Exam 3: The Adjusting Process

The sum of all the depreciation expenses recorded to date for a depreciable asset is called residual value.

The accounting records for Social Event Planning Services include the following select unadjusted balances on December 31,2018: Salaries Expense,$6,000; Service Revenue: $18,000; Unearned Revenue,$400; Supplies Expense,$600; Rent Expense,$300; Depreciation Expense-Equipment,$200. During December,the company worked with a new client and provided event planning services for an upcoming event.It will receive the full amount of $1,500 when the event is completed in January 2019.As of the end of December 2018,it performed one-third of the services covered by the contract.The company made the accrual adjustments.The balance of Service Revenue,as shown on the adjusted trial balance,should be a ________.

Which of the following accounting principles does NOT help to explain the timing and recognition of revenues and expenses?

An adjusting entry that credits Salaries Payable is an example of a(n)________.

On September 1,2018,Real Estate Professionals Company paid $5,000 in advance for an eight-month rental space covering the period of September 1,2018 through April 30,2019.The deferred expense was initially recorded as an asset.The company makes adjusting entries once a year at year-end.The adjusting entry on December 31,2018 would include a ________.

On March 1,2018,LeClaire Company paid $60,000 for office rent covering the three-month period ending May 31,2018.Journalize the adjusting entry on March 31 by using the alternative treatment of deferred expenses.Omit explanation.

Hudson Landscaping Service bought equipment for $10,800 on January 1,2019.It has an estimated useful life of five years and zero residual value.Hudson uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month.As of June 30,2019,the book value of this equipment shown on its balance sheet will be ________.

Which of the following is NOT a type of adjusting entry?

If a company fails to make an adjusting entry for accrued revenues,the net income will be overstated.

During December 2018,April Service Company performed $1,500 of services,but as of December 31,2018,the clients have not yet been billed.If April fails to make an adjusting entry on December 31,2018,indicate the effect on assets,liabilities,equity,and net income. Understated, Overstated, No Effect Assets Liabilities Equity Net Income

Accrued revenue represents the receipt of cash before the revenue has been earned.

Since net income increases the equity account Owner,Capital,if net income is understated,then equity will also be understated.

The matching principle ________.

Financial statements are prepared from the balances in a(n)________.

Accumulated Depreciation is a(n)________ account and carries a normal ________ balance.

West Electrical Company performed services of $8,000 on January 24 and invoiced the customer.West received the $8,000 on January 31.Provide the journal entry on January 31 when the cash was received.(Ignore explanation.)

Unearned revenue is recorded when ________.

The Hartman Dental Company prepays the rent on its dental office.On July 1,the company paid $18,000 for 6 months of rent.The rent period begins on July 1.How much Rent Expense should the company record for the three months ended September 30 under the accrual basis? Why?

The accounting principle that ensures all expenses are recorded during the period when they are incurred and offsets those expenses against the revenues of the period is called the ________ principle.

The accountant for Eagle Financial Services Company failed to make an adjusting entry to record $3,000 of telephone expenses for the last two months of the year.Which of the following statements is TRUE?