Using the table below, indicate the impact of the following errors made during the adjusting entry process. Use a "+" for overstatements, a "-" for understatements, and a "0" for no effect. The first one is provided as an example. $\begin{array} { | c | l | l | l | c | c | c | } \hline &{ \text { Error } } & \text { Revenues } & \text { Expenses } & \text { Assets } & \text { Liabilities } & \text { Equity } \\ \hline \text { Ex. } & \begin{array} { l } \text { Did not record depreciation } \\ \text { for this period } \end{array} & 0 & - & + & 0 & + \\ \hline 1 . & \begin{array} { l } \text { Did not record unpaid } \\ \text { telephone bill } \end{array} & & & & & \\ \hline 2 . & \begin{array} { l } \text { Did not adjust unearned } \\ \text { revenue account for revenue } \\ \text { earned this period. } \end{array} & & & & & \\ \hline 3 . & \begin{array} { l } \text { Did not adjust shop supplies } \\ \text { for supplies used this period } \end{array} & & & & & \\ \hline 4 . & \begin{array} { l } \text { Did not accrue employee } \\ \text { salaries for this period } \end{array} & & & & & \\ \hline \end{array}$ \[\begin{array} { | l | l | l | l | l | l | } \hline 5 . & \begin{array} { l } \text { Recorded rent expense owed } \\ \text { with a debit to insurance } \\ \text { expense and a credit to rent } \\ \text { payable } \end{array} & & & & \\ \hline \end{array}\]

The answer of Using the table below, indicate the impact...

Exam 3: Adjusting Accounts and Preparing Financial Statements

The accrual basis of accounting requires adjustments to recognize revenues in the periods they are earned and to match expenses with revenues.

(True/False)

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Question 181

Using the table below, indicate the impact of the following errors made during the adjusting entry process. Use a "+" for overstatements, a "-" for understatements, and a "0" for no effect. The first one is provided as an example. Error Revenues Expenses Assets Liabilities Equity Ex. Did not record depreciation for this period 0 - + 0 + 1. Did not record unpaid telephone bill 2. Did not adjust unearned revenue account for revenue earned this period. 3. Did not adjust shop supplies for supplies used this period 4. Did not accrue employee salaries for this period 5. Recorded rent expense owed with a debit to insurance expense and a credit to rent payable

(Essay)

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Question 182

Each adjusting entry affects one or more income statement account, one or more balance sheet account, and never cash.

(True/False)

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Question 183

On December 31, Carmack Company received a $215 utility bill for December that it will not pay until January 15. The adjusting entry needed on December 31 to accrue this expense is:

(Multiple Choice)

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Question 184

Sanborn Company has 10 employees, who earn a total of $1,800 in salaries each working day. They are paid on Monday for the five-day workweek ending on the previous Friday. Assume that year ended December 31, is a Wednesday and all employees will be paid salaries for five full days on the following Monday. The adjusting entry needed on December 31 is:

(Multiple Choice)

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Question 185

Since the revenue recognition principle requires that revenues be recorded when earned, there are no unearned revenues in accrual accounting.

(True/False)

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Question 186

Each adjusting entry will affect a balance sheet account.

(True/False)

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Question 187

The main purpose of adjusting entries is to:

(Multiple Choice)

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Question 188

The adjusted trial balance contains information pertaining to:

(Multiple Choice)

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Question 189

Depreciation measures the decline in market value of an asset.

(True/False)

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Question 190

Failure to record depreciation expense will overstate assets and understate expenses.

(True/False)

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Question 191

refer to costs incurred in a period that are both unpaid and unrecorded. refer to revenues earned in a period that are both unrecorded and not yet received in cash (or other assets).

(Short Answer)

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Question 192

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

(Multiple Choice)

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Question 193

On May 1, Sellers Marketing Company received $1,500 from Franco Marcelli for a marketing campaign effective from May 1 this year to April 30 of the following year. The Cash receipt was recorded as unearned fees and at year-end on December 31, $1,000 of the fees had been earned. Assuming adjustments are only made at year-end, the adjusting entry on December 31 would be:

(Multiple Choice)

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Question 194

Which of the following statements related to U.S. GAAP and IFRS is incorrect?

(Multiple Choice)

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Question 195

On January 1, Eastern College received $1,200,000 from its students for the spring semester that it recorded in Unearned Tuition and Fees. The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term. Assuming the college prepares adjustments monthly, what amount of tuition revenue should the college recognize on February 28?

(Multiple Choice)

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Question 196

On January 1, a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:

(Multiple Choice)

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Question 197

A company entered into a 2-month contract for $50,000 on April 1. It earned $25,000 of the contract services in April and billed the customer. The company should recognize the revenue when it receives the customer's check.

(True/False)

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Question 198

Adjusting is a three-step process (1) , (2) , and (3) .

(Short Answer)

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Question 199

On December 1, Casualty Insurance Company borrowed $50,000 at a 6.0% interest rate from One Mutual Bank. The note payable plus interest will not be paid until April 1 of the following year. The company's annual accounting period ends on December 31 and adjustments are only made at year-end. The adjusting entry needed on December 31 is:

(Multiple Choice)

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Question 200

Exam 3: Adjusting Accounts and Preparing Financial Statements

The accrual basis of accounting requires adjustments to recognize revenues in the periods they are earned and to match expenses with revenues.

Each adjusting entry affects one or more income statement account, one or more balance sheet account, and never cash.

On December 31, Carmack Company received a $215 utility bill for December that it will not pay until January 15. The adjusting entry needed on December 31 to accrue this expense is:

Since the revenue recognition principle requires that revenues be recorded when earned, there are no unearned revenues in accrual accounting.

Each adjusting entry will affect a balance sheet account.

The main purpose of adjusting entries is to:

The adjusted trial balance contains information pertaining to:

Depreciation measures the decline in market value of an asset.

Failure to record depreciation expense will overstate assets and understate expenses.

________ refer to costs incurred in a period that are both unpaid and unrecorded. ________ refer to revenues earned in a period that are both unrecorded and not yet received in cash (or other assets).

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

Which of the following statements related to U.S. GAAP and IFRS is incorrect?

On January 1, a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:

A company entered into a 2-month contract for $50,000 on April 1. It earned $25,000 of the contract services in April and billed the customer. The company should recognize the revenue when it receives the customer's check.

Adjusting is a three-step process (1) ________, (2) ________, and (3) ________.

Accounting in Business

Analyzing and Recording Transactions

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

Filters

refer to costs incurred in a period that are both unpaid and unrecorded. refer to revenues earned in a period that are both unrecorded and not yet received in cash (or other assets).

Adjusting is a three-step process (1) , (2) , and (3) .