Exam 3: The Adjusting Process

On December 31,2014,the balance in Pinnacle Exploration Company's Unearned Revenue account was a credit of $8,000.In January,2015,the company received an advance payment of $14,000 from a new customer for services to be performed.By January 31,adjustments were made to recognize $7,000 of the revenue which had been earned during January.What was the balance in Unearned Revenue on January 31,2015?

On January 1,2015,the Accounts Receivable of Linda Inc.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?

Viva Inc.had bought machine X for $15,500 two years ago.The machine had no residual value and had an estimated useful life of 10 years.If the company uses the straight-line depreciation method,calculate the current book value of the machine.

The advance cash payments of future expenses are called ________.

The time period concept states that ________.

In accounting terms,the calendar year is always called the fiscal year.

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

On January 1,Ogden Inc.had $2,000 of supplies on hand.During January,Ogden purchased $4,000 worth of new supplies.At the end of the month,a count revealed $1,000 worth of supplies remaining on the shelves.The adjustment entry needed will include a debit to Supplies Expense of $5,000.The supplies were initially recorded as an asset.

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

Deborah Consultants had the following balances before preparing adjusting entries in the books on December 31,2015. Prepare the adjusted trial balance after considering these adjustments: a.Office Supplies used,$800.Assume the office supplies were initially recorded as an asset. b.Accrued salaries on December 31,$600. c.Revenue accrued but not recorded,$200.

Which of the following accounting terms assumes that a business's activities can be divided into small segments and financial statements can be prepared for specific periods,such as a month,quarter,or year?

Maywood Inc.purchased manufacturing equipment for $12,600.It has an estimated useful life of 7 years.The company should record depreciation expense of $100 per month.(Assume that the company uses the straight-line method.)

On the first day of January,Maywood Inc.borrowed $2,000 on a one-year note payable bearing interest at 4% per year.The note specifies that principal and interest must be paid in full at the end of the one-year period.On June 30,the adjusted trial balance will show Interest Payable of ________.

Prepaid rent is an expense account and hence it appears on the income statement.

Real Weight Losers,a diet magazine,collected $480,000 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 adjusting entry needed on June 30.(Ignore explanation)Assume the magazine initially records a liability for the subscription revenue.

In the case of unearned revenue,the adjusting entry at the end of the period includes a credit to Service Revenue.Assume the unearned revenue is initially recorded as a liability.

The depreciation method that allocates an equal amount of depreciation each year is called the straight-line method.

To fill the unadjusted trial balance columns in a worksheet,the account balances before adjustments are copied directly from the ________.

Unearned revenue is revenue that ________.

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