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Exam 3: The Adjusting Process

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Question 61

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A one-year insurance policy was purchased on October 1, 2011 for $4,200. The adjusting entry on December 31, 2011 would be

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$4,200/12 ...

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Question 62

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

A) Fees Earned
B) Accounts Receivable
C) Unearned Fees
D) Depreciation Expense

E) None of the above
F) All of the above

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Question 63

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Which of the following is considered to be unearned revenue?

Which of the following is an example of accrued revenue?

A company purchases a one-year insurance policy on June 1 for $2,760. The adjusting entry on December 31 is

Revenue recognition concept requires that the reporting of revenue be included in the period when cash for the service is received.

List the four basic types of accounts that require adjusting entries and give an example of each.

Complete the missing items in the following chart:

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

Journalize the six entries to adjust the accounts at December 31. (Hint: One of the accounts was affected by two different adjusting entries).

Explain the difference between accrual-basis accounting and cash-basis accounting.

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a:

An adjusting entry would adjust revenue so it is reported when earned and not when cash is received.

On January 1st, Power House Co. prepays the year's rent, $10,140 to its landlord. Prepare the journal entry by recording the prepayment to an asset account.

The system of accounting where revenues are recorded when they are earned and expenses are recorded when they are incurred is called the cash basis of accounting.

If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the assets at the end of the period will be understated.

An adjusting entry would adjust an expense account so the expense is reported when incurred.

The account type and normal balance of Prepaid Expense is

For each of the following, journalize the necessary adjusting entry:

At the end of the current year, $3,700 fees have been earned but have not been billed to clients. Journalize the adjusting entry to record the accrued fees.