ACCTG 70 Chapter 9 "Adjustments"

What effect does debits have upon expense accounts?

Increase

For Example: If we need to make an adjusting entry to increase Interest Revenue and Increase Interest Receivable:

Interest Revenue: - Revenue - Increase Interest Receivable: - Asset - Increase

Adjusted entries for accrued expenses typically affect:

Expenses: Under Profit and Loss Liability: Under Balance Sheet

What effect does credits have upon asset accounts?

Decrease

An adjustment to record the amount of insurance that has not expired as of year end would be considered a(n):

Prepaid items

Which of the following is a listing of all of a company's accounts and the ending balances before making adjustments?

Trial Balance

To create adjusting entries using QBO, select the:

(+) New icon

To make an adjusting entry using the Journal in QBO, select the:

(+) New icon

If we need to make an adjusting entry to increase interest Expense and increase interest Payable- (Increase/Decrease)

*Interest Expense - Expense - Increase *Interest Payable - Liability - Increase

Identify the order of the following steps in the accounting cycle.

1. Chart of Accounts 2. Transactions 3. Trial Balance 4. Adjustments 5. Adjusted Trial Balance 6. Financial Statements

identify the order of the following steps to make adjusting entries using QBO.

1. Select (+) New icon 2. Select Journal Entry 3. Enter Journal Date 4. Enter Journal Number 5. Enter Debit Account 6. Enter Credit Account

Match the following in the accounting cycle that are completed throughout the accounting period and which steps are completed at the end of the accounting period.

1. Steps Completed Throughout the Accounting Period a. Update Chart of Accounts b. Record Transactions 2. Steps Completed at the End of the Accounting Period: c. Prepare a Trial Balance d. Enter Adjustments e. Prepare an Adjusted Trial Balance f. Prepare Financial Statements

Indicate the order in which the following should be prepared at the end of the accounting period. Position 1 of 3 Trial Balance correct toggle button unavailable Trial Balance

1. Trial Balance 2. Adjustments 3. Adjusted Trial Balance

Identify the order of the following steps to make an adjusting entry using QBO.

1: (+) New icon 2: Journal Entry 3: Journal Date 4: Journal Number 5: Debit Account 6: Debit Amount 7: Credit Account 8: Credit Amount

Examples of related Expense and liability accounts used for accrued expenses adjusting entries

Accrued Expense: *Accrued interest Incurred * Accrued Taxes Payable Expense Account: *Interest Expense *Tax Expense Liability Account: *Interest Payable *Taxes Payable

Examples of related Revenue and Asset accounts used for accrued revenue adjusting entries as follows

Accrued Revenues: *Accrued Interest Earned *Accrued Rent Revenue Revenue Account: * Interest Revenue *Rent Revenue Asset Account * Interest Receivable * Rent Receivable

An adjustment to record the amount of interest expense that your company has incurred but not yet paid at year-end would be considered:

Accrued expenses

An adjustment to record the amount of interest revenue that your company has earned but not yet collected or recorded at year end would be considered:

Accrued revenues

Which of the following steps in the accounting cycle is used to bring accounts up to date at the end of the accounting period?

Adjusting Entries

Which of the following steps in the accounting cycle are entered into journal using debits and credits?

Adjustments

If the accrual basis of accounting is used, types of adjusting entries that may be needed at the end of the accounting period include:

Answer: Unearned Items Prepaid Items All: 1. Prepaid items 2. Unearned items 3. Accrued Expense 4. Accrued Revenues

What type of adjusting entry is required for revenues that have been earned but not yet collected or recorded?

Answer: Accrued revenues * Prepaid items: Items that are prepaid, such as prepaid insurance or prepaid rent. * Unearned items Items that a customer has paid us for, but we have not provided the product or service * Accrued expenses: Expenses that are incurred but not yet paid or recorded. * Accrued revenues Revenues that have been earned but not yet collected or recorded.

Adjusting entries for prepaid items typically affect which of the following types of accounts:

Asset and Expense accounts

In double-Entry accounting, how do we know whether to use a debit or credit for adjusting entries?

Assets: Debit: Increase Credit: Decrease Liabilities: Debit: Decrease Credit: Increase Equity: Debit: Decrease Credit: Increase Revenues (income): Debit: Decrease Credit: Increase Expenses: Debit: Increase Credit: Decrease

Whether a debit or credit increases or decreases an account depends upon the type of account.

Assets: Debit: Increase Credit: Decrease Liabilities: Debit: Decrease Credit: Increase Equity: Debit: Decrease Credit: Increase Revenues: (Income) Debit: Decrease Credit: Increase Expenses: Debit: Increase Credit: Decrease

Adjusting entries for prepaid items typically affect which of the following types of accounts:

Expense: Under Profit and Loss Asset: Under Balance Sheet

Indicate which accounts should be debited and credited to record an adjusting entry to increase the Interest Expense account and increase the Interest Payable account.

Debit: Interest Expense Credit: Interest Payable

Indicate which accounts should be debited and credited to record an adjusting entry to increase the Interest Revenue account and increase the Interest Receivable account.

Debit: Interest Receivable Credit: Interest Revenue

Indicate which accounts should be debited and credited to record an adjusting entry to increase the Rent Revenue account and decrease the Unearned Revenue account. Instructions

Debit: Unearned Revenue Credit: Rent Revenue

Indicate which accounts should be debited and credited to record an adjusting entry to increase the Insurance Expense account and decrease the Prepaid Insurance account.

Debit: Insurance Expense Credit: Prepaid Insurance

Adjusting entries to record accrued expenses typically include:

Liability account Expense account

What type of adjusting entry is required for Items that have been paid in advance, such as insurance or rent?

Prepaid items

Examples of related Expenses and Asset accounts used for prepaid item adjusting entries are as follows.

Prepaid items: Prepaid Insurance Prepaid Rent Office Supplies Expense Account: Insurance Expense Rent Expense Office Supplies Expense Asset Account: Prepaid Insurance Prepaid Rent Office Supplies

Adjusting entries for accrued revenues typically affect:

Revenue Under Profit and Loss Asset: Under Balance Sheet

Adjusting entries to record accrued revenues typically include:

Revenue account Asset account

Adjusting entries to record unearned items typically affects which of the following types of accounts:

Revenue: Under: Profit and Loss Liability: Under Balance Sheet

Match the following terms with the correct definition.

Trial Balance >> A list of each account and account balance at the end of the period before adjustments have been made. Adjusted Trial Balance A list of each account and account balance at the end of the period after adjustments have been made.

True or false: If the accounting system balances, total debits equal total credits on the Trial Balance.

True

True or false: The purpose of adjusting entries is to bring the accounts up to date at the end of an accounting period.

True

What type of adjusting entry is required for Items that a customer has paid us for, but we have not yet provided the product or service?

Unearned items

Examples of related Revenue and Liability accounts used for unearned item adjusting entries are as follows:

Unearned items: Unearned rent App Subscription Revenue Account: *Rent Revenue >> (Increase ) *App Subscription Revenue Liability Account: *Unearned Revenue >> (Decrease) *Unearned App Subscription Revenue

An adjustment to record the amount of sales earned that was prepaid by the customer would be considered a(n):

unearned item