Exam 3: Accrual Accounting

Match the following types of adjusting entries to the listed situation. (Choices may be used more than once.) -The employee salaries has been incurred, but not paid at the end of the accounting period

A photo processing store purchased office supplies on January 15 by paying cash of $5,000. On January 1, the Supplies account had a beginning balance of $500. On December 31, an inventory revealed that supplies on hand amounted to $500. A)What adjusting journal entry is necessary at December 31st? B)How much will be reported on the balance sheet at December 31 for Supplies? C)How much supplies expense will be reported on the income statement? D)If the adjustment in part A is not recorded, what will be the impact on the income statement, retained earnings statement, and balance sheet?

The expense recognition principle requires that expenses be recorded and reported in the same period as the revenue that it helped to generate.

In the worksheet, the first set of columns immediately following the account titles is for the Adjusted Trial Balance

Match the following types of adjusting entries to the listed situation. (Choices may be used more than once.) -Supplies Expense

Accumulated depreciation is a contra asset account.

Match the following types of adjusting entries to the listed situation. (Choices may be used more than once.) -Interest is earned but not yet collected

What does the phrase, "revenue is recognized when earned" mean?

____________________ is the name given to revenue, expense, and dividend accounts because they are closed at the end of the period.

Match the following types of adjusting entries to the listed situation. (Choices may be used more than once.) -The depreciation on machinery used during the current year is recorded

The names of the four major types of adjusting entries are ____________________, ____________________, ____________________, and ____________________.

During December, Camp David, Inc. purchased $5,000 of supplies for use in its business. At the end of December, 20% of the supplies were still on hand, but only 70% had been paid. What amounts will appear on the company's balance sheet on December 31? Supplies on Hand Accounts Payable

Closing entries are necessary to assure that the company's net income for an accounting period is accurately determined.

Most companies use the accrual basis of accounting because it is required under generally accepted accounting principles.

Match the following types of adjusting entries to the listed situation. (Choices may be used more than once.) -Prepaid Insurance

The ____________________ principle attempts to associate the revenue of the period with all costs necessary to generate that revenue.

A company employs 10 workers in its manufacturing facility. Each employee is paid $10 per hour and works 8 hours per day, Monday through Friday. Employees are paid every Wednesday for the previous Monday through Friday workweek. The last payday was Wednesday, October 28. A)Compute the dollar amount of the company's weekly payroll. B)Prepare the adjusting entry on Friday, October 30, the last day of the fiscal period. C)What special precautions are necessary upon recording the payment of wages to employees on the next payday, November 4?

Adjusting journal entries are made at the end of the period when

A marine company pays its sales personnel 6% commission of the selling price of each yacht. During November 2019, yacht sales totaled $20,400,000. During December 2019, sales totaled $25,100,000. Because its policy is to pay commissions only in the month after the sales, the company paid commissions during December for November 2019. During January 2020, the company paid its sales people commissions on December 2019 sales. A)If the cash basis of accounting is used, how much commission expense is reported on the income statement for December 2019? B)If the accrual basis of accounting is used, how much commission expense is reported on the income statement for December 2019?

Income Statement accounts are closed to the income summary.