Accounting Financial Chapter 4

Which of the following types of transactions could be an accrual adjustment?

An increase to an asset account ant an increase to a revenue account

Interest Payable is

a liability on the balance sheet and reports the amount owed

If an adjusting entry decreased an asset on the balance sheet, then one can conclude that _______

an expense was increased on the income statement

Accrual adjustment recorded to adjust for revenues not yet collected will cause

assets to increase

The accrual adjustment recorded to adjust for revenues not yet collected will cause

assets to increase

The adjusting entry that debits Interest Receivable and credits Interest Revenue records interest____.

generated but not yet collected

When making deferral adjustments to record the amount used during the period for items such as Prepaid insurance or Supplies the debit will _____ a(n) _______ account

increase expense

Types of transactions represent accrual adjustments

increase to income taxes payable and increase to income taxes expense increase to interest payable and increase to interest expense

Gift cards are an example of a transaction in which a company receives payment in advance of fulfilling a sale or performing a service. This type of translation will result in: 1) an increase to the account called Cash, an asset and 2) a(n) ________ to the amount called __________ a ______

increase, Deferred Revenue, Liability

On November 30, a company borrowed $1,000 by issuing a 1-year note with interest and principal due at the end of the 1-year period. The interest on the note should be expensed____.

over the months the note is unpaid

After the adjustments have been completed, the adjusted balance in the Interest Expense account represents_____.

total interest that has been paid and/or accrued during the period

The adjusting entry to record wages incurred but not yet recorded includes a credit to_____.

wages payable

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

The adjusting entry a company would record for the amount of wages incurred but not yet paid will cause which of the following?

Decrease stockholders' equity Increase liabilities

Adjusting entry to record depreciation, includes a debit too ______ and a credit to _____

Depreciation Expense Accumulated Depreciation

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 _____."

Expense Payable

True or false: The adjusting entry to record interest owed for the period will cause the balance in the Note Payable account to increase.

False Accrued interest increases the Interest Payable account. The amount does not affect the Note Payable account. Only principal payments on the note will affect the balance in the Note Payable account.

True or False: To calculate a company's income tax obligation, the income after tax is multiplied by the company's tax rate

False The income before (not after) tax is multiplied by the company's tax rate

What are the reports made available to the public?

Income Statement Statement of Retained Earnings Balance Sheet Statement of Cash Flows Notes to the financial statements

Which of the following may require an accrual adjusting entry that is recorded with a debit to an expense and a credit to a liability

Interest owed on notes payable Utilities to be paid in later accounting period

Which line item on the adjusted trial balance reports its beginning balance but on the balance sheet reports its ending balance?

Retained Earnings

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

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

Accrual adjustments are necessary when cash is paid or collected

after the expense is incurred or seller performs its obligation

In recording an accrual adjustment to account for revenues not yet collected

an asset is increased since cash will be collected at a later date

The entry to record the payment of wages incurred in the prior accounting period is recorded _____

credit Cash debit Salaries and Wages Payable

Example of a deferral adjustment

debit Supplies Expense and credit Supplies

Entries needed for the closing process

debit each revenue, credit each expense, and record the difference in retained earnings. credit dividends and debit retained earnings

Adjusting entry to record the earned by the seller fulfilling its obligation results in a(n) _____ to the deferred revenue

decrease

Salaries and Wages Payable is recorded for salaries and wages incurred, but not yet ______ to employees, at the end of the accounting period.

distributed

Permanent accounts are found on _____.

only the balance sheet

Which line item is found on both the income statement and the statement of retained earnings?

Net Income