AC 210 Ch. 4 - LearnSmart

adjusted income before income tax expense is 10,000 tax rate is 20% what is net income?

$8,000

Net income (or loss) is recorded in the retained earnings account when _____ and _____ accounts are closed and transferred into retained earnings.

revenue; expense

After all closing process, which accounts will have zero balance?

-Expenses -Revenues -Dividends -All temporary accounts

The entry to record the payment of wages incurred in the prior accounting period is recorded with ________

Credit cash; debit Salaries and Wages payable

___ Expense should be recorded to recognize the use of and benefit received from long-lived assets, such as equipment, during the accounting period.

Depreciation

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

To ensure that all assets and liabilities are reported at appropriate amounts.

Adjusting entries to adjust Supplies or Prepaid Rent have which of the following effects?

-Total assets is decreased on the balance sheet. -The carrying value of the assets are decreased -Total expenses on the Income statement are increased

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

but not yet collected

Accrual adjustments are needed when a company has earned revenue or incurred an expense but _____ has not been exchanged.

cash

Accumulated Depreciation has a normal ______ balance which indicates that it _______ Total Assets.

credit; decreases

The adjusting entry to record revenue for the services for which the seller has performed its obligation but has not yet been billed the customer requires____.

debit income tax expense and credit income tax payable

The closing entry to close Rent Expense requires Rent Expense to be _______ and Retained Earnings to be _______.

debited; credited

The adjusting entry to record salaries and wages to employees at the end of the accounting period include a debit to "Sales and Wages ____" and a credit to "Salaries and Wages ____".

expense; payable

The Equipment account balance in a company's ledger equals its

original cost

As of Dec. 31, $2500 of interest expense has accrued on a $50,000 note Payable. The note Payable and the incurred interest will become due and Payable next year. How will the interest affect the adjustments at the end of the year?

Interest Expense should be increased because the cost in Interest related to the current period.

The adjustment for supplies used during the period will result in a debit to the ________ account and a credit to the ________ account.

Supplies Expense; Supplies

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

Total assets will increase and total stockholders' equity will increase.

Which of the following statements describes the effect that adjustments may have on liabilities?

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

what accounts are found on an unadjusted balance typically require adjusting entries?

prepaid rent, interest payable, supplies

As of December 31, the un-adjusted balance in unearned revenue contains $5,600 for un-redeemed gift cards. An analysis of the monthly sales indicates that $3,200 gift cards were redeemed during the month but not yet recorded. How will these transactions affect the adjustments at the end of the period?

-Unearned Revenue needs to be decreased by the amount of gift cards redeemed during the month. -Sales Revenue needs to be increased by the amount of gift cards redeemed during the month.

the purpose of adjusting entries for income taxes is to record income taxes ____________ the accounting period.

accrued, but not yet paid, at the end of

The annual depreciation taken on a vehicle totals $3000. The vehicle has been in service for 3 whole years and the adjusting entries have been completed for the year. at the end of the 3rd year the financial statements will report depreciation expense of __________ and Accumulated Depreciation of ___________.

$3000; $9000

The entry to record income tax accrued, but unpaid at the end of the accounting period includes both a ___ and a ___.

-credit to Income Tax Payable -debit to Income Tax Expense

Which of the following are temporary accounts that will be closed at the end of the accounting period during the closing process?

-expenses -revenues -dividends

Bristol, INC. paid $800 for a 4-month insurance policy on August 1 of the current year. On August 31, Bristol, Inc. made an adjusting entry to account for the insurance that expired during the month of August. The adjusting entry contained a debit to Insurance Expense in the amount of ___ and a credit to Prepaid Insurance in the amount of ___. The remaining balance in the Prepaid Insurance account after the adjustment was ___?

200; 200; 600

At the end of the accounting period, adjusting entries are required. Place the steps in the adjustment process in the correct order: Record the post adjusting entries, prepare financial statements, use the unadjusted trial balance to determine the accounts requiring adjustment, prepare an adjusted trial balance to check the equality of the debits and credits, record closing journal entries and post to the accounts, prepare a post-closing trial balance.

Use the unadjusted trial balance to determine the accounts requiring adjustment, record and post adjusting entries, prepare an adjusted trial balance to check the equality of the debits and credits, prepare financial statements, record closing journal entries and post to the accounts, prepare a post-closing trial balance.

A prepayment that is originally recorded as an asset will be ____.

allocated to future accounting periods based on the value of the benefit used during the period

used to record the adjusting entry for the amortization of long-term assets that lack physical substance

amortization expense accumulated amortization

After the adjustments have been completed, the adjusted balance in income Tax Payable represents the amount _______ to the government at the end of the accounting period.

owed

In accrual accounting defer means to ___________ recording the other side of the cash transaction as a revenue or expense instead the other side of the cash is recorded as a liability or Prepaid.

postpone