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