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Exam 3: The Adjusting Process

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Question 1

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Which of the following is an example of a prepaid expense?

A) Supplies
B) Accounts Receivable
C) Unearned Subscriptions
D) Unearned Fees

E) B) and D)
F) A) and D)

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Question 2

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

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Question 3

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A company depreciates its equipment $500 a year.The adjusting entry for December 31 is credit Depreciation Expense,$500 and debit Equipment,$500.

At the end of April,the first month of the year,the usual adjusting entry transferring rent earned to a revenue account from the unearned rent account was omitted.Indicate which items will be incorrectly stated,because of the error,on (a)the income statement for April and (b)the balance sheet as of April 30.Also indicate whether the items in error will be overstated or understated.

A fixed asset's market value is reflected in the Balance Sheet.

By matching revenues and expenses in the same period in which they incur

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.

On January 2nd,Dog Mart prepaid $30,000 rent for the year and recorded the prepayment in an asset account.Prepare the January 31st adjusting entry for rent expense.

The prepaid insurance account had a beginning balance of $6,600 and was debited for $2,300 of premiums paid during the year.Journalize the adjusting entry required at the end of the year assuming the amount of unexpired insurance related to future periods is $4,100.

What effect will the following adjusting journal entry have on the accounting records?

Which account would normally not require an adjusting entry?

A contra asset account for Land will normally appear in the balance sheet.

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

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:

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day.Journalize the necessary adjusting entry at the end of the accounting period,assuming that the period ends on Wednesday.

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

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

If the adjustment of the unearned rent account at the end of the period to recognize the amount of rent earned is inadvertently omitted,the net income for the period will be understated.

The net book value of a fixed asset is determined by

If the adjustment for depreciation for the year is inadvertently omitted,the assets on the balance sheet at the end of the period will be understated.