AC 210 Learnsmart 4

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

When recording an adjustment for the use of equipment during the current accounting period which two accounts are affected?

Accumulated Depreciation and Depreciation Expense

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

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

Supplies Expense Supplies Accounts Payable

Amount used and reported on the income statement Amount remaining and used on the balance sheet Amount owed for supplies purchased on account

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

Credit to Income Tax Payble Debit to Income Tax Expense

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

Debit Rent Expense

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

Debit Salaries and Wages payble Credit cash

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

Depreciation

The adjusting entry to record depreciation, includes a debit to _____ and a credit to _____.

Depreciation expense Accumulated depreciation

The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to "Interest _____" and a credit to "Interest _____."

Expense and Payable

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

Expense and Payable

Which of the following types of transactions represent accrual adjustments?

Increase to Income Taxes Payable and Increase to Income Taxes Expense

Which of the following types of transactions represents accrual adjustments?

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

____ expense or accrues throughout the accounting period on Notes Payable.

Interest

Operations Reporting Compliance Risk Abatement

Objective is to ensure the efficient and effective completion of work and the protection of assets. Objective is to produce reliable and timely accounting information Objective is to focus on adhering to laws and regulations This is not an objective

Which of the following duties should not be the responsibility of an employee who has access to cash?

Perform bank reconciliations Record cash collected in journal

Which of the following accounts are found on a balance sheet?

Prepaid Rent Interest Payable

Which line item on the adjusted trial balance reports its beginning balance but on the balance sheet reports its ending balance?

Retained Earnings

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

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' increase

After the adjustments have been completed, the adjusted balance in Income Tax Expense account represents _____.

Total income tax that has been paid or accrued during the period.

What are the effects on the accounting equation from the adjustment for which the seller has satisfied the performance obligation to its buyers during the accounting period that has previously been recorded as a liability?

Total liabilities will decrease and total stockholders' equity will increase

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 total stockholders' equity will decrease

Interest Payable is _____.

a liability on the balance sheet and reports the amount owed.

Adjustment 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.

acccount

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

Accrual adjustments will increase balance sheet accounts for _____.

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

Accrual adjustments are needed when a company has provided goods or services to customers or incurred an expense but _____ has not been exchanged.

cash

Adjusting entries never affect the asset account called _____.

cash

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

credit

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

credit decreases

The adjusting entry to record depreciation on equipment includes a ____.

credit to accumulated depreciation debit to depreciation expense

salaries and wages payble is _____.

debited when the wages that were previously recorded are paid.

A prepayment is originally recorded as an asset. Later at the end of the accounting period, an adjustment is recorded causing a(n) _____ in the asset account and a(n) ____ in the expense account.

decrease; increase

Adjustments made to expense accounts at the end of the accounting period adhere to the ___ recognition (matching) principle

expense

Initially a prepayment for items such as rent or insurance are recorded as assets and later are recorded as a(n) _____ in the period the benefit expires.

expense

The ____ recognition principle requires an adjustment for income tax expenses owed attributable to the net income earned during the current period.

expense

In the closing process, ____ are zeroed out by crediting each account and ____ are zeroed out by debiting each account.

expenses and dividends; revenues

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 and expense

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 Payble

increase of $3,000

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

Adjustments ensure that liabilities are reported as all amount ___ at the end of the accounting period.

owed

Closing entries move the balances from the _____ accounts into the Retained Earnings account.

temporary

After the adjustments have been completed, the balance in the "Salaries and Wages Expense" account represents ____.

total salaries and wages, paid and unpaid, that have been incurred during the accounting period.

To determine the adjusting entries required, a(n) _____ is prepared.

unadjusted trial balance

The adjusting entry to record wages incurred but not yet recorded includes a credit to ____.

wages payable

The adjusted trial balance _____.

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