Chapter 4 Rivero

debit Supplies Expense, $7,000; credit Supplies, $7,000.

The Vintage Laundry Company purchased $8,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $1,500 on hand. The adjusting entry that should be made by the company on June 30 is:

Book value of the asset.

The difference between the cost of a depreciable asset and its related accumulated depreciation is referred to as the:

Debit to a liability and a credit to a revenue

An adjusting entry can include a

Debit to Interest Receivable and a credit to Interest Revenue.

An adjusting entry made to record accrued interest on a note receivable due next year consists of a:

They contribute to the production of revenue

Expenses are recognized when:

Debit Unearned Service Revenue and credit Service Revenue

If a business has received cash in advance of services performed and credits a liability account, the adjusting entry needed after the services are performed will be:

When the service is performed.

In a service-type business, revenue is recognized:

A debit to Insurance Expense and a credit to Prepaid Insurance for $200.

Oakville Inc. purchased a 12-month insurance policy on March 1, 2017 for $2,400. At March 31, 2017, the adjusting journal entry to record expiration of this asset will include:

Debit Rent Expense, $4,000; credit Prepaid Rent, $4,000.

On July 1 the Fisher Shoe Store paid $24,000 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Fisher Shoe Store is:

August 31

Otto's Tune-Up Shop follows the revenue recognition principle. Otto services a car on August 31. The customer picks up the vehicle on September 1 and mails the payment to Otto on September 5. Otto receives the check in the mail on September 6. When should Otto show that the revenue was recognized?

expenses with revenues

The expense recognition principle matches

Analyzing Transactions

The first required step in the accounting cycle is:

When the performance obligation is satisfied.

The revenue recognition principle dictates that revenue should be recognized in the accounting records:

liability

Unearned revenue is classified as a: