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Exam 3: Adjusting Accounts and Preparing Financial Statements

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Question 81

Multiple Choice

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An adjusting entry could be made for each of the following except:

A) Unearned revenues.
B) Accrued expenses.
C) Depreciation.
D) Prepaid expenses.
E) Owner investments.

F) D) and E)
G) A) and E)

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Question 82

Multiple Choice

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Assuming unearned revenues are originally recorded in balance sheet accounts, the adjusting entry to record earning of unearned revenue is:

A) Decrease a liability; increase revenue.
B) Increase an expense; increase a liability.
C) Increase an expense; decrease a liability.
D) Increase an asset; increase revenue.
E) Increase an expense; decrease an asset.

F) A) and D)
G) B) and D)

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Question 83

Multiple Choice

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The adjusting entry to record an accrued expense is:

Which of the following assets is not depreciated?

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250?

Describe the adjusting entries, including the accounts used, for 1)prepaid expenses, 2)depreciation and 3)unearned revenues.

On December 14, Branch Company received $3,000 cash for 30 days of consulting services that will be completed on January 13. Branch records all such prepayments by customers in a liability account. Prepare the December 31 adjusting entry.

Sanborn Company has 10 employees, who earn a total of $1,800 in salaries each working day. They are paid on Monday for the five-day workweek ending on the previous Friday. Assume that year ended December 31, is a Wednesday and all employees will be paid salaries for five full days on the following Monday. The adjusting entry needed on December 31 is:

The adjusting entry to record an accrued revenue is:

A company owes its employees $5,000 for the year ended December 31. It will pay employees on January 6 for the previous two weeks' salaries. The year-end adjusting entry on December 31 will include a debit to Salaries Expense and a credit to Cash.

An account linked with another account that has an opposite normal balance and is subtracted from the balance of the related account is a(n) :

The time period assumption assumes that an organization's activities can be divided into specific time periods such as months, quarters, or years.

The length of time covered by a set of periodic financial statements, primarily a year for most companies, is referred to as the:

The entry to record a cash receipt from a customer when the service is to be provided in a future period involves a debit to an unearned revenue account.

On October 15, a company received $15,000 cash as a down payment on a consulting contract. The amount was credited to Unearned Consulting Revenue. By October 31, 10% of the services required by the contract were completed. The company will record consulting revenue of $1,500 from this contract for October.

A company pays each of its two office employees each Friday at the rate of $100 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

Depreciation expense is an example of an accrued expense.

Torsten had total assets of $149,501,000, net income of $6,242,000, and net sales of $209,203,000. Its profit margin was 2.98%.

Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are:

On December 31, Chu Company had performed $3,000 of management services for clients that had not yet been billed. Prepare Chu's adjusting entry to record these fees earned.