplies in the adjusting entry is for the amount of supplies

Which of the following is considered to be an accrued expense?

The estimated amount of depreciation on equipment for the current year is $5,300.Journalize the adjusting entry to record the depreciation.

A contra asset account for Land will normally appear on the balance sheet.

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day.Journalize the necessary adjusting entry at the end of the accounting period,assuming that the period ends on Wednesday.

Reporting of revenues and expenses in the proper period is due to the accounting period concept.

Which of the following is not a characteristic of the accrual basis of accounting?

Adjusting entries are

At January 31,the end of the first month of the year,the usual adjusting entry transferring expired insurance to an expense account is omitted.Which items will be incorrectly stated,because of the error,on a the income statement for January and b the balance sheet as of January 31? Also indicate whether the items in error will be overstated or understated.