Exam 3: Accrual Accounting

The university satellite office operates five days per week with a daily payroll of $5,000. Employees are paid every Saturday for the workweek just completed (Monday through Friday). The last day of the month is Wednesday, October 31. What is the effect of the correct adjustment at October 31?

An ____________________ revenue must be recorded when revenue is earned in advance of receiving cash.

Which one of the following is an example of an accrued liability?

On October 1, 2019, a company paid $9,000 rent in advance. The rent per month is $1,000. Assuming the company's accounting period ends on December 31, 2019, what will be reported on the financial statements?

A local tennis club sells season memberships for $1,000 each. During January 2019, 50 season memberships were sold. As of March 31, 2019, only $25,000 of season membership fees had been collected from customers. The tennis season runs for 6 months starting April 01, 2019. Which one of the following is an amount reported on the Balance Sheet dated March 31, 2019?

Three months before its year-end, a company signed a $250,000, 12%, 8-month note. Principal and interest will be paid at maturity. No interest should be accrued at year-end because the company has no obligation to pay the interest until the note matures.

Which of the following adjusting entries involves the cash account?

When a company recognizes the portion of supplies used during a year, the effect is to decrease net income.

Failure to record amounts earned for services provided to customers but not yet paid results in which of the following?

When should a shipping company recognize revenue from its delivery service?

A company borrowed $100,000 on a one-year, 10% note on September 1, with interest and principal to be paid at maturity. How much interest payable will be reported on the balance sheet at November 30?

Match the following types of adjusting entries to the listed situation. (Choices may be used more than once.) -Two years insurance premium was paid in advance

What effect does "recognizing accrued interest revenue at the end of the accounting period" have on the accounting equation?

A company that sells merchandise to customers should normally recognize

Which one of the following adjustments decreases net income for the period?

Accrued revenue is recognized when cash is received.

A company that forgets to recognize depreciation for the year understates its income and assets.

Match each statement to the item listed below -A listing of all the account balances immediately before preparation of the financial statements

When cash is paid before an expense is incurred, an accrual is necessary.

A manufacturing company purchased equipment on January 1, 2010 for $450,000. As of January 1, 2019, depreciation of $202,500 had been recorded on this asset. Depreciation expense for 2019 is $22,500. After the adjustments are recorded and posted at December 31, 2019, what are the balances for the Equipment and Accumulated Depreciation? ​ Equipment Accumulated Depreciation