Exam 3: The Adjusting Process

The company determines that the interest expense on a note payable for the period ending December 31 is $775.This amount is payable on January 1.Prepare the journal entries required on December 31 and January 1.

Match the type of account (a through e) with the business transactions that follow. -Received six months of rental payments from a tenant.

A contra asset account for Land will normally appear on the balance sheet.

On December 31,the balance in the office supplies account is $1,385.A physical count shows $435 worth of supplies on hand.Prepare the adjusting entry for supplies.

Match the type of account (a through e) with the business transactions that follow. -Provided tutoring for a student that will be invoiced next month.

Complete the missing items in this summary of adjustments chart:

The matching principle supports matching expenses with the related revenues.

Which of the following is not true regarding depreciation?

The matching principle

On January 2,Safe Motorcycling Monthly received a check for $72 from a subscriber for a 12-month subscription.The January issue was mailed on January 15.Prepare the necessary entries for the month of January.

The type of account and normal balance of Prepaid Insurance would be

The general term used to indicate delaying the recognition of an expense already paid or of a revenue already received is

The adjusted trial balance verifies that total debits equal total credits before the adjusting entries are prepared.

Unearned revenue is a liability.

Using accrual accounting,revenue is recorded and reported only

The estimated amount of depreciation on equipment for the current year is $5,300.Journalize the adjusting entry to record the depreciation.

Identify the effect (a through h) that omitting each of the following items would have on the balance sheet. -An attorney has earned half of a retainer fee that was received and recorded last month. No adjustment was recorded for the amount earned.

At the end of the fiscal year,the following adjusting entries were omitted:Assuming that financial statements are prepared before the errors are discovered,indicate the effect of each error,considered individually,by inserting the dollar amount in the appropriate spaces.Insert "0" if the error does not affect the item. ​ Error (a) Error (b)Over- Under- Over- Under-stated stated stated stated​ (1) Assets at Dec.31 would be $ $ $ $​ (2) Liabilities at Dec.31 would be $ $ $ $​ (3) Net income for the year would be $ $ $ $​ (4) Owner's equity at Dec.31 would be $ $ $ $​

What is the purpose of an adjusted trial balance? What type (s)of error does it detect? What type (s)of error does it not detect?

The accounting principle upon which deferrals and accruals are based is