Exam 3: The Adjusting Process

The accounting records for Social Event Planning Services include the following select unadjusted balances on December 31, 2018: Salaries Expense, $6,000; Service Revenue: $18,000; Unearned Revenue, $400; Supplies Expense, $600; Rent Expense, $300; Depreciation Expense-Equipment, $200. During December, the company worked with a new client and provided event planning services for an upcoming event. It will receive the full amount of $1,800 when the event is completed in January 2019. As of the end of December 2018, it performed one-third of the services covered by the contract. The company made the accrual adjustments. The balance of Service Revenue, as shown on the adjusted trial balance, should be a ________.

Which of the following entries would be made because of the matching principle?

Which of the following accounting principles does NOT help to explain the timing and recognition of revenues and expenses?

An adjusting entry that debits Accounts Receivable is an example of a(n) ________.

The revenue recognition principle tells accountants when to record revenue and requires companies to follow a three step process.

Dickens Services, Inc. performed accounting services for a client in December. A bill was mailed to the client on December 30. The company received a check by mail on January 5. Which of the following accounts should appear on the balance sheet as of December 31 as related to the services performed?

Since net income increases the equity account Retained Earnings, if net income is understated, then equity will also be understated.

The matching principle ensures all expenses are recorded when they are incurred during the period and are matched to the cash payments for expenses.

The goal of the time period concept is to compute an accurate net income or net loss.

Under accrual basis accounting, revenue is recorded only when cash is received.

Salaries are $5,000 per week for five working days and are paid weekly at the end of the day on Fridays. The end of the month falls on a Thursday. The accountant for Sunset, Inc. made the appropriate accrual adjustment and posted it to the ledger. The balance of Salaries Payable, as shown on the adjusted trial balance, will be a ________. (Assume that there was no beginning balance in the Salaries Payable account.)

If a company fails to make an adjusting entry for deferred expense, the assets will be overstated. Assume the deferred expense is initially recorded as an asset.

On December 15, 2018, Donald Services, Inc. collected revenue of $3,000 in advance from a new client, and agreed to provide services to the client for the period of December 15 through January 15 of the following year. Assume that the company records deferred revenues using the alternative treatment, and journalize the adjusting entry recorded on December 31, 2018. Omit explanation.

Global Enterprises, Inc. signed a one-year $46,000 note payable at 9% interest on April 1, 2018. If Global only adjusts its accounts once a year at year-end, how much interest expense was accrued on December 31, 2018? (Round any intermediate calculations to two decimal places, and your final answer to the nearest whole number.)

During the accounting period, office supplies were purchased on account for $3,200. A physical count, on the last day of the accounting period, shows $1,100 of office supplies on hand. Supplies Expense for the accounting period is $3,300. What was the beginning balance of Office Supplies?

The accountant of Omega, Inc. failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned. Assume the deferred revenue was initially recorded as a liability. Which of the following statements is true?

Which of the following entries would be recorded by a company that uses the cash basis method of accounting?

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

A worksheet is an external document that forms a part of the financial statements.

Which of the following is considered a fiscal year?