Accounting Chapter 4 LS

After posting the adjusting entry to record revenues for which the seller has preformed its obligations, but has not yet collected, which account will be increased?

Accounts Receivable

Describe the effect that adjustments have on liabilities

Adjustments increase liabilities for the amount of any accrued and unpaid expenses at the end of the period.

Accrual adjustments will increase balance sheet accounts for

Amounts of revenue generated and expenses incurred but not collected or paid

What do adjusting entries never include

Cash

Interest is defined as ........ and it is classified as a blank account under stockholder's equity

Cost of borrowing money Expense account in stockholders equity

The balance in the dividends account represents a reduction in retained earnings under stockholder's equity. Therefore, the dividends account has a normal what kind of balance

Debit

The adjusting entry to record revenue for services the seller has preformed but not yet collected requires

Debit to accounts receivable and credit to service revenue

Why is the balance in the depreciation expense account generally different from the balance in the accumulated depreciation account?

Depreciation expense only reflects the current period depreciation. Accumulated depreciation contains depreciation since the asset was purchased.

Adjustments help to ensure that all ................... are recorded in the period in which they are incurred

Expenses

Interest incurred but not yet paid during an accounting period, should be recorded as an expense and

Liability

How does the adjustment for depreciation differ from other deferral adjustments?

The depreciation adjustment uses a contra account rather than the asset accounts directly.

What is an accrual adjustment

They occur when an expense or revenue has been incurred, but no cash has been exchanged. The cash will be paid or received in the future.

Why are adjustments needed at the end of an accounting period?

To ensure revenues and expenses are reported in the proper period

Adjusting entries to adjust supplies or prepaid rent have what effects

Total assets are decreases on the balance sheet The carrying value of assets are decreases Total expenses on the income statement are increased

What are the effects on the financial condition of the business from the adjustments for revenues from the seller fulfilling its obligations that have not been collected yet

Total assets will increase and total stockholders equity will increase

After the adjustments have been completed, the adjusted balance in income tax expense account represents

Total income tax that has been paid and accrued during the period

True or false: The balance in the interest expense account and the balance in the interest payable account may be different after the adjustments are posted

True

What's the adjustment process

Use the adjusted trial balance to determine the accounts requiring adjustment Record and post adjusting entries Prepare a adjusted trial balance to check the equality of the debits and credits Prepare financial statements Record closing journal entries and post to accounts Prepare a post closing trial balance

The adjusting entry to record wages incurred but not yet recorded includes a credit to

Wages payable

What is the purpose of the depreciation adjustment for long lived assets?

What is the purpose of the depreciation adjustment for long lived assets?

Which of the following entries will cause assets and stockholders equity to increase? Adjusting for services provided

but not yet collected

After the adjustments have been recorded, the adjusted balance in the Prepaid rent account represents the

the amount of the prepayment that remains towards future rental periods

After the adjustments have been completed, the balance in the "salaries and wages expense" account represents

total salaries and wages, paid and unpaid, that have been incurred during the accounting period

The deferral adjustment to record the amount of service revenue collected in advance for which the company has now satisfied the performance obligation includes a ......................

Debit to deferred revenue and credit to service revenue