chapter 3 Adjusting Process

Your page rank:

Total word count: 775
Pages: 3

Calculate the Price

- -
275 words
Looking for Expert Opinion?
Let us have a look at your work and suggest how to improve it!
Get a Consultant

Revenue is reported on the income statement in the period earned. The accounting concept supporting this reporting is

the revenue recognition concept.

All adjusting entries affect

at least one income statement account and one balance sheet account.

Accrued revenues are revenues that

have been earned but have not been received or recorded in the books.

If an adjustment for $7,500 in accrued revenues is omitted, how will this affect the financial statements?

Net income will be understated by $7,500.

Prepaid expenses

are an advance payment of cash.

The adjusting entry for accrued expenses includes

debit to an expense account.

The unearned subscriptions account reflected a balance of $32,500 prior to any adjustments. It is determined that $9,800 in subscriptions remain unearned at the end of the period. The adjusting journal entry should include a

credit to Subscriptions Revenue for $22,700.

Because collecting the adjustment data requires time, the adjusting entries are often

entered later but dated as of the last day of the period.

When recording an adjusting entry for a prepaid expense

an asset account is credited.

When recording an adjusting entry for unearned revenues

a liability account is debited.

If the following adjusting entry is omitted, what effect will it have on net income?
Depreciation Expense 4,300
Accumulated Depreciation 4,300

net income will be overstated by $4,300

The adjusted trial balance is prepared

after adjusting entries are posted but before financial statements are prepared.

Once the adjusted trial balance is balanced, it can be used to prepare

the income statement, the statement of owners’ equity, and the classified balance sheet.

The adjusted trial balance

is at a specific date.

an adjustment to record unrecorded fees earned was posted during the current period. Which of the following would cause the adjusted trial balance totals to be unequal?

The adjustment was posted as a debit to Accounts Receivable for $870 and a credit to Fees Earned for $780.

In the vertical analysis of a balance sheet

each asset item is stated as a percent of total assets.

Which of the following statements is true about vertical analysis?

It is useful in analyzing relationships within a financial statement.

Comparing each line of a financial statement with a total amount from the same financial statement

is referred to as vertical analysis.

The following are line items from the vertical analysis of an income statement:
Amount Percent
Total revenues $600 300%
Total expenses 400 200
Net income $200 100%
What needs to be changed on the statement?

Total revenues should be the base expressed as 100%.

unearned revenues

are referred to as future revenues.

The adjusting entry to record depreciation includes

a debit to an expense account.

The adjusted trial balance is prepared

to verify the equality of total debit and credit balances.

Using the following information, prepare a vertical analysis of two years’ income statements. Fees Earned is $153,500 for Year 2 and $149,700 for Year 1. Operating expenses are $122,800 for Year 2 and $127,245 for Year 1. Which of the following statements are true?

Operating income has increased as a percentage of revenue.

After which of the following errors would the adjusted trial balance totals not agree?

A debit to Accounts Receivable was inadvertently posted as a credit to Accounts Payable.

In the vertical analysis of an income statement

each item is stated as a percent of revenues or fees earned.

The recording of adjusting entries is supported by the

matching concept.

Which statement is true regarding the cash basis of accounting?

Revenues are reported in the period in which cash is received, and expenses are reported when cash is paid out.

Indicate which of the following accounts will never require an adjusting entry.

Cash

Barry Company received $8,000 full payment in advance for services that are 60 percent complete at the end of the period. The adjusting entry will

debit Unearned Revenue for $4,800 and credit Service Revenue for $4,800.

The accumulated depreciation account is called

contra asset

Clever Computers has a 5-day work week and pays the office staff $3,050 each week. If the month ends on a Thursday, the adjusting entry will credit Wages Payable for

2440

The adjusting entry for accrued revenues

is the same journal entry as recording revenue on account.

All of the following are types of adjustments except

Cash expenses.

If the following adjusting entry is omitted, what effect will it have on the financial statements?

Revenues will be understated by $1,900.

Which of the following errors would cause the adjusted trial balance to be unequal ?

the adjustment for depreciation of $3,545 was journalized as debit to Depreciation Expense for $3,454 and a credit to Accumulated Depreciation of $3,545.

The purpose of the adjusted trial balance is to verify

the equality of the total debit balances and the total credit balances after adjustments have been recorded.

Adjusting entries are dated

at the end

Share This
Flashcard

More flashcards like this

NCLEX 10000 Integumentary Disorders

When assessing a client with partial-thickness burns over 60% of the body, which finding should the nurse report immediately? a) ...

Read more

NCLEX 300-NEURO

A client with amyotrophic lateral sclerosis (ALS) tells the nurse, "Sometimes I feel so frustrated. I can’t do anything without ...

Read more

NASM Flashcards

Which of the following is the process of getting oxygen from the environment to the tissues of the body? Diffusion ...

Read more

Unfinished tasks keep piling up?

Let us complete them for you. Quickly and professionally.

Check Price

Successful message
sending