Ch.4 Adjustments, Financial Statement, and Financial Results
Found on the Balance Sheet
Interest Payable Prepaid rent (Assets, liabilities, and stockholders equity)
Which of the following transactions constitutes an accrual adjustment involving a revenue account?
Interest Revenue on a note receivable
Interest incurred, but not yet paid during an accounting period, should be recorded as an expense and a(n) ____
Liability
After the adjustments have been completed, the balance in the Rent Expense account represents the ____
cost of rent for the accounting period
Which of the following types of transactions could be an accrual adjustment?
-An increase to an asset account and an increase to a revenue account.
Entries needed for the closing process
-Credit Dividends Declared and debit Retained Earnings - Debit each revenue, credit each expense, and record the difference in Retained Earnings.
After posting the adjusting entry to record revenues for which the seller has performed of its obligations but has not yet collected, which account will be increased?
Accounts Receivable
Which of the following adjusting entries are recorded with a debit to an expense and a credit to liability
Accruing for services received that have not yet been paid
A(n) ____ trail _____ is prepared ____ the adjusting entries have been recorded and ____ the Financial Statement are prepared.
Adjusting/ Balance/ after/ before
Accrual adjustments will increase balance sheet accounts for ____
Amounts when the seller performs its obligations or incurred but not yet collected or paid
The adjusting entry to record amortization causes ____
Assets to decrease Stockholders equity to decrease
Found on the income statement
Revenues & Expense
Accumulated Depreciation has a normal _____ balance which indicates that it ______ Total Assets
Credit/Decreases
The adjusting entry to record the amount of revenue for which the seller has fulfilled its obligation to its buyers which had been collected in advance requires a(n) _____(debit/credit) to Deferred Revenue and a(n) _____ (debit/credit) to Sales Revenue
Debit credit
Which of the following entries records the adjustment for income tax accrued, but not yet paid?
Debit income Tax Expense and credit income Tax Payable
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
The adjusting entry to record the supplies used during the period will result in a(n) ___
Decrease to Supplies and an increase to Supplies Expense
______ Expense should be recorded to recognize the use of and benefit received from long lived assets, such as equipment, during the accounting period
Depreciation
Which financial statement reports the dividends during the current accounting period?
Dividends are reported on the Statement of Retained Earnings.
Why are adjustments needed at the end of an accounting period?
Ensure revenues and expensesbare reported in the proper period
The _____ recognition principle requires that a portion of long lived assets be transferred to an expense account during the accounting period the asset is being used to generate revenues
Expense
In its 1st year of business, Daily Grind Inc purchased $1000 of supplies of which it only has $300 left st the end of its period. Which of the following will be found in the year end Financial statements
Supplies on the balance sheet of $300 Supplies Expense on the income statement of $700
Which of the following statements are true about the closing process?
Temporary accounts, which include revenues, expenses, and dividends are closed into Retained Earnings Permanent accounts are not closed and are reported on the balance sheet
The balance in then"Interest Expense" account and the balance in the "Interest Payable" account may be different after the adjustments are posted
True
The adjusting entry to record wages incurred but not yet recorded includes a credit to _____
Wage Payable
The adjusted trial balance___
Will be used to determine the asset and liability balances on the balance sheet
In an accrual adjustment for expenses incurred but not yet paid _____.
a liability is increasing since cash will be paid in the future due to the expense incurred