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Exam 3: Adjustments: Accruals and Deferrals

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Question 51

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For the year ending June 30, Island Clinical Services mistakenly omitted adjusting entries for (1) $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired. What is the combined effect of these errors on (a) revenues, (b) expenses, and (c) net income for the year ending June 30?

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(a) Revenues were understated ...

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Question 52

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The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

A) $56,700
B) $58,000
C) $55,800
D) $54,500

E) A) and B)
F) A) and C)

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Question 53

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The revenue recognition principle

If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the assets at the end of the period will be understated.

The unadjusted and adjusted trial balances for Ellen's Coiffures is shown below. Assume that all balances in the unadjusted trial balance column and the amounts of the adjustments are correct. Further assume that $400 of insurance expired during the year. Locate the errors in the accountant's adjusting entries, assuming that none of the accounts was affected by more than one adjusting entry. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

On December 31, the balance in the office supplies account is $1,385. A physical count shows $435 worth of supplies on hand. Prepare the adjusting entry for supplies.

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following is true?

Record journal entries for the following transactions. ​ ​(a) On December 1, $18,000 was received for a service contract to be performed from December 1 through April 30. ​(b) Assuming the work is performed evenly throughout the contract period, prepare the adjusting journal entry on December 31.

The account type and normal balance of Unearned Revenue is

Salaries of $6,400 are paid for a five-day week on Friday. Prepare the adjusting journal entry that is required if the month ends on Thursday.

The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a(n)

The adjustment for accrued fees was debited to Accounts Payable instead of Accounts Receivable. This error will be detected when the adjusted trial balance is prepared.

Indicate with a Yes or No whether or not each of the following accounts would, under normal circumstances, require an adjusting entry. 1. Cash 2. Prepaid Expenses 3. Depreciation Expense 4. Accounts Payable 5. Accumulated Depreciation 6. Equipment

The system of accounting where revenues are recorded when services have been performed or products have been delivered to customers and expenses are recorded when they are incurred is called the cash basis of accounting.

On March 1, a business paid $3,600 for a twelve-month liability insurance policy. On April 1, the business entered into a two-year rental contract for equipment at a total cost of $18,000. Determine the following amounts: ​ (a) insurance expense for the month of March (b) balance in prepaid insurance as of March 31 (c) equipment rent expense for the month of April (d) balance in prepaid equipment rental as of April 30

Using the following account balances for Garry's Tree Service, prepare a trial balance. ​

Classify the following items as:

Generally accepted accounting principles require that companies use the ____ of accounting.

The adjusting entry for gym memberships earned that were previously recorded in the unearned gym memberships account is

Accumulated depreciation accounts are liability accounts.