ACC 201 Chp 4 LearnSmart

Which two accounts are used to record the adjusting entry for the amortization of long-term assets that lack physical substance?

1. Accumulated Amortization 2. Amortization Expense

Which of the following adjusting entries are recorded with a debit to an expense and a credit to a liability

Accruing for services received that have not yet been paid

The adjusted trial balance should be prepared ______ the financial statements are prepared to prove the _____ of the debits and credits

Before; equality

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

But not yet collected

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

Which action will be taken in the adjusting entry to record rent expense that has expired during the month?

Debit rent expense

Which line item is reported on both the income statement and statement of retained earnings?

Net income

The carrying value of supplies represents the cost of supplies

On hand at the end of the accounting period

The balance in retained earnings prior to the closing process equals _______

The balance at the end of the previous accounting period

Deferred revenue should be reduced and revenue increased for the amount of revenue _______ during the period

The seller performs of its obligations

WHy are adjustments needed at the end of an accounting period?

To ensure revenues and expenses are reported in the proper period

Which of the following statements most accurately describes the purposes of the closing entries?

To establish zero balances in the income statement and dividend accounts and to transfer net income and dividends into retained earnings

What are the effects on the accounting equation from the adjustment for salaries and wages incurred, but not yet paid, during the accounting period?

Total liabilities will increase and stockholders' equity will decrease

True or false: After the closing entries have been posted, the new balance in the retained earnings account will equal the retained earnings reported on the balance sheet

True

True or false: Dividends paid are not reported on the income statement because they are not classified as expenses

True

True or false: The balance in the "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 ______

Wages Payable

A(n) _____ trial ______ is prepared immediately ______ the adjusting entries have been recorded and ______ the financial statement are prepared.

1. Adjusted 2. Balance 3. After 4. Before

The adjusting entry to record the amortization of a long-term asset that lacks physical substance includes a debit to ______ and a credit to ______

1. Amortization expense 2. Accumulated Amortization

Place the steps in the adjustment process in order. Drag the items to put them in the proper order with the first step on top

1. Analyze the accounts to determine the amount of the adjustment 2. Record the adjusting entry in the journal 3. Summarize the adjusting entries in the accounts

The adjusting entry to records the amount of prepaid rent used during the period requires a _______ to rent expense and a ______ to prepaid rent

1. Debit 2. Credit

Identify the entries needed for the closing process

1. Debit each revenue, credit each expense, and record the differences in retained earnings 2. Credit dividends and debit retained earnings

The adjusting entry to record depreciation on equipment includes a ______

1. Debit to Depreciation Expense 2. Credit to Accumulated Depreciation

As of December 31 (the end of the accounting period), ABC company has a profit before tax of $12,000. The company's tax rate is 25%. The adjustment will include a(n) ______ of $_______ to income tax payable

1. Increase 2. 3,000

______ is defined as the "cost of borrowing money." Since the accountant represents a cost incurred on borrowed money. It is classified as a(n) ______ account under stockholders' equity

1. Interest 2. Expense

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

After the adjustments have been recorded, the adjusted balance in the prepaid rent account represents the ______

Amount of the prepayment that remains towards future rental periods

Match each financial statement line item with the appropriate description Supplies

Amount remaining and reported on the balance sheet

Match each financial statement line item with the appropriate description Supplies Expense

Amount used and reported on the income statement

Match each financial statement line item with the appropriate description Accounts payable

Amounts owed for supplies purchased on account

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

Depreciation

______ is the process of allocating the cost of buildings, vehicles, and equipment to expense over time as they are used

Depreciation

Which financial statement reports the dividends during the current accounting period

Dividends are reported on the statement of retained earnings

True or false: A contra-account, such as accumulated depreciation, will have a normal debit balance

False

True or false: Adjustments ensure that assets on the balance sheet are reported at amounts that have been used up or expired during the period.

False

True or false: Since retained earnings is involved in the closing process, it is considered a temporary account

False

The adjustment for supplies used during the period will result in a(n) ______ to the supplies expense account

Increase

The accounts receivable account should be _____ when adjusting at the end of the period for any revenues from fulfilling obligations to buyers which has not yet been collected or recorded

Increased

Which of the following statements is correct regarding the adjustment to record interest accrued on a note payable?

Interest on the note payable is classified as an expense since it is a cost of borrowing

After the adjustments have been completed, the adjusted balance in the interest payable accounts represents ______

Interest that has been accrued, but has not been paid, at the end of the period

Permanent accounts are found on ______

Only the balance sheet

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

Original cost

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

Salaries and wages payable is recorded for salaries and wages incurred, but not yet ______ to employees, at the end of the accounting period

Paid

Closing entries move the balances from the _____ accounts into the retained earnings account

Temporary

Which of the following is incorrect regarding income tax payable account

The account represents tax refunds due to the company

Which of the following accounts are found on an income statement?

1. Sales revenue 2. Interest expense 3. Rent expense

The adjusting entry to record amortization causes ______

1. Stockholders' equity to decrease 2. Assets to decrease

Adjusting entries to adjust supplies or prepaid rent have which of the following effects?

1. The carrying value of the assets are decreased 2. Total assets is decreased on the balance sheet 3. Total expenses on the income statement are increased

After the adjustments have been completed, the adjusted balance in the Interest Expense account represents _____

Interest that has been paid during the accounting period & Total interest that has been paid and/or accrued during the period

Interest incurred, but not yet paid during an accounting period, should be recorded as an expense and a(n) ______

Liability

As the balance in the Accumulated Depreciation increases, total assets ______ because accumulated depreciation is a ______-account

1. Decrease 2. Contra

As of December 31, the unadjusted balance in Deferred Revenue contains $5,600 for unredeemed 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?

1. Deferred revenue needs to be decreased by the amount of gift cards redeemed during the month 2. Sales revenue needs to be increased by the amount of gift cards redeemed during the month

Which of the following line items are found on a statement of retained earnings?

1. Dividends 2. Net income

The adjusting entry a company would record for the amount of wages incurred but not yet paid will cause which of the following?

1.Increase in liabilities 2. Decrease stockholders' equity

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

1. Dividends 2. Expenses 3. Revenues

The adjusting entry to record revenue for services the seller has performed but not yet collected requires ______

A debit to accounts receivable and credit to service revenue

The adjusting entry for income taxes records income tax that is incurred and ______ by the company

Owed