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Exam 3: The Adjusting Process

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Question 71

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In the case of a deferred expense,the adjusting entry required at the end of a period will consist of a debit to the Prepaid Expense account.Assume the deferred expense was initially recorded as an asset.

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Question 72

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Which of the following entries would be made as the result of the revenue recognition principle?

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B)

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Question 73

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Which of the following accounts would be used under the accrual basis of accounting,but not under cash basis accounting?

Holland Company purchased manufacturing equipment for $10,920.It has an estimated useful life of seven years and no residual value.The company should record depreciation expense of $80 per month.(Assume that the company uses the straight-line method. )

Bright Lights Electrical performed services of $8,000 on January 24 and invoiced the customer.Bright Lights received the $8,000 on January 31.Provide the journal entry on January 31 when the cash was received.(Ignore explanation. )

Luminous Electrical performed services of $8,000 on January 24 and invoiced the customer.Luminous received the $8,000 on January 31.Provide the journal entry on January 24 when services were performed.(Ignore explanation. )

If a company is using accrual basis accounting,when should it record revenue?

Stancil Enterprises prepaid four months of office rent totaling $8,100 on October 1,2017.Assuming Stancil records deferred expenses using the alternative treatment,what would be the adjusting entry recorded on December 31,2017?

The accountant for Hobson Electrical Repair 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 statements is true?

The revenue recognition principle guides accountants in ________.

The accounts that are used in a worksheet are taken from and listed in the same order as the ________.

What is the effect of the adjusting entry for Depreciation Expense?

Which of the following is a contra account?

The accountant for Sparks Electric failed to make an adjusting entry to record $3,000 of telephone expenses for the last two months of the year.Which of the following statements is true?

Adjusting entries are needed to correctly measure the ________.

In the case of deferred revenue,the cash is received first,and the revenue is earned later.

The asset account,Office Supplies had a beginning balance of $5,400.During the accounting period,office supplies were purchased,on account,for $5,400.A physical count,on the last day of the accounting period,shows $2,300 of office supplies on hand.What is the amount of Supplies Expense for the accounting period?

The major difference between a cash basis accounting system and an accrual basis accounting system is the timing of recording revenues and assets.

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

Prepaid Insurance is an asset account that appears on the balance sheet.