Exam 3: Adjusting the Accounts

Accumulated Depreciation is a liability account and has a normal credit account balance.

Grand Slam Company purchased equipment for $9600 on January 1 2016. The company expects to use the equipment for 4 years. It has no salvage value. Monthly depreciation expense on the asset is

The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received.

An adjusting entry requiring a credit to Insurance Expense indicates that the initial transaction was charged to an asset account.

Expenses include losses that are not part of normal operations under

Bob Bundy an employee of Jumbo Corp. will not receive her paycheck until April 2. Based on services performed from March 15 to March 31 his salary was $1500. The adjusting entry for Jumbo Corp. on March 31 is a. Salaries and Wages Expense 1,500 Salaries and Wages Payable 1,500 b. No entry is required. c. Salaries and Wages Expense 1,500 Cash 1,500 d. Salaries and Wages Payable 1,500 Cash 1,500

An adjusted trial balance proves the ______________ of the total debit and credit balances after all ______________ entries have been made.

A company's calendar year and fiscal year are always the same.

The cash basis of accounting is not in accordance with generally accepted accounting principles.

Which of the following is a constraint in accounting?

Rent received in advance and credited to a rent revenue account which is still unearned at the end of the period will require an adjusting entry crediting a liability account for the amount still unearned.

The time period assumption states that

An adjusting entry recording accrued salaries for a period indicates that Salaries Expense has been ________________ but has not yet been ________________ or recorded.

The adjusted trial balance of Old 97 Automotive Service Company on June 30 2016 includes the following accounts: Supplies $300; Accumulated Depreciation $9500; Salaries Payable $1550 Notes Payable $6750; Service Revenue $22100; Salaries and Wages Expense $8750; Depreciation Expense $3250; Supplies Expense $1000; Rent Expense $400; Utilities Expense $350; and Interest Expense $250. Prepare an income statement for the month of June.

Accrued expenses are

A bakery shop makes a large sale for $1400 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The bakery shop follows GAAP and applies the revenue recognition principle. When is the $1400 considered to be recognized?

The time period assumption is often referred to as the expense recognition principle.

Helena Corporation issued a one-year 7% $300000 note on April 30 2016. Interest expense for the year ended December 31 2016 was

Holiday Gifts signs a three-month note payable to help finance increases in inventory for the Christmas shopping season. The note is signed on November 1 in the amount of $80000 with annual interest of 6%. What is the adjusting entry to be made on December 31 for the interest expense accrued to that date if no entries have been made previously for the interest? a. Interest Expense 800 Interest Payable 800 b. Interest Expense. 1,200 Interest Payable 1,200 c. Interest Expense 800 Cash 800 d. Interest Expense 800 Notes Payable 800

The trial balances before and after adjustments for National Parks Calendars at the end of its fiscal year are presented below. Instructions Prepare the adjusting entries that were made.