ACCT Ch.4.1

Sonic Gateway purchased $1,000 of app software that is estimated to have four years of usefulness. The adjusting entry to record the amortization includes a debit to _______ and a credit to ________

Amortization Expense; Accumulated Amortization

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

In recording an accrual adjustment to account for revenues earned but not yet collected, __________

An asset is increased since cash will be collected at a later date

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

Place the steps taken at the end of the accounting period to complete the financial statement preparation process in the correct order

1.) Prepare the adjusting entries 2.) Prepare an adjusted trial balance 3.) Prepare the financial statements

The adjusting entry to record services earned but not yet billed requires _________

A debit to Accounts Receivable and credit to Service Revenue

How do accrual adjustments affect liabilities and expenses ?

Accrual adjustments can increase liabilities and increase expenses

Which report is constructed immediately prior to preparing the financial statements with the purpose of demonstrating that the accounts balance?

Adjusted trial balance

A deferral adjustment reduces the balance in a(n) _________ account on the balance sheet and transfers that reduction into a(n) _______ account on the income statement

Asset; expense

Long-lived assets, such as equipment, are reported at their _______ value on the balance sheet which is the _______

Carrying; cost less accumulated depreciation

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

Cash

After the adjustments have been completed, the balance in the Rent Expense account represents the ________

Cost of the rent for the accounting period

If an asset account such as Equipment has a normal debit balance, the associated contra-account should have a normal _______ balance

Credit

The adjusting entry for supplies used during the period requires a ________ to Supplies and a ________ to Supplies expense

Credit; debit

The Accounts Receivable account should be ________ when adjusting at the end of the period for any revenues that have been earned but not yet collected or recorded

Debited

Balance sheet accounts, such as Supplies or Prepaid rent, __________ as a result of deferral adjustments

Decrease

The adjusting entry to record the amount earned that previously had been collected in advance will ________

Decrease liabilities and increase revenues

Adjustments help to ensure that all revenues are recorded in the period in which they are _________

Earned

Unearned Revenue should be reduced and Revenue increased for the amount of revenue ________ during the period

Earned

Adjusting entries are made at the _______ of the accounting period, while daily transactions are made throughout the accounting period

End

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

False: Adjustments ensure that assets report their economic benefit remaining, not the amount that has been used up or expired during the period. The related on the expense on the income statement is the amount used or expired during the accounting period

When should supplies be recorded as an expense?

In the period the supplies are used, regardless of when they were purchased

When making deferral adjustments to record the amount used during the period for items such as Prepaid Insurance or Supplies, the debit will _______ a(n) ________ account

Increase;Expense

As of December 31, $2,500 of interest expense has accrued on a $50,000 note payable. The note payable and the accrual interest will become due and payable next year. How will the interest affect the adjustments at the end of the period?

Interest Expense should be increased, because the cost of interest relates to the current period

The accrual adjustment recorded to adjust for expenses incurred but not yet paid will cause _________

Liabilities to increase

Amortization is the expensing of ________

Long-term assets that lack physical substance

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

Adjustments to revenue accounts at the end of the accounting period are made to adhere to accrual accounting principals, specifically the _________ principal

Revenue-recognition

When will Accounts Receivable be involved in an adjusting entry?

Revenues are earned but have not been collected or recorded at the end of the period

Which of the following statements is correct regarding the adjustment for salaries and wages accrued but not paid at the end of the accounting period?

Salaries and Wages Expense will increase by the amount of the unpaid salaries and wages

After the adjustments have been recorded, Unearned Revenue on the balance sheet reports the amount of ________

The sales or services still owned to the customer

What are the effects on the accounting equation from the adjustment for depreciation?

Total assets will decrease and total stockholders' equity will decrease

What is a good starting point for determining which accounts require adjustments?

Unadjusted trial balance

After adjustments have been completed, the adjusted balance in the Supplies Expense account represents the cost of supplies ________

Used during the accounting period

Deferring a revenue or expense account in accounting means that the amount ________

Will be reported as a revenue or an expense in a later period

Adjustments ensure that ___________ balances are reported at amounts representing the economic benefits that remain at the end of the period and will be used-up in future periods

asset

Sterling Company paid $1,200 for 3 months of rent on April 1 of the current year. On April 30, Sterling Company made an adjusting entry to account for the rent that expired during the month of April. The adjusting entry contained a debit to Rent Expense in the amount of $______ and a credit to Prepaid Rent in the amount of $______. The remaining balance in the Prepaid Rent account after the adjustment was $______.

~400 ~400 ~800

The adjustment entry to record depreciation on equipment includes a ________

-Credit to Accumulated Depreciation -Debit to Depreciation Expense

Which of the following types of transactions represent accrual adjustments?

-Increase to Income Taxes Payable and increase to Taxes Expense -Increase to Interest Payable and increase to Interest Expense

Which of the following account balances will typically be increased as a result of adjusting entries?

-Supplies Expense* -Supplies -Prepaid Rent -Cash -Unearned Revenue -Interset Payable*

As of December 31, the unadjusted balance in Unearned 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?

-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 adjusting entry to record depreciation on equipment includes a ________

-Debit to Depreciation Expense -Credit To Accumulated Depreciation

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

-Debit to Income Tax Expense -Credit to Income Tax Payable

Accrual adjustments include either a debit to a(n) __________ account and a credit to a liability account OR a debit to an asset account and a credit to a(n) ________ account. Deferral adjustments include a debit to a liability account and a credit to a(n) _________ account OR a debit to a(n) _________ account and a credit to an asset account

Expense; revenue; revenue; expense