Exam 3: The Adjusting Process

The difference between the balance of a fixed asset account and the balance of its related accumulated depreciation account is termed the book value of the asset.

A company pays $360 for a yearly trade magazine on August 1. The adjusting entry on December 31 is debit Unearned Subscription Revenue, $150 and credit Subscription Revenue, $150.

The account type and normal balance of Unearned Revenue is

The prepaid insurance account had a beginning balance of $6,600 and was debited for $2,300 of premiums paid during the year. Journalize the adjusting entry required at the end of the year assuming the amount of unexpired insurance related to future periods is $4,100.

What effect will the following adjusting journal entry have on the accounting records?

Requirement: Make the journal entries for both of the following: (a) On December 1, $18,000 was received for a service contract to be performed from December 1 through until April 30. (b) If the service work for this contract is performed evenly and on a regular basis throughout this period, prepare the adjusting journal entry as of year-end, December 31.

Fees receivable would appear on the balance sheet as a(n)

Which of the following is considered to be unearned revenue?

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

The net book value of a fixed asset is determined by

Depreciation Expense is reported on the balance sheet as an addition to the related asset.

Vertical analysis is useful for analyzing financial statement changes over time.

How will the following adjusting journal entry affect the accounting equation?

Accrued expenses are ordinarily reported on the balance sheet as

The entry to adjust for the cost of supplies used during the accounting period is

The system of accounting where revenues are recorded when they are earned and expenses are recorded when they are incurred is called the cash basis of accounting.

The supplies account has a balance of $2,100 at the beginning of the year and was debited during the year for $2,300, representing the total of supplies purchased during the year. If $400 of supplies are on hand at the end of the year, the supplies expense to be reported on the income statement for the year is

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?

Accruals are needed when an unrecorded expense has been incurred or an unrecorded revenue has been earned.

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The last pay day of December is Friday, December 27. Assuming the next pay period begins on Monday, December 30, journalize the adjusting entry necessary at the end of the fiscal period (December 31).