Exam 3: Adjusting Accounts and Preparing Financial Statements

A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31. On February 9, it paid its employees for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:

The Income Summary account is used:

The main purpose of adjusting entries is to:

Kader Co. paid a total of $35,000 in dividends during the current year. The entry needed to close the dividends account is:

Depreciation expense is an example of an accrued expense.

A(n) _______________________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

When expenses exceed revenues, there is a net loss and the Income Summary account would have a credit balance.

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets is called:

Earned but uncollected revenues that are recorded during the adjusting process with a credit to a revenue account and a debit to an expense account are referred to as accrued expenses.

The accounting principle that requires revenue to be reported when earned is the: