CHAPTER 4: Textbook

accural, deferral

(blank) adjustments are used when cash has not been exchanged in a prior transaction, and (blank) adjustments are used when cash has been exchanged in a prior transaction.

deferred

(blank) revenues and expenses result because the cash changed hands prior to the revenue being earned or the expense being incurred.

closing entry

CE is short for (blank: two words)

postpone

the term "defer" means to (blank) until later.

true

TRUE OR FALSE after the closing entries have been posted, the new balance in the retained earnings account will equal the retained earnings reported on the balance sheet.

False

TRUE OR FALSE the term "defer" means "in advance."

deferred

a gym that requires a three-month prepayment of membership fees, an insurance company collects one year's premium from customers in advance, and an airline that sells tickets online are examples of (blank) revenue that would need to be adjusted at the end of the accounting period.

supplies

accounts on an unadjusted trial balance that may require an adjusting entry include prepaid expenses, unearned revenue, and (blank).

revenue

accrual adjustments to record amounts earned but not yet collected include a debit to an asset account and a credit to a(n) (blank) account.

income

adjusting entries are needed in order to measure the period's net (blank) or loss, and update the accounts to their proper balances.

paid

adjusting entries are typically recorded at the end of the accounting period to ensure revenues and expenses are recorded in the period in which they occur, even though the cash will be collected or (blank) in a future period.

asset

adjustments ensure that (blank) balances are reported at amounts representing the economic benefits that remain at the end of the period and will be used-up in future periods.

liabilities

adjustments increase (blank) for the amount of any accrued and unpaid expenses at the end of the period.

benefit

adjustments reduce assets for the amounts used or expired during the period, leaving a balance that represent the economic (blank) remaining in the account.

income statement

after the closing process is complete, all (blank: two words) accounts have a zero balance.

deferred

assets represent resources with probable future benefits to the company. many assets are used over time to generate revenues, including supplies, buildings, equipment, and prepaid expenses for insurance, advertising, and rent. these assets are (blank) expenses

income statement

depreciation expense appears on the (blank: two words).

journal entries, t-accounts

during the accounting period, transactions that result in exchanges between the company and other external parties are analyzed and recorded in the general journal using (blank: two words) in chronological order, and the related accounts are updated in the general ledger (blank: hyphenated word).

debit, credits

expenses and losses have (blank) balances, and must new closed with (blank).

2/12

for a note receivable that was created on November 1, 2018 and is due for repayment on October 31, 2019, what is the time fraction needed to compute interest revenue for the year ended December 31, 2018?

may

in May, Just In Thyme, Inc. billed a customer $1,000 for services performed in May. in June, the company collected the $1,000. assuming accrual accounting, $1,000 of revenue should be recorded in (blank).

asset

interest receivable is a(n) (blank) that represents the right to collect interest.

stockholders' equity

net income appears on both the income statement and the statement of (blank: two words).

debit, credit

on December 1, Lotsa Space Company received $12,000 from a tenant for 4 months' rent in advance. the entry on December 1, includes a $12,000 (blank) to cash, and a $12,000 (blank) to unearned rent revenue.

cash, unearned rent

on December 1, Lotsa Space Company received $12,000 from a tenant for 4 months' rent in advance. the entry on December 1, includes a $12,000 debit to (blank), and a $12,000 credit to (blank: two words) revenue.

$400

on May 1, Buy & Large, Inc. had a supplies balance of $100. during May it purchased $500 of supplies on credit. at the end of May, there were $200 of supplies on hand. The amount of supplies expense for the month of may equals (blank).

debit, debit, credit

on September 1, Taggert Company paid $1800 for a 6-month insurance premium beginning September 1. Taggert will (blank) prepaid insurance for $1800 on September 1, (blank) insurance expense for $300 on September 30, and (blank) insurance expense for $1800 on September 1.

credit

on a trial balance, the following would indicate an error has been made: dividends payable has a debit balance, common stock has a debit balance, and buildings has a (blank) balance.

book, carrying

on the balance sheet, the amount that is reported for total property and equipment is the net (blank) value, also call the (blank) value.

asset

prepaid rent is a(n) (blank) and represents rend paid for in advance.

post-closing

preparing a(n) (blank: hyphenated words) trial balance is the last step in the accounting cycle.

accounts receivable

revenue is credited for amounts earned but not yet billed. (blank: two words) is the asset that is debited.

credit, debits

revenues and gains have (blank) balances and must be closed with (blank).

accrued

revenues that have been earned but have not yet been recorded at the end of the accounting period are called (blank) revenues.

retained earnings

temporary accounts with debit balances are credited and temporary accounts with credit balances are debited. the net amount, equal to net income, affects (blank: two words).

debit, credit

the adjusting entry to record the amount of revenue earned that had been collected in advance required a(n) (blank) (debit/credit) to unearned revenue and a(n) (blank) (debit/credit) to sales revenue.

temporary, zero

the closing entries have two purposes: to transfer the balances in the (blank) accounts to retained earnings, and to establish a (blank) balance in each of the temporary accounts to start the accumulation in the next accounting period.

income statement

the financial statement that reports the amount of prepaid expenses used during the accounting period is the (blank: two words).

revenue

the unearned revenue account is reduced during the adjustment process because as revenue is earned, it is removed from unearned revenue and transferred into a (blank) account.

increase, expense

when making deferral adjustments to record the amount used during the period for items such as prepaid insurance or supplies, the debit will (blank) a(n) (blank) account.