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Exam 3: The Adjusting Process

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Question 91

Multiple Choice

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All of the accounts and the account balances of a company appear on the ________.

A) statement of owner's equity
B) balance sheet
C) adjusted trial balance
D) income statement

E) None of the above
F) B) and C)

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Question 92

Multiple Choice

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During the accounting period,office supplies were purchased on account for $4,000.A physical count,on the last day of the accounting period,shows $1,400 of office supplies on hand.Supplies Expense for the accounting period is $2,700.What was the beginning balance of Office Supplies?

A) $4,100
B) $2,600
C) $100
D) There is not enough information to answer this question.

E) B) and C)
F) A) and C)

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Question 93

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The asset account,Office Supplies had a beginning balance of $5,700.During the accounting period,office supplies were purchased,on account,for $5,100.A physical count,on the last day of the accounting period,shows $2,000 of office supplies on hand.What is the amount of Supplies Expense for the accounting period?

On December 15,2018,Donald Services Company collected revenue of $3,000 in advance from a new client,and agreed to provide services to the client for the period of December 15 through January 15 of the following year.Assume that the company records deferred revenues using the alternative treatment,and journalize the adjusting entry recorded on December 31,2018.Omit explanation.

The matching principle ________.

An accrual adjusting entry records an expense after the cash is paid,or it records revenue before the cash is received.

On April 1,Beta Company purchased office supplies for $1,500.At the end of April,Beta's employees took a count of the remaining supplies and found that there was $500 of supplies left.Provide the adjusting entry needed at the end of April.(Ignore explanation).Assume the office supplies were initially recorded as an asset.Assume there were no office supplies on hand prior to the purchase on April 1.

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

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

Under accrual basis accounting,revenue is recorded only when cash is received.

On September 1,2018,Real Estate Professionals Company paid $5,000 in advance for an eight-month rental space covering the period of September 1,2018 through April 30,2019.The deferred expense was initially recorded as an asset.The company makes adjusting entries once a year at year-end.The adjusting entry on December 31,2018 would include a ________.

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.

Marcy's Event Planning Services Company records deferred expenses and deferred revenues using the alternative treatments.The business makes adjusting entries as needed to bring its books to the full accrual basis once a year at the end of the year.On October 1,Marcy's paid $3,600 for insurance for a one-year period.Coverage begins on October 1.At the end of the year,it will make an adjusting entry that debits Insurance Expense for $1,500.

The Hartman Dental Company prepays the rent on its dental office.On July 1,the company paid $18,000 for 6 months of rent.The rent period begins on July 1.How much Rent Expense should the company record for the three months ended September 30 under the accrual basis? Why?

Williams Enterprises prepaid three months of office rent totaling $8,700 on October 1,2019.Assuming Williams records deferred expenses using the alternative treatment,what would be the entry on October 1,2019?

Improvements,a home improvement magazine,collected $240,000 in subscription revenue on June 30.Each subscriber will receive an issue of the magazine in each of the next 12 months,beginning with the July issue.The company uses the accrual method of accounting.What is the amount of Subscription Revenue that has been earned by the end of December? (Round any intermediate calculations to two decimal places,and your final answer to the nearest whole number. )

The revenue recognition principle requires companies to record revenue when (or as)the entity satisfies each performance obligation.

Financial statements are prepared from the balances in a(n) ________.

Adjusting entries may involve any account,including Cash.

Mercury Company sells tickets in advance for its weekly productions and records the proceeds as Unearned Revenue.At the end of each month,the company makes an adjusting entry to account for the tickets used during the month (ticket revenue. ) On March 1,the Unearned Revenue account had a credit balance of $5,000.During March,Mercury sold 500 tickets at $40 each,and 450 tickets were used during the month.What is the balance in Unearned Revenue at the end of March?