Exam 3: Adjusting the Accounts

One part of eight adjusting entries is given below. Instructions Indicate the account title for the other part of each entry. 1. Unearned Revenue is debited. 2. Prepaid Rent is credited. 3. Accounts Receivable is debited. 4. Depreciation Expense is debited. 5. Utilities Expense is debited. 6. Interest Payable is credited. 7. Service Revenue is credited (give two possible debit accounts). 8. Interest Receivable is debited.

Expenses paid and recorded in an asset account before they are used or consumed are called ______________. Revenue received and recorded as a liability before it is earned is referred to as ______________.

For each of the following accounts, indicate (a) the type of adjusting entry (prepaid expense, accrued revenue, etc.) and (b) the related account in the adjusting entry. 1. Depreciation Expense 2. Salaries Payable 3. Service Revenue 4. Supplies 5. Unearned Revenue

Betty Carson has performed $500 of CPA services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Betty make?

Sherman Air Charter signed a four-month note payable in the amount of $8,000 on September 1. The note requires interest at an annual rate of 9%. The amount of interest to be accrued at the end of September is

A liability-revenue relationship exists with

The Accumulated Depreciation account is a contra asset account that is reported on the balance sheet.

Employees at Julian Corporation are paid $5,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salary expense should be recorded two days later on January 2?

Depreciation is the process of

A contra asset account is subtracted from a related account in the balance sheet.

For prepaid expense adjusting entries

Which is not an application of revenue recognition?

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

An expense is recorded under the cash basis only when

Myron is a barber who does his own accounting for his shop. When he buys supplies he routinely debits Supplies Expense. Myron purchased $1,500 of supplies in January and his inventory at the end of January shows $400 of supplies remaining. What adjusting entry should Myron make on January 31?

Henry-K Company purchased a computer system for $3,600 on January 1, 2010. The company expects to use the computer system for 3 years. It has no salvage value. Monthly depreciation expense on the asset is