Exam 3: Adjusting Accounts for Financial Statements

Of the office supplies Sandhu Consulting buys each month,60% are paid for during the same month and 40% are paid for during the following month.During July,Sandhu purchased $600 of office supplies.During August,Sandhu paid $450 for office supplies.The office supplies inventory was $160 on July 31 and was $90 on August 31.What should be reported as office supplies expense for August?

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Question 1

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The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

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Question 2

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Discuss the types of adjusting entries used for accrued expenses and accrued revenues.

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Question 3

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Accrued expenses are expenses that have been incurred but not yet paid for.Adjusting entries for accrued expenses increase expenses and also increase liabilities to recognize that an expense has been incurred but not yet paid.Accrued revenues are revenues that have been earned but not yet recorded,i.e.are receivable.The adjusting entry recognizes the revenue and also establishes an account receivable.

The accrual basis of accounting reflects the understanding that the economic effect of revenue generally occurs when it is earned,not when cash is received.

(True/False)

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Question 4

Expenses incurred during an accounting period but that,before end-of-period adjustments,remain unrecorded because payment is not due are referred to as accrued expenses.

(True/False)

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Question 5

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of an asset.

(True/False)

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Question 6

The timeliness principle assumes that an organization's activities can be divided into specific time periods including:

(Multiple Choice)

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Question 7

The accrual basis of accounting:

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Question 8

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.

(True/False)

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Question 9

Identify the types of adjusting entries and explain the purpose of each type.

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Question 10

A trial balance prepared before any adjustments have been recorded is:

(Multiple Choice)

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Question 11

Computerized accounting systems should include controls to show when and where corrections are made.

(True/False)

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Question 12

The economic effect of an expense is incurred when the benefit expires or is used up,not when cash is paid.

(True/False)

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Question 13

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

(True/False)

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Question 14

Sally Company's unadjusted and adjusted trial balances on December 31,2015,are as follows: In general journal form,prepare the adjusting entries that were recorded by Sally Company.

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Question 15

If an accountant forgot to record depreciation on office equipment at the end of an accounting period,what is the effect on the statements prepared at that time?

(Multiple Choice)

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Question 16

Under the alternative method for accounting for prepaid expenses,which of the following pairs of journal entry formats is correct?

(Multiple Choice)

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Question 17

Gallery Corp.performs 20 days' work on a 30-day contract.The total contract is valued at $6,000.The adjusting entry of $4,000 includes a credit to unearned revenue.

(True/False)

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Question 18

On January 1,2015,Peach Company purchased a five-year insurance policy for $5,000.If the cost was debited to Prepaid Insurance,the adjusting entry at the end of 2015 is:

(Multiple Choice)

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Question 19

Adjusting entries are posted to the general ledger.

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Question 20

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The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Discuss the types of adjusting entries used for accrued expenses and accrued revenues.

The accrual basis of accounting reflects the understanding that the economic effect of revenue generally occurs when it is earned,not when cash is received.

Expenses incurred during an accounting period but that,before end-of-period adjustments,remain unrecorded because payment is not due are referred to as accrued expenses.

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of an asset.

The timeliness principle assumes that an organization's activities can be divided into specific time periods including:

The accrual basis of accounting:

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.

Identify the types of adjusting entries and explain the purpose of each type.

A trial balance prepared before any adjustments have been recorded is:

Computerized accounting systems should include controls to show when and where corrections are made.

The economic effect of an expense is incurred when the benefit expires or is used up,not when cash is paid.

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

Sally Company's unadjusted and adjusted trial balances on December 31,2015,are as follows: In general journal form,prepare the adjusting entries that were recorded by Sally Company.

If an accountant forgot to record depreciation on office equipment at the end of an accounting period,what is the effect on the statements prepared at that time?

Under the alternative method for accounting for prepaid expenses,which of the following pairs of journal entry formats is correct?

Gallery Corp.performs 20 days' work on a 30-day contract.The total contract is valued at $6,000.The adjusting entry of $4,000 includes a credit to unearned revenue.

On January 1,2015,Peach Company purchased a five-year insurance policy for $5,000.If the cost was debited to Prepaid Insurance,the adjusting entry at the end of 2015 is:

Adjusting entries are posted to the general ledger.

Accounting in Business

Analyzing and Reporting Transactions

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Merchandise Inventory and Cost of Sales

Accounting Information Systems

Internal Control and Cash

Receivables

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