Financial Accounting

Blank 1: expense Blank 2: payable

As of December 31, the end of the accounting period, $700 of salaries and wages owed to employees have been incurred but not paid. The employees will be paid on January 5. On December 31, Salaries and Wages ____ will be debited and Salaries and Wages ____ will be credited by $700. (Enter one word per blank.)

after the financial statements have been prepared

Closing journal entries are recorded ______. -after the financial statements have been prepared -after the post-closing trial balance is prepared -before the adjusted trial balance is prepared -before the unadjusted trial balance is prepared

-without them, the financial statements would be misleading. -adjustments ensure that the balance sheet reports all of the economic resources the company owns and all of the obligations the company owes

Adjusting entries are important because ______. (Select all that apply.) -adjustments ensure that the assets and liabilities are properly reflected in the income statement -without them, Net Income would be zero -without them, the financial statements would be misleading. -adjustments ensure that the balance sheet reports all of the economic resources the company owns and all of the obligations the company owes

-the amounts the seller has fulfilled of its obligations that were collected in advance on the debit side -the amounts received in advance that the seller has not yet fulfilled of its obligations on the credit side -the normal ending balance on the credit side

The Deferred Revenue T-account will show which of the following? (Select all that apply.) -the amounts the seller has fulfilled of its obligations that were collected in advance on the debit side -the amounts the seller has fulfilled of its obligations that were collected in advance on the credit side -the amounts received in advance that the seller has not yet fulfilled of its obligations on the credit side -the normal ending balance on the credit side -the normal ending balance on the debit side -the amounts received in advance that the seller has not yet fulfilled of its obligations on the debit side

Dividends

Which of the following is closed into Retained Earnings by debiting Retained Earnings? -Accounts Receivable -Dividends -Accounts Payable -Revenue

Interest Expense and credit to Interest Payable

The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to ______. -Interest Expense and credit to Notes Payable -Interest Payable and credit to Interest Expense -Interest Expense and credit to Interest Payable -Interest Revenue and credit to Interest Receivable -Interest Receivable and credit to Interest Revenue

-stockholders' equity will increase -assets will increase

Which of the following is true about the adjusting entry to record the revenue for which the seller has performed of its obligations but not yet collected? (Select all that apply.) -assets will decrease -stockholders' equity will decrease -liabilities will increase -stockholders' equity will increase -assets will increase -liabilities will decrease

-Adjustments ensure that the balance sheet reports all of the economic resources the company owns and all of the obligations the company owes. -Adjustments ensure the revenues the seller has performed of its obligation and expenses incurred are reflected in the income statement. -Unadjusted financial statements could present a misleading and incomplete picture of the company's financial results.

Why are the adjustments important to the preparation of the financial statements? (Check all that apply.) -Adjustments ensure that the balance sheet reports all of the economic resources the company owns and all of the obligations the company owes. -Adjustments ensure the revenues the seller has performed of its obligation and expenses incurred are reflected in the income statement. -Unadjusted financial statements could present a misleading and incomplete picture of the company's financial results. -Unadjusted financial statements will always show net income because the expense accounts have not been brought up to date.

-Deferred Revenue should be reduced for any portion the seller has fulfilled of its obligations during the current period. -Revenues the seller has performed of its obligations but not yet billed to Accounts Receivable, should be recorded as a revenue.

Why is it necessary to make adjustments to revenue accounts at the end of the accounting period? -Deferred Revenue should be reduced for any portion the seller has fulfilled of its obligations during the current period. -Revenues the seller has performed of its obligations but not yet billed to Accounts Receivable, should be recorded as a revenue. -Revenues need to be adjusted so that revenues equals the amount of cash received during the current period.

Adjusting entries

_____ ensure that the revenues recognized and expenses incurred during the period are reflected in the income statement. -Adjusting entries -Permanent accounts -Unadjusted trial balances