Astronomy

When should supplies be recorded as an expense?

In the period the supplies are used, regardless of when they were purchased

Andy records an adjusting entry for deferred revenue. Andy should:

credit a revenue account debit a liability account

An adjusting entry for accrued expenses involves:

debit to an expense credit to a liability

An adjusting entry is necessary to record interest expense at year-end because the interest:

has already been incurred

intrest

is defined as the "cost of borrowing money."

Adjusting entries:

update the accounts to their proper balances. are needed before financial statement preparation.

depreciation

The process of allocating the cost of an asset to expense over the useful life of the asset is called

Supplies should be ______ and Supplies Expense should be ______ for the cost of supplies used up during the period.

decreased; increased

The adjusting entry for a deferred revenue includes a debit to a(n)_____ account and a credit to a(n) ________ account.

liability; revenue

At year-end, companies that utilize accrual-based accounting systems complete the measurement process through

recording of adjusting entries

Adjusting Entries:

-update the accounts to their proper balances - are needed before financial statement preparation

A primary purpose of adjusting entries is to record events that

have occurred but that have not yet been recorded

How do adjusting entries for accrued expenses affect liabilities and expenses?

Adjusting entries for accrued expenses can increase liabilities and decrease expenses.

A prepayment is originally recorded as an asset. An adjusting entry at the end of the accounting period results in a(n) ______ in the asset account and a(n) ______ in the expense account.

Decreasing, Increasing

1.

Deferred revenue arises when a business receives cash in one period, but does not provide all of the related goods or services until a later period.

expense

If an adjusting entry's credit is to a liability account, then the debit must be to ______.

In an adjusting entry for expenses incurred but not yet paid ______.

a liability is increasing since cash will be paid in the future due to the expense incurred

To complete the measurement process, companies need to update balances of assets, liabilities, revenues and expenses for changes created by _____ entries

adjusted

In recording an accrual adjusting entry to account for revenues earned but not yet collected, ______.

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

Prepaid insurance is a(n) ______.

asset in the balance sheet

After the adjusting entries have been completed, the adjusted balance in the Supplies Expense account represents the cost of supplies:

used during the accounting period

liability

Deferred revenue is a(n) ______. asset

The adjusting entry for an accrued revenue always includes:

a debit to an asset account a credit to a revenue account

Adjusting entries for accrued expenses ensure that liabilities are reported for all amounts ______ at the end of the accounting period.

owed