BU101 Unit 2 Review

Prior to the adjusting process, accrued revenue has

Been earned and not recorded as revenue.

Prior to the adjusting process, accrued expenses have

Been incurred but not paid and not recorded.

Prepaid expenses have

Not yet been recorded as expenses but have been paid.

Deferred revenue is revenue that is

Not earned but the cash has been received.

Adjusting entries are

Needed to bring accounts up to date & match revenue/expense.

Adjusting entries affect at least one

Income statement account and one balance sheet account.

An expense that has not been paid & has not been recognized in the books by a journal entry is

Accrued

Generally accepted accounting principles require that companies use the ____ of accounting.

Accrual basis

By matching revenue earned during the accounting period to related incurred expenses,

Net income/loss will be properly reported on the income statement.

Prepaid expenses are eventually expected to become

Expenses when used up.

Which of the following accounts would likely be included in an accrual adjusting entry?

Interest Expense

Which of the following accounts would likely be included in a deferral adjusting entry?

Unearned Revenue

A balance in the prepaid rent account after adjusting entries are made, represents a(n)

Deferral

A balance in unearned subscriptions account after adjusting entries are made represents a(n)

Deferral

The account type and normal balance of Prepaid Expense would be

Asset, debit

The account type and normal balance of Unearned Revenue would be

Liability, credit

The entry to adjust the accounts for salaries accrued at the end of the accounting period is

Debit Salaries Expense; credit Salaries Payable.

Accrued revenues would affect _______ on the balance sheet.

Assets

Accrued expenses affect ________ on the balance sheet.

Liabilities

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

Debit Supplies Expense; Credit Supplies.

When preparing the statement of owner’s equity, the beginning capital balance can be found

In the general ledger.

Accumulated Depreciation appears on the

Balance sheet in the property, plant, and equipment section.

Notes receivable due in 390 days appear on the

Balance sheet in the non-current assets section.

Unearned fees appear on the

Balance sheet as a current liability.

Which of the fixed asset accounts listed below will not have a related contra asset account?

Land

Prepaid insurance is reported on the balance sheet as a

Current asset

The first item appearing on the statement of owner’s equity is

The beginning balance of owner’s equity.

The statement of owner’s equity should be prepared

After the income statement and before the balance sheet.

The income statement should be prepared

Before the statement of owner’s equity and balance sheet.

The balance sheet should be prepared

After the income statement and the statement of owner’s equity.

The general term for delaying the recognition of an expense/revenue already paid/received

Deferral

The classified balance sheet will show which asset subsections?

Current assets and property, plant, and equipment.

The classified balance sheet will show which liability subsections?

Current liabilities and long-term liabilities.

Debts listed as current liabilities are those that

Will be paid in less than one year.

On the balance sheet, owner’s equity is

Added to liabilities and the two are equal to assets.

After posting the 1st closing entry to the capital acct, the balance will be +/- by

The net income (net loss) for the period.

What is the first account that should be listed in the post-closing trial balance?

Cash

There are 2 closing entries. The first one is to close _____; the second one is to close _____.

Revenues and expenses, the drawing account.

Which of the accounts below would be closed by posting a debit to the account?

Fees Earned

Which of the following accounts will not be closed to the capital acct at the end of the year?

Prepaid Insurance

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry?

Increases the balance of a liability account.

The accounting principle upon which deferrals and accruals are bases is

Matching

Fees payable could appear on the balance sheet as an

Liability

Data for an adjusting entry described as "accrues wages, $2,020" requires a

Debit to Wages Expense and a credit to Wages Payable

Prepaid rent, representing rent for the next six months’ occupancy, would be reported on the tenant’s balance

Asset

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of 2,200 and accrued salaries of $1,300. Net income, as corrected, is

$54,500

The net book value of a fixed asset is determined by the original cost

Less accumulated depreciation.

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

Depreciation

Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the unadjusted trial balance?

Depreciation Expense

Which of the following accounting steps in the accounting process would be completed last?

Preparing the financial statements.

What is the major difference between the unadjusted trial balance and the adjusted trial balance?

The adjusted trial balance will be used to record the adjustments for the period.

The income statement should be prepared

Before the statement of owner equity and the balance sheet.

Which of the following accounts should be closes to the capital account at the end of the year?

Service Revenue

Of the following steps of the accounting cycle, which step should be completed first?

Transaction are posted to the ledger.

The accounting cycle requires three trial balances be done. In what order should they be prepared?

Unadjusted, adjusted, post-closing

Once the adjusting entries are posted, the adjusted trial balance is prepared to

Verify that the debits and credits are in balance

Which of the following accounts would not appear in the Balance Sheet columns of the end-of-period spreadsheet?

Service Revenue

The Income Statement columns in the end-of-period spreadsheet show that debits are equal to $55,800(expenses) and credits are $77,520(revenue). What does this information mean to the accountant?

There is a net income of 21,720.