Exam 3: Adjusting the Accounts

Accumulated Depreciation is

On January 2, 2010, National Credit and Cash purchased a general liability insurance policy for $2,400 for coverage for the calendar year. The entire $2,400 was charged to Insurance Expense on January 2, 2010. If the firm prepares monthly financial statements, the proper adjusting entry on January 31, 2010, will be:

An accounting period that is one year in length is referred to as a ______________ year.

Accounting time periods that are one year in length are referred to as interim periods.

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

A candy factory's employees work overtime to finish an order that is sold on February 28. The office sends a statement to the customer in early March and payment is received by mid-March. The overtime wages should be expensed in

If an adjusting entry is not made for an accrued expense,

On June 1, during its first month of operations, Soufflé Masters purchased supplies for $3,500 and debited the supplies account for that amount. At January 30, an inventory of supplies showed $1,200 of supplies on hand. What adjusting journal entry should be made for June?

Ramona's Music School borrowed $20,000 from the bank signing a 10%, 6-month note on November 1. Principal and interest are payable to the bank on May 1. If the company prepares monthly financial statements, what adjusting entry should the company make at November 30 with regard to the note (round answer to the nearest dollar)?

When a prepaid expense is initially debited to an expense account, expenses and assets are both overstated prior to adjustment.

Expense recognition is tied to revenue recognition.

In a service-type business, revenue is considered earned

Cindi's Candies paid employee wages on and through Friday, January 26, and the next payroll will be paid in February. There are three more working days in January (29-31). Employees work 5 days a week and the company pays $900 a day in wages. What will be the adjusting entry to accrue wages expense at the end of January?

The Poway Animal Encounters operates a drive through tourist attraction. The company adjusts its accounts at the end of each month. The selected accounts appearing below reflect balances after adjusting entries were prepared on April 30. The adjusted trial balance shows the following: Other data: 1. Three months' rent had been prepaid on April 1. 2. The fencing is being depreciated at $6,000 per year. 3. The unearned ticket revenue represents tickets sold for future visits. The tickets were sold at $4.00 each on April 1. During April, twenty of the tickets were used by customers. Instructions (a) Calculate the following: 1. Monthly rent expense. 2. The age of the fencing in months. 3. The number of tickets sold on April 1. (b) Prepare the adjusting entries that were made by the Poway Animal Encounters on April 30.

Adjusting entries are required

The adjusting entry at the end of the period to record an expired cost may be different depending on whether the cost was initially recorded as an asset or an expense.

The adjusted trial balance of Hanson Hawk Corporation at September 30, 2010 includes the following accounts: H. Hawk, Capital $27,700; H. Hawk, Drawing $9,750; Sales Revenue $42,800; Insurance Expense $1,950; Salaries Expense $18,000; Rent Expense $3,000; Supplies Expense $650; and Depreciation Expense $1,100. Prepare an owner's equity statement for the year.

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

If prepaid expenses are initially recorded in expense accounts and have not all been used at the end of the accounting period, then failure to make an adjusting entry will cause

The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset.