Ch.4 Adjustments, Financial Statement, and Financial Results

Found on the Balance Sheet

Interest Payable Prepaid rent (Assets, liabilities, and stockholders equity)

Which of the following transactions constitutes an accrual adjustment involving a revenue account?

Interest Revenue on a note receivable

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

Liability

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

cost of rent for the accounting period

Which of the following types of transactions could be an accrual adjustment?

-An increase to an asset account and an increase to a revenue account.

Entries needed for the closing process

-Credit Dividends Declared and debit Retained Earnings - Debit each revenue, credit each expense, and record the difference in Retained Earnings.

After posting the adjusting entry to record revenues for which the seller has performed of its obligations but has not yet collected, which account will be increased?

Accounts Receivable

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

Accruing for services received that have not yet been paid

A(n) ____ trail _____ is prepared ____ the adjusting entries have been recorded and ____ the Financial Statement are prepared.

Adjusting/ Balance/ after/ before

Accrual adjustments will increase balance sheet accounts for ____

Amounts when the seller performs its obligations or incurred but not yet collected or paid

The adjusting entry to record amortization causes ____

Assets to decrease Stockholders equity to decrease

Found on the income statement

Revenues & Expense

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

Credit/Decreases

The adjusting entry to record the amount of revenue for which the seller has fulfilled its obligation to its buyers which had been collected in advance requires a(n) _____(debit/credit) to Deferred Revenue and a(n) _____ (debit/credit) to Sales Revenue

Debit credit

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

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

Decrease stockholders equity Increase liabilities

The adjusting entry to record the supplies used during the period will result in a(n) ___

Decrease to Supplies and an increase to Supplies Expense

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

Depreciation

Which financial statement reports the dividends during the current accounting period?

Dividends are reported on the Statement of Retained Earnings.

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

Ensure revenues and expensesbare reported in the proper period

The _____ recognition principle requires that a portion of long lived assets be transferred to an expense account during the accounting period the asset is being used to generate revenues

Expense

In its 1st year of business, Daily Grind Inc purchased $1000 of supplies of which it only has $300 left st the end of its period. Which of the following will be found in the year end Financial statements

Supplies on the balance sheet of $300 Supplies Expense on the income statement of $700

Which of the following statements are true about the closing process?

Temporary accounts, which include revenues, expenses, and dividends are closed into Retained Earnings Permanent accounts are not closed and are reported on the balance sheet

The balance in then"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 _____

Wage Payable

The adjusted trial balance___

Will be used to determine the asset and liability balances on the balance sheet

In an accrual adjustment for expenses incurred but not yet paid _____.

a liability is increasing since cash will be paid in the future due to the expense incurred