Exam 3: The Adjusting Process

In the case of a prepaid expense,the adjusting entry required at the end of a period will consist of a credit to the Prepaid Expense account.Assume the prepaid expense was initially recorded as an asset.

Under cash basis accounting,an expense is recorded only when cash is paid.

The employees of Kostner Financial Services Inc.worked the last two weeks of December.They received their paychecks on January 2.Which of the following accounts should appear on the balance sheet as of December 31 according to the matching principle?

The account names in a worksheet are taken from and listed in the same order as the ________.

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

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

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

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.

Which of the following is considered a fiscal year?

A company received $5,000 for 100 one-year subscriptions on July 1.The journal entry to record this cash receipt would include a ________.The company uses a liability account for revenue received in advance.

The allocation of a plant asset's cost over its useful life is called ________.

The matching principle is also called the ________.

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

The accountant of Omega Consulting Inc.failed to make an adjusting entry to record $6,000 for unearned service revenues that were earned before the end of the fiscal year.Assume the company initially recorded a liability.Which of the following statements is true?

Saturn Inc.signed a one-year $48,000 note payable at 8% interest on May 1,2014.If Saturn Inc.only adjusts its accounts once a year at year-end,how much interest expense was accrued on December 31,2014?

The revenue recognition principle guides accountants in ________.

The advance cash receipts of future revenues are called ________.

Argyle Designs Inc.has entered into a contract to design 20 new dresses for a customer.It will collect a total of $40,000 after the design services are complete.Argyle started design work on June 1.As of June 30,it finished 4 of the 20 designs.The company will make an adjusting entry at the end of June to accrue $10,000 of service revenue.

The accountant of Hobson Electrical Repair Inc.failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year.Which of the following statements is true?

Which of the following entries would be made as the result of the revenue recognition principle?