Exam 3: The Adjusting Process

Athens Delivery Service is hired on October 31,2018 to perform services,beginning on November 1,2018.The delivery services will be performed for six months at a rate of $3,300 per month.Athens' fiscal year ends on December 31.What amount of service revenue should be recorded as an adjusting entry on December 31,2018?

During the accounting period,office supplies were purchased on account for $4,000.A physical count,on the last day of the accounting period,shows $1,400 of office supplies on hand.Supplies Expense for the accounting period is $2,700.What was the beginning balance of Office Supplies?

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.

Deferred expenses are advanced payments of future expenses

At the end of the current year,the accountant for Computer Graphics Company forgot to make an adjusting entry to accrue Wages Payable for the company's employees for the last week in December.The wages will be paid to the employees in January.Which of the following is an effect of this error?

If a company is using accrual basis accounting,when should it record revenue?

All of the accounts and the account balances of a company appear on the ________.

Why is it important for companies to record adjusting entries?

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

The following extract was taken from the worksheet of Miller and Miller Company for the year 2019. Miller and Miller Company Worksheet December 31, 2019 From the above information,determine the amount of the Rent Expense adjustment.

Prepaid Insurance is an asset account that appears on the balance sheet.

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

The partial worksheet of Browning Furniture is as follows: Browning Furniture Worksheet December 31,2019 Accumulated Calculate and enter the amounts for the Adjusted Trial Balance columns.

Adjusting entries are needed to correctly measure the ________.

On January 1,Unearned Revenue of Commercial Plumbing Services Company had a beginning balance of $1,300.During January,the company earned $1,000 of the deferred revenue.The company also collected $3,000 from a new customer for services to be performed the following month.At the end of January,the Unearned Revenue account should have a balance of $3,000.

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

If a company receives cash before it does the work or delivers a product,no journal entry is needed until the revenue has been earned.

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 31,2019. Cash \ 6,000 Accounts Receivable 2,000 Office Supplies 1,800 Equipment 15,000 Accumulated Depreciation--Equipment 9,000 Deborah, Capital 3,000 Deborah, Withdrawals 15,000 Service Revenue ? Salaries Expense 4,000 Rent Expense 800 Depreciation Expense--Equipment 1,500 Supplies Expense 500

Unearned Revenue is a(n)________ account and carries a normal ________ balance.

Big Rig Delivery Service has the following plant assets: Communications Equipment: Cost,$3,840 with useful life of 8 years; Delivery Equipment: Cost,$17,712 with useful life of 12 years; and Computer: Cost,$12,960 with useful life of 4 years.Assume the residual value of all the assets is zero and the straight-line method is used. Big Rig's monthly depreciation journal entry will include a ________.