Exam 4: The Accounting Cycle: Accruals and Deferrals

Swordfish Co. earned $75,000 in 2009 and expects to receive 2/3 of the amount in 2010 and the remainder in 2011. How much revenue should they report in 2009?

In which of the following situations would Daystar Company record unearned revenue in May?

Regal Real Estate which maintains its accounts on the basis of a fiscal year ending June 30, began the management of an office building on June 15 for an agreed annual fee of $4,800. The first payment is due on July 15. The adjusting entry required at June 30 is:

At March 31, the amount of supplies on hand is $520. What amount is reported in the January income statement for supplies expense?

Before any month-end adjustments are made, the net income of Russell Company is $38,000. However, the following adjustments are necessary: office supplies used, $3,160; services performed for clients but not yet recorded or collected, $3,040; interest accrued on a note payable to bank, $3,640. After adjusting entries are made for the items listed above, Russell Company's net income would be:

What should be the balance of Prepaid Rent on December 31?

When a company receives cash in advance and it is obligated to provide a service or a product in the future, the entry would be a credit to a liability account and a debit to revenue.

The period of time over which the cost of an asset is allocated to depreciation expense is called its useful life.

After the appropriate adjusting entry is recorded, the balance in the liability account Unearned Fees will:

The Cash account is usually affected by adjusting entries.

Accounting terminology Listed below are nine technical accounting terms emphasized in this chapter: Adjusting entries Unearned revenue Accrued expense Accumulated depreciation Accrued revenue Prepaid expense Materiality Contra-asset Book value Each of the following statements may (or may not) describe one of these technical terms. In the space provided below each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms. ____ (a.) An account with a credit balance that is an offset against an asset account. ____ (b.) A contra-account. ____ (c.) A liability to customers who have paid in advance. ____ (d.) The estimated current value of an asset. ____ (e.) Entries made to achieve the goals of accrual accounting when revenue or expense transactions span more than one accounting period. ____ (f.) An asset that will expire shortly. ____ (g.) Revenue that has been earned, but not yet received.

What amount of interest expense has accrued on the bank loan?

$900 is owed to employees for work since the last payday in January, to be paid the first week of February. What is the effect on January net income if the accountant fails to make any January 31 adjustment for this item?

The balance of an unearned revenue account:

The need for adjusting entries results from timing differences between the receipt or disbursement of cash and the dates on the financial statements.

An example of a contra-asset account is:

The accrued interest should be:

Great Kids Co. began providing day care for the children of employees of a large corporation on January 15 for an agreed monthly fee of $9,000. The first payment is to be received on February 15. The adjusting entry required by Great Kids Co. on January 31 includes:

Of the following adjusting entries, which one results in an increase in liabilities and the recognition of an expense at the end of an accounting period?

Which of the following is not a purpose of adjusting entries?