Exam 11: Work Sheet and Adjusting Entries

Unearned revenues are classified ________ as and have a normal balance of ________.

Net income appears on the work sheet in the

Young Corporation used a perpetual inventory system. By physical count, ending Merchandise Inventory is $82,300. The balance in the Merchandise Inventory account is $80,500. Which of the following is the correct adjusting entry?

At the time a firm adjusts Merchandise Inventory, the Income Summary account

Which of the following account types are NOT located on the worksheet's balance sheet?

This liability account is credited when cash is received for goods and/or services in advance of being earned

The amount of ending merchandise inventory appears in the Balance Sheet Debit column of the work sheet.

The Income Statement Debit column exceeds the Income Statement Credit column on a work sheet. This indicates

If revenue is earned over two fiscal periods, one should initially credit the Unearned Revenue account.

If the Unearned Revenue account had an unadjusted normal balance of $3,800, and an adjustment was made debiting the account for $500, the amount would appear in the Adjusted Trial Balance columns of the work sheet as a

Indicate the work sheet columns in which the balances of the accounts listed should appear.

This account is debited in a periodic inventory system, when goods are bought for resale.

Match the terms below with the correct definitions. -An inventory system that debits Purchases when goods are bought

The second adjusting entry for merchandise inventory with the periodic inventory system is to debit Merchandise Inventory for the amount of the beginning inventory.

The Accounts Receivable balance would appear in which column of the worksheet

The first adjusting entry for merchandise inventory with the periodic inventory system is a credit to Merchandise Inventory and a debit to Income Summary.

The adjusting entry for unearned revenue involves a debit to Accounts Payable.

If the Income Summary account has a debit of $60,000 and a credit of $65,000 after adjusting entries have been journalized and posted, $65,000 represents the ending inventory.

Using this inventory method the Merchandise Inventory account is adjusted only at the end of the fiscal period and the adjustment is based on a physical inventory.

Discuss the accounting principle served by crediting amounts received (which will not be earned during the present fiscal period) to an Unearned Revenue account instead of to the Revenue account. Give an example of a business in which this might occur. Explain how failure to make an adjustment to the Unearned Revenue account and the Revenue account would affect the financial statements.