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Exam 3: Adjusting the Accounts

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Question 51

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The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.

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Question 52

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Why do salary expenses need to be accrued at the financial reporting date?

A) Salaries incurred are an actual expense for the time period in which they are accrued.
B) If not accrued the company will not have to pay the amounts in the future.
C) The liability account will be overstated if not accrued.
D) The expense account will be overstated if not accrued.

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Question 53

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Which of the following reflect the balances of prepayment accounts prior to adjustment?

The accounts of a business before an adjusting entry is made to record an accrued revenue reflect an

As prepaid expenses expire with the passage of time, the correct adjusting entry will be a

An interim period of a company can be any time period of less than one year.

An accounting time period that is one year in length, which could, but does not need to begin on January 1, is referred to as

On July 1 the Fog Forest Gallery paid $8,000 to Tapley Realty for 4 months rent beginning July 1. Rent Expense was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Fog Forest is

Anika Company purchased a plot of land for $100,000 on January 1^st. It plans to hold the land for 7 years and then sell it. What is the amount of annual depreciation to be recorded?

The difference between the cost of the asset and its accumulated depreciation is called the "carrying amount" of the asset.

The adjusted trial balance of Jacks Financial Planners appears below and using the information from the adjusted trial balance, you are to prepare for the year ending December 31: 1. an income statement; 2. a statement of ower's equity; and 3. a balance sheet.

If a business has several types of long-lived assets such as equipment, buildings, and trucks,

Unearned revenues are

Rubber Company prepares quarterly financial statements. It is now June 30, 2014 and you have been asked to assist. Prepare all adjusting journal entries required for June 30, 2014. a. The balance in the Supplies account on April 1 was $1,000. On May 15 Rubber purchased $4,200 of supplies and recorded the amount to the Supplies Expense account. On June 30 a count of supplies revealed there was $1,450 of supplies on hand. b. Rubber records all unearned revenue in the revenue account. On June 30, 2014, the Revenue account has a balance of $62,000, and of this amount $52,000 was actually earned. The remainder of the work will be performed in August 2014. c. Rent was paid for the next 6 months on June 15, 2014 in the amount of $36,000. The rent period is from the 15 to the 15 of each month . This amount has been debited to the Rent Expense account. d. Two insurance policies were obtained. Policy A $19,000 purchased on April 1, 2014 for 19 months. Policy B $12,500 purchased on June 1, 2014 for 24 months. All amounts were recorded as insurance expense.

Accrued expenses are expenses that have been incurred but have not been recorded yet in the records.

Companies reporting under IFRS must prepare adjusting entries every a) month. B) day. C) year. D) quarter.

Pooley Electric Company purchased office supplies costing $4,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,600 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

The Crofter Gift shop signs a three-month, 6% note payable to help finance increases in inventory for the Christmas shopping season. The note is signed on November 1 in the amount of $40,000. What is the adjusting entry to be made on December 31 for the interest expense accrued to that date, if no entries have been made previously for the interest?

In the accrual basis of accounting, expenses are recognized when the services are used or the goods are consumed, not when the cash is paid.

If unearned revenues are initially recorded in revenue accounts and have not all been earned at the end of the accounting period, then failure to make an adjusting entry will cause