A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is
debit Salaries Payable, $8,000; credit Cash, $8,000
debit Salary Expense, $8,000; credit Drawing, $8,000
debit Salary Expense, $8,000; credit Salaries Payable, $8,000
debit Drawing, $8,000; credit Cash, $8,000
Accrued expenses are ordinarily reported on the balance sheet as
Accrued revenues would appear on the balance sheet as
Adjusting entries affect at least one
income statement account and one balance sheet account
revenue and the drawing account
asset and one owner’s equity account
revenue and one capital account
Adjusting entries are
the same as correcting entries
needed to bring accounts up to date and match revenue and expense
optional under generally accepted accounting principles
rarely needed in large companies
As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called
Austin, Inc. made a Prepaid Rent payment of $2,800 on January 1st. The company’s monthly rent is $700. The amount of Prepaid Rent that would appear on the January 31 balance sheet after adjustment is:
By matching revenues and expenses in the same period in which they incur
net income or loss will always be underestimated.
net income or loss will always be overestimated.
net income or loss will be properly reported on the income statement
net income or loss will not be determined.
Depreciation Expense and Accumulated Depreciation are classified, respectively, as
expense, contra asset
asset, contra liability
contra asset, expense
Generally accepted accounting principles requires that companies use the ____ of accounting.
Prepaid expenses are eventually expected to
become expenses when their future economic value expires.
become revenues when services are performed.
become expenses in the period when they are paid.
become revenues when the liability is no longer owed.
The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed
The entry to adjust for the cost of supplies used during the accounting period is
debit Supplies Expense; credit Supplies
debit Owner Capital; credit Supplies
debit Accounts Payable; credit Supplies
debit Supplies; credit Owner Capital
Which of the following is considered to be unearned revenue?
Concert tickets sold for tonight’s performance.
Concert tickets sold yesterday on credit.
Concert tickets that were not sold for the current performance.
Concert tickets sold for next month’s performance.
Which of the following is an example of an accrued expense?
Salary owed but not yet paid
Fees received but not yet earned
Supplies on hand
A two-year premium paid on a fire insurance policy
Which of the following is an example of accrued revenue?
Swimming pool cleaning that has been paid for three months in advance.
Swimming pool cleaning that has been provided but has not been billed or paid.
An agreement has been signed for swimming pool cleaning for the next three months.
Swimming pool cleaning that has been provided and paid on the same day.
Which of the accounting steps in the accounting process below would be completed last?
preparing the adjusted trial balance
preparing the financial statements
When is the adjusted trial balance prepared?
Before adjusting journal entries are posted
After adjusting journal entries are posted.
After the adjusting journal entries are journalized
Before the adjusting journal entries are journalized.
What is the purpose of the adjusted trial balance?
to verify that all of the adjusting entries have been posted
to verify that the net income <loss> is correctly reported
to verify that no adjusting journal entry has been omitted.
to verify that the debits and credits balance
What is the proper adjusting entry at April 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $16,000, and unexpired amounts per analysis of policies, $6,000?
debit Insurance Expense, $6,000; credit Prepaid Insurance, $6,000
debit Insurance Expense, $16,000; credit Prepaid Insurance, $16,000
debit Prepaid Insurance, $10,000; credit Insurance Expense, $10,000
debit Insurance Expense, $10,000; credit Prepaid Insurance, $10,000
Using accrual accounting, revenue is recorded and reported only
when cash is received without regard to when the services are rendered
when the services are rendered without regard to when cash is received
when cash is received at the time services are rendered
if cash is received after the services are rendered
Using accrual accounting, expenses are recorded and reported only
when they are incurred, whether or not cash is paid
when they are incurred and paid at the same time
if they are paid before they are incurred
if they are paid after they are incurred
The net book value of a fixed asset is determined by
Original cost less accumulated depreciation
Original cost less depreciation expense
Original cost less accumulated depreciation plus depreciation expense
Original cost plus accumulated depreciation
Which one of the following accounts below would likely be included in a deferral adjusting entry?
The type of account and normal balance of Accumulated Depreciation is
contra asset, credit
contra asset, debit