ACC CH:4

The adjusting entry to record the supplies used during the period will result in a(n) ______.

decrease to Supplies and an increase to Supplies Expense

The adjusting entry to record depreciation on equipment includes a ______. (Select all that apply.)

- debit to Depreciation Expense - credit to Accumulated Depreciation

Bristol, Inc. paid $800 for a 4-month insurance policy, for the duration of August to November, on August 1 of the current year. On August 31, Bristol, Inc. made an adjusting entry to account for the insurance that expired during the month of August. The adjusting entry contained a debit to Insurance Expense in the amount of $___ and a credit to Prepaid Insurance in the amount of $____. The remaining balance in the Prepaid Insurance account after the adjustment was $_____

200 200 600

Adjustments ensure that ______ balances are reported at amounts representing the economic benefits that remain at the end of the current period.

ASSETS

After posting the adjusting entry to record revenues for which the seller has performed of its obligations but has not yet collected, which account will be increased?

Accounts Receivable

If a company recorded an adjusting entry by debiting Interest Expense for $500 and Interest Payable for $50 in error, then the ______.

Adjusted trial balance's debits will not equal its credits

How does the timing of adjusting entries differ from the accounting for daily transactions?

Adjustments are made at the end of the accounting period because making them on a daily basis would be inefficient.

Why are the adjustments important to the preparation of the financial statements? (Check all that apply.)

Adjustments ensure that the balance sheet reports all of the economic resources the company owns and all the obligations the company owes. Unadjusted financial statements could present a misleading and incomplete picture of the company's financial results. Adjustments ensure that the revenues earned and expenses incurred during the period are reflected on the income statement.

If an asset account such as Equipment has a normal debit balance, the associated contra-account should have a normal ____ balance. (Enter one word per blank.)

CREDIT

Which of the following is closed into Retained Earnings by debiting Retained Earnings?

Dividends

Adjusting entries are made at the _____ of the accounting period, while daily transactions are made throughout the accounting period. (Enter one word per blank.)

END

As of December 31 (the end of the accounting period), ABC Company has a profit before tax of $12,000. The company's tax rate is 25%. The adjustment will include a(n) ____ of $____ to Income Tax Payable.

Increase of $3,000 ($12,000 x 25% or $12,000 x.025.)

The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to "Interest ____" and a credit to "Interest _____ ." (Enter one word per blank.)

Interest Expense and credit to Interest Payable

Which of the following transactions constitutes an accrual adjustment involving a revenue account?

Interest Revenue on a note receivable

After the adjustments have been completed, the adjusted balance in Income Tax Payable represents the amount ______ to the government at the end of the accounting period. (Only add one word per blank.)

OWED

The adjustment for supplies used during the period will result in a debit to the ______ account and a credit to the ______ account.

Supplies Expense; Supplies

On September 1, Taggert Company paid $1,800 for a 6-month insurance premium beginning September 1. Which of the following statements are correct regarding the accounting for this insurance over the six-month period? (Check all that apply.)

Taggert will debit Insurance Expense for $300 on Sept. 30. Taggert will credit Prepaid Insurance for $300 on Sept. 30. Taggert will debit Prepaid Insurance for $1,800 on Sept.1.

Which of the following is incorrect regarding the Income Tax Payable account?

The account represents tax refunds due to the company.

Why are adjustments needed at the end of an accounting period?

To ensure that all assets and liabilities are reported at appropriate amounts

What are the effects on the accounting equation from the adjustment for depreciation?

Total assets will decrease and total stockholders' equity will decrease.

What are the effects on the financial condition of the business from the adjustment for revenues from the seller fulfilling its obligations that have not yet been collected?

Total assets will increase and total stockholders' equity will increase.

A(n) ____ trial ____ is prepared immediately _____ the adjusting entries have been recorded and _____ the financial statement are prepared. (Enter one word per blank.)

adjusted trial balance after before

Without _____ entries, financial statements would present an incomplete and misleading picture of the company's financial position.

adjusting

Closing journal entries are recorded ______.

after the financial statements have been prepared

The adjusted trial balance should be prepared ______ the financial statements are prepared to prove the ______ of the debits and credits.

before; equality

The step in the accounting cycle where entries are recorded to update retained earnings and zero out temporary accounts is referred to as the ____ process. (Enter one word per blank.)

closing

Which of the following entries records the adjustment for income tax accrued, but not yet paid?

debit income tax expense and credit income tax payable

The Accounts Receivable account should be ______ when adjusting at the end of the period for any revenues from fulfilling obligations to buyers which has not yet been collected or recorded. (Enter one word per blank.)

debited

A prepayment is originally recorded as an asset. Later at the end of the accounting period, an adjustment is recorded causing in a(n) ______ in the asset account and a(n) ______ in the expense account.

decrease; increase

Prepaid expenses, such as Prepaid Rent, should be ______ by the benefits that were used up during the accounting period.

decreased

Select the following statements that are correct regarding Dividends? (Check all that apply.)

dividends are closed into retained earning by crediting dividends; dividends are closed into retained earnings by debiting retained earnings; dividends have a normal debit balance

The adjusting entry to record salaries and wages owed to employees at the end of the accounting period includes a debit to "Salaries and Wages ______" and a credit to "Salaries and Wages .____" (Enter one word per blank.)

expense ; payable

Interest incurred, but not yet paid during an accounting period, should be recorded as an expense and a(n) ______.

liability

Which of the following statements is correct regarding the adjustment for salaries and wages accrued but not paid at the end of the accounting period?

salaries and wages expense will increase by the amount of the unpaid salaries and wages

Sterling Company paid $1,200 for 3 months of rent on April 1 of the current year. On April 30, Sterling Company made an adjusting entry to account for the rent that expired during the month of April. The adjusting entry contained a debit to Rent Expense in the amount of $ and a credit to Prepaid Rent in the amount of $. The remaining balance in the Prepaid Rent account after the adjustment was $

$400; $400; $800

As of December 31, the unadjusted balance in Deferred Revenue contains $5,600 for unredeemed gift cards. An analysis of the monthly sales indicates that $3,200 gift cards were redeemed during the month but not yet recorded. How will these transactions affect the adjustments at the end of the period?

1) Deferred Revenue needs to be decreased by the amount of gift cards redeemed during the month 2) Sales revenue needs to be increased by the amount of gift cards redeemed during the month1

Accumulated Depreciation has a normal ___ balance which indicates that it ___ Total Assets. (Enter one word per blank.)

CREDIT DECREASES

The seller's adjusting entry to record the revenue earned by fulfilling its obligation to its buyers which had been collected in advance requires a __ (debit/credit) to Deferred Revenue and a ____ (debit/credit) to Sales Revenue. (Enter one word per blank.)

DEBIT CREDIT

Which of the following entries records the adjustment to revenue for which the seller has performed its obligations but has not yet been collected or billed?

Debit Accounts Receivable and credit Sales Revenue

Which action will be taken in the adjusting entry to record rent expense that has expired during the month? (Assume that the rent was paid in advance and previously recorded as an asset.)

Debit Rent Expense

Adjustments help to ensure that all ______ are recorded in the period in which they are incurred.

EXPENSES

The adjusting entry to record depreciation, includes a debit to _______ _____ and a credit to___ ____. (Add only one word per blank.)

credit to accumulated depreciation; debit to depreciation expense