ACC-2010 Quiz 4

The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is:

Accrued

Depreciation is the process of:

Allocating the cost of an asset to the periods in which it is used

Closing entries

Cause the revenue and expense accounts to have 0 balances

Under the cash basis of accounting

Cash must be received before revenue is recognized

A company purchased office supplies costing $5000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $900 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

Debit supplies expense, $4100; credit supplies, $4100

The Vintage Laundry Company purchased $8500 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 $1500 on hand. The adjusting entry that should be made by the company on June 30 is

Debit supplies expense, $7000; Credit supplies, $7000

Baden Industries borrows $20000 at 7% annual interest for six months on October 1st, 2017. Which is the appropriate entry to accrue interest if Baden employs a December 31st, 2017, fiscal year?

Interest expense $350 Interest payable $350

A flower shop makes a large sale for $1,000 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,000 considered to be recognized?

November 30

Which types of accounts will appear in the post-closing trial balance?

Permanent Accounts

Merando Industries employs a 5-day workweek and a September 30 year-end. Normal weekly wages amount to $36000. If September 30 ends on a Wednesday, what is the appropriate journal entry at fiscal year-end?

Salaries and Wages Expense $21600 Salaries and Wages Payable $21600

Based on the account balances below, what is the total of the debit and credit columns of the adjusted trial balance? Service revenue $5300 Equipment $7400 Cash 2525 Prepaid insurance 1225 Unearned service revenue 5320 Depreciation expense 640 Salaries and wages expense 1050 Accum. depreciation 1280 Common stock 390 Retained earnings 550

Service rev + Unearned service rev+ Common stock +retained earnings

Foley Marketing received $60000 from a customer on January 2nd, 2017 to be on retainer for the next 2 years. The appropriate journal entry to recognize earned revenue at Foley's fiscal year-end on December 31st, 2017 would be ____________.

Unearned revenue $30000 Service Revenue $30000

The expense recognition principle matches

expenses with revenues

Prepaid expenses are

paid and recorded in an asset account before they are used or consumed

An adjusted trial balance:

proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made.

Unearned revenues are:

received and recorded as liabilites before they are recognized

law firm received $2000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause:

revenues to be understated