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Exam 3: The Adjusting Process

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Question 31

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Deferred revenues are assets because the business has collected the cash before earning the revenue.

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Question 32

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The entry to record depreciation includes a credit to the ________ account.

A) Depreciation Payable
B) Cash
C) Accumulated Depreciation
D) Depreciation Expense

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Question 33

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The allocation of a plant asset's cost to expense over its useful life is called ________.

Maxwell Tax Planning Service bought communications equipment for $10,200 on January 1,2019.The equipment has an estimated useful life of five years and zero residual value.Maxwell uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of each month.As of June 30,2019,the balance in the Accumulated Depreciation account for this equipment is ________.

Justice Company purchased a machine for $15,000 two years ago.The machine had no residual value and had an estimated useful life of 10 years.If the company uses the straight-line depreciation method,calculate the current book value of the machine.

The asset account,Office Supplies,had a beginning balance of $3,700.During the accounting period,office supplies were purchased,on account,for $3,500.Supplies Expense for the accounting period is $4,100.What is the ending balance of Office Supplies?

Which of the following is a contra account?

Anthony Delivery Service has a weekly payroll of $34,000.December 31 falls on Tuesday and Anthony will pay its employees the following Monday (January 6) for the previous full week.Assume that Anthony has a five-day workweek and has an unadjusted balance in Salaries Expense of $925,000 at December 31.What is the December 31 balance of Salaries Expense after adjusting entries are recorded and posted?

Adjusting entries either credit a revenue account or debit an expense account.

What is the difference between cash basis accounting and accrual basis accounting?

If a company fails to make an adjusting entry to record accrued expenses,the liabilities and net income will be overstated.

The revenue recognition principle tells accountants when to record revenue and requires companies to follow a three step process.

A contra account's normal balance is the opposite of the normal balance of the related account.

The sum of all the depreciation expense recorded to date for a depreciable asset is called ________.

The key differences between the cash basis and accrual basis of accounting are the timing and recognition of assets and liabilities.

Which of the following is considered a fiscal year?

Wellness,a healthy living magazine,collected $516,000 in subscription revenue on May 31.Each subscriber will receive an issue of the magazine in each of the next 12 months,beginning with the June issue.The company uses the accrual method of accounting.What is the balance in the Unearned Revenue account as of December 31?

The accountant for Barnes Auto Repair Company failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year.Which of the following is an effect of this omission?

Jupiter Company signed a one-year $36,000 note payable at 8% interest on March 1,2019.How much interest expense must be accrued on May 31,2019? (Round any intermediate calculations to two decimal places,and your final answer to the nearest whole number.)

To match expenses against revenues means to add expenses paid in cash during one month to revenues earned during that same month.