ACCT 303 - Chapter 2 Part 1 Reading Assignment (pp. 46-72)

Which of the following are permanent accounts? (Select all that apply.) 1- revenue 2- common stock 3- equipment 4- cash 5- cost of goods sold

common stock equipment cash

The normal balance of the contra asset accumulated depreciation account is a(n) _______________ . (Enter one word per blank

credit

Glasser Corp. sold goods on account. The journal entry to record this transaction includes (Select all that apply.)

credit revenue debit cost of goods sold debit accounts receivable credit inventory

The adjusting entry to record deferred revenue originally recorded as sales revenue includes a: 1- credit to deferred revenue 2- debit to sales revenue 3- debit to deferred revenue

credit to deferred revenue debit to sales revenue

Revenue of $1,000 was collected in advance from customers for goods and was recorded as sales revenue. At year end, $600 of the revenue collected in advance is earned. The adjusting entry includes a:

credit to deferred revenue of $400 debit to revenue of $400

Logan Corp. purchases supplies on account and appropriately records the transaction in an asset account. The adjusting journal entry at year-end when accounting for supplies used will require a (Select all that apply.)

credit to supplies debit to supplies expense

Ragland Corp. purchases supplies on account for $1,000 and appropriately records the transaction in an asset account. A count of inventory at year-end indicates that $300 of supplies are remaining. The adjusting journal entry required at year-end includes (Select all that apply.)

credit to supplies on hand $700 debit to supplies expense $700.

To increase the accumulated depreciation account, you would ______ the account, and to increase depreciation expense, you would _____ the account.

credit, debit

The adjusting journal entry required when deferred revenue is recognized includes a _____________ entry to a liability.

debit

To record the issuance of common stock at par value, (Select all that apply.)

debit cash credit common stock

Supplies expense is ______ and supplies is ______ for the amount of supplies used during the period that were originally recorded as an asset when purchased. 1 - credited, debited 2 - debited, credited 3 - credited, credited 4 - debited, debited

debited, credited

The use of office supplies purchased on account in the previous month will have what effects on the balance sheet equation? (Select all that apply.)

decrease assets decrease retained earnings

Revenues will ______ retained earnings, and expenses will ______ retained earnings.

increase, decrease

A temporary purchases account is used when the _____________ inventory system is used. (Enter only one word.)

periodic

If the ______ inventory system is used, adjusting entries are made to the purchases, inventory, and cost of goods sold accounts at the end of the period.

periodic

A ______ account represents the basic financial position elements of the accounting equation and a _____ account keeps track of the changes in the retained earnings component of shareholders' equity.

permanent; temporary

Adjusting entries are recorded for (Select all that apply.)

prepayments accruals estimates

Which of the following are temporary accounts? (Select all that apply.)

salary expense revenue

Flounder Corp. sold $12,000 of goods on account. The entry to record this transaction would include a debit to

accounts receivable.

A trial balance proves: A) debits balances equal credit balances B) all transactions have been recorded correctly C) all transactions have been posted correctly

A) debits balances equal credit balances

Which of the following steps occurs only at the end of the year?

Close the temporary accounts to retained earnings

On July 1, Davis Corporation pays $10,000 for August rent. Which of the following are correct? (Select all that apply.)

Davis debits prepaid rent $10,000 Davis credits cash $10,000

The journal entry to record the issuance of 100 shares of $5 par value common stock for $500 would include which of the following?

Debit cash $500

On September 1, Newman Company received $1,200 of revenue in advance from customers for work to be performed evenly over the next 12 months. The transaction was recorded in an income statement account. What is the adjusting journal entry required on December 31?

Debit revenue $800. Reason: The question states that the transaction was recorded in an income statement account so you know they are using the alternative approach and record the full amount as income when received. The amount must be adjusted at year end to reflect the appropriate amount of revenue.

On October 1, Year 1, Swift Corporation received $1,200 from customers for services to be performed evenly over the next 12 months. Swift recorded the original transaction in a balance sheet account. The adjusting journal entry on December 31, Year 1, will include which of the following entries?

Debit to deferred revenue $300. Reason: $1,200/12 months = $100 per month x 3 months Oct-Dec.

True or false: Permanent accounts are closed at the end of the accounting period.

False

Identify which transaction would result in the following journal entry: debit to Cash for $60,000 and credit to Common stock for $60,000.

Issue stock to investors

Which transaction would require the following journal entry: debit Accounts receivable for $3,500; credit Sales revenue for $3,500; debit Cost of goods sold for $2,000 and credit Inventory for $2,000? 1) Sale on account 2)Purchase of inventory 3)Payment on account 4)Collection on account

Sale on account

Adjusting journal entries are necessary for three situations: ,deferrals, _____________, and estimates. (Enter only one word.)

accruals, prepayments, accrual, prepayment, accurals, accural, acrual, or acruals (all of them work)

Which of the following items is prepared at the end of the accounting period immediately before the financial statements are prepared?

adjusted trial balance

Accruals occur when cash flow comes: (Select all that apply.)

after revenue recognition after expense recognition

Recognizing revenue before cash flow is an example of:

an accrual adjusting entry

When rent is paid in advance, it is properly recorded on the balance sheet as

an asset.

The effect on the accounting equation from using supplies which had been previously recorded as an asset is:

assets decrease and owners' equity decrease

At the end of the period, an unadjusted ______________ balance, a listing of all accounts with their respective balances, is used to assist in the preparation of adjusting entries, financial statements, and closing entries. (Enter one word per blank)

trial or trail