ACCT - 2110 Concept Quiz 3

Unearned revenue would be debited for $700. Service revenue would be credited for $700.

$1,000 of cash was received in advance of performing services. By the end of the period, $300 had not yet been earned. (The Unearned revenue account was increased at the time of the initial cash receipt.) Demonstrate the required adjusting journal entry by selecting from the choices below. (Check all that apply.)

Supplies expense would be debited for $300. Supplies would be credited for $300.

$1,000 of supplies were purchased at the beginning of the month. $300 were used during the month. (The Supplies account was increased at the time of the initial purchase.) Demonstrate the required adjusting journal entry by selecting from the choices below. (Check all that apply.)

Supplies expense would be debited for $600.

$800 of supplies were purchased at the beginning of the month and the Supplies account was increased. As of the end of the period, $200 of supplies still remain. Which of the following is the correct adjusting entry?

$1,250

A $300,000 building was purchased on December 1. It is estimated that it will have a life of 20 years and zero salvage value. Calculate depreciation expense for the month of December using straight-line depreciation.

Debit Salaries expense for $500.

By the end of the accounting period, employees have earned salaries of $500, but they will not be paid until the following pay period. Which of the following is the proper adjusting entry?

Debit Depreciation expense; credit Accumulated depreciation.

Choose the statement below that demonstrates the correct adjusting entry to recognize depreciation expense on a building.

Blank 1: depreciation expense Blank 2: credit Blank 3: accumulated depreciation

Demonstrate your knowledge of a depreciation adjusting entry by completing the following sentence. A depreciation adjustment would include a debit to Depreciation expense Blank 1 Blank 1 Depreciation expense , Correct Unavailable (depreciation expense/accumulated depreciation/building) and credit Blank 2 Blank 2 credit , Correct Unavailable (debit/credit) to Accumulated Depreciation Blank 3 Blank 3 Accumulated Depreciation , Correct Unavailable (depreciation expense/accumulated depreciation/building).

Unearned revenues refer to cash received in advance of providing a service or product.

Explain what unearned revenues are by choosing the correct statement below.

should be recorded when goods or services are provided to customers at an amount expected to be received

The revenue recognition principle states that revenue:

A plant asset refers to a long-term tangible asset used to produce and sell products or services.

What is a plant asset?

Wages expense, Interest expense

Which of the accounts below are considered accrued expenses? Multiple choice question. Unearned revenue, Utility expense Common Stock, Dividends Cash, Building, Equipment Wages expense, Interest expense

Supplies

Which of the following accounts is considered a prepaid expense?

Expenses should be matched in the same accounting period as the revenues that are recognized as a result of those expenses. Matching of expenses with revenues is a major part of the adjusting process.

Which of the following statements describes the expense recognition (matching) principle? (Check all that apply.)

Insurance expense would be debited for $300.

A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. Demonstrate the required adjusting journal entry on Dec. 31 by selecting from the choices below.

Blank 1: 100 Blank 2: 3,600 or 3600

On December 1, a company pays $3,600 for a 36-month insurance policy. After one month, accrual accounting requires $ (100/3,600) of insurance expense be reported on the income statement ending December 31. However, if cash basis accounting is used, $ (100/3,600) of insurance expense would be reported at the time of purchase.

credit to Prepaid insurance for $400. debit to Insurance expense for $400.

A 12-month insurance policy was purchased on Dec. 1 for $4,800 and the Prepaid insurance account was initially increased for the payment. The required adjusting journal entry on December 31 includes a: (Check all that apply.)

Blank 1: 12 Blank 2: December

A calendar year-end reporting period is defined as a (1 / 3 / 12) -month period which ends on (December/January/March) 31st.

It is a tangible long-term asset. Its original cost (minus any salvage value) is expensed over its useful life. It is reported on the balance sheet. It has a life within the business greater than one year or the current operating cycle, whichever is longer.

A plant asset can be defined by which of the following statements? (Check all that apply.)

Debit Unearned revenues for $400.

An advance payment of $1,000 for services was received on December 1 and was recorded as a liability. By the end of the year, $400 had been earned. Demonstrate the December 31 adjusting entry by choosing the correct statement below.

They are reported on a balance sheet. They are a liability. They are also called deferred revenues. They refer to cash received in advance of performing a service or product.

Explain what unearned revenues are by selecting the statements below which are correct. (Check all that apply.)

Comparability of financial statements is improved. Revenues are always recorded in the period in which they are earned. Expenses are always recognized in the period in which they are incurred.

Which of the following statements describes why accrual accounting better reflects a business's performance? (Check all that apply.) The comparability of financial statements is improved. Revenues are always recorded in the period in which they are earned. Expenses are always recognized in the period in which they are incurred. It provides a better focus and understanding of how cash is spent and why it is received.