Exam 3: Adjusting the Accounts

Which of the following accounting periods would NOT be referred to as an interim period?

On June 28, Bronnie's provided consulting services to Maisie Company. Bronnie's billed Maisie on July 2 for $800 related to these services. On July 5, Maisie paid the invoice in full. Bronnie's only cost related to this sale was $250 in salaries expense. Bronnie's paid the salaries on July 3. Assuming Bronnie's Company has a June 30 year end, the company's profit for the Maisie's job on the June 30 financial statements should be

The accrual basis of accounting is more complex than the cash basis of accounting as it involves such decisions as determining when to record revenues and expenses.

Pooley Electric Company purchased office supplies costing $4,000 and debited Office Supplies expense for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,600 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

Unearned revenue is a prepayment that requires an adjusting entry when services are performed.

The Upton Company accumulates the following adjustment data at December 31. 1. Revenue of $1,100 collected in advance has been earned. 2. Salaries of $600 are unpaid. 3. Prepaid rent totalling $450 has expired. 4. Supplies of $550 have been used. 5. Revenue earned but unbilled totals $750. 6. Utility expenses of $300 are unpaid. 7. Interest of $250 has accrued on a note payable. Instructions a. For each of the above items indicate: i. The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense). ii. The account relationship (asset/liability, liability/revenue, etc.). iii. The status of account balances before adjustment (understatement or overstatement). iv. The accounts that will be affected. v. The profit effect. Prepare your answer in the tabular form presented below. The first item is shown for illustrative purposes. b. Assume Profit before the adjustments listed above was $21,500. What is the adjusted Profit?

When a prepayment is made for an insurance policy, the debit may be made to the Insurance Expense account.

If the debits equal the credits in the adjusted trial balance, it means that all of the entries have been made.

The cash basis of accounting is more useful than the accrual basis as the balance in the bank account is always reflected in the financial statements.

The Boltenhouse Museum paid employee wages on and through Friday, August 23, and the next payroll will be paid September 5. There are four more working days in August (26-29). Employees work 5 days a week and the company pays $800 a day in wages. What will be the adjusting entry to accrue wages expense at the end of August?

Expense recognition is tied to revenue recognition when there is a direct association between the cost incurred and the earning of revenue.

If a company fails to adjust a Prepaid Rent account for rent that has expired, what effect will this have on that month's financial statements?

The fiscal year of a business is usually determined by

Revenue is recognized when there is a decrease in assets or an increase in liabilities as the result of the company's business activities with its customers.

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

The adjusted trial balance of Owens Financial Planners appears below. Using this information, prepare for the month ending December 31: a. an income statement. b. a statement of owner's equity. c. a balance sheet.

An adjusting entry

A 52 week period is called a(n) a) fiscal year. B) interim period. C) quarter. D) business period.

Which of the following would NOT result in unearned revenue?

Dorchester Museum purchased a computer for $3,600 on December 1. It is estimated that the useful life of the computer will be 3 years. If financial statements are to be prepared on December 31, the company should make the following adjusting entry