Exam 3: The Adjusting Process

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 accounting period used for the annual financial statements is called the fiscal year.

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

The sum of all the depreciation expense recorded to date for a depreciable asset is called ________.

Why is it important for companies to record adjusting entries?

Adkins Company is hired on December 15,2018 to perform services,beginning on December 16,2018.Under this agreement,Adkins will earn $3,900 monthly and receive payment on January 15,2019.What amount of service revenue should be recorded for the year ending December 31,2018?

A contra account's normal balance is the opposite of the normal balance of the related account.

Deferred revenues,also called unearned revenues,arise when a business collects cash before earning the revenue.

An expense that has been incurred but not yet paid is called a(n)________.

Deferred expenses are also called prepaid expenses.

An internal document that helps summarize data for the preparation of financial statements is called a ________.

Princeton Financial Services Company purchased computers that are to be used in its consulting services.Based on the matching principle,what account,other than Computers,should appear on the balance sheet as of December 31,2018?

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.

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

A business hired a repair service to overhaul its plumbing system.The repair service began work on September 15 and intends to complete it on October 15.The business will pay the repair service $4,000 when the work is completed.As of September 30,the work was 50% complete.Provide the adjusting entry to accrue repair expense by the end of September.(Ignore explanation).

On January 1,2017,the Accounts Receivable of Martha Company had a debit balance of $190,000.During January,the company provided services for $400,000 on account.The company collected $240,000 from its customers on account in January.What was the ending balance in the Accounts Receivable account at the end of January?

A depreciable asset's cost minus accumulated depreciation is called ________.

To match expenses against revenues means to ________.

The accountant for Main Street Jewelry Repair Services Company forgot to make an adjusting entry for Depreciation Expense for the current year.Which of the following is an effect of this error?

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.