ACC 212 Test 2

Which of the following may require an accrual adjusting entry that is recorded with a debit to an expense and a credit to a liability? (multiple answers) - supplies used during the period - rent paid in advance - revenue for which the seller has performed it's obligation but not yet collected - interest owed on notes payable - Utilities to be paid in later accounting period - depreciation of equipment

- interest owed on notes payable - Utilities to be paid in later accounting period

The benefits of internal control procedures are that they (multiple answers)

-Enhance the reliability of accounting information -Protect against theft of assets -Improve the efficiency and effectiveness of operations

Which of the following is not a significant objective of the Sarbanes-Oxley (SOX)

...

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

Interest payable is ____________

A liability on the balance sheet and reports the amount owed

Which of the following adjusting entries entries are recorded with a debit to an expense and a credit to a liability? - Recording depreciation for the period - adjusting supplies used during the period -Accruing for services receive that have not yet been paid - purchases of inventory on account

Accruing for services receive that have not yet been paid

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

Amount of the pre-payment that remains towards future rental periods

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

But not yet collected

After the adjustments have been completed, the balance in the rent expense account represents the _____________

Cost of rent for the accounting period

The adjusting entry to record amount of revenue for which the seller has fulfilled its obligation to its buyers which had been collected in advance requires a ____________ to deferred revenue and a ____________ to sales revenue

Debit, credit

The adjusting entry to record the amount of prepaid rent used during the period requires a ______________ to rent expense and a ___________ to prepaid rent

Debit, credit

During the closing process, the closing entry to reduce the sales revenue normal account balance to zero requires the revenue account to be ___________

Debited

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

As the balance in the accumulated depreciation increases, total assets ___________ because accumulated depreciation is a _____________-account

Decrease, contra

Supplies should be ______ and Supplies Expense should be ______ for supplies used during the period.

Decreased, increased

Which of the following reconciling items does not require a journal entry?

Deposit in transit

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

Depreciation

What is the purpose of the depreciation adjustment for long-lived assets?

Depreciation allows the company to allocate the cost of an asset over the years the asset benefits the company

Adjusting entries are made at the ________ of the accounting period

End

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

Expense

The adjusting entry to record salaries and wages owed to employees at the end of the accounting period includes a debit to "salary and wages _____________ " and a credit to "salaries and wages _____________"

Expense, payable

T or F: Internal prevent and detect all errors and fraud

False

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

Increase liabilities Decrease Stockholders Equity

As of December 31, the end of the accounting period, $700 of salaries and wages owed to employees have been incurred but not paid. The employees will be paid on January 5. On December 31, salaries and wages payable will _______________ by $700 and salaries and wages __________________ will increase by $700

Increase, Expense

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

Liabilities to increase

Adjustments in sure that liabilities are reported as all amounts _________ at the end of the accounting period

Owed

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

Owed

Temporary accounts include ______________, _____________, and ________________. These accounts only track the current period's results

Revenues, expenses, dividends

Cashiers at a supermarket have to talk to a manager before approving price changes at the register. Which internal control principle is being followed?

Segregate duties

The adjustment for supplies used during the period will result in a debit the __________ account and a credit to the __________ account

Supplies expense, supplies

How does the adjustment for depreciation differ from other deferral adjustments?

The depreciation adjustment uses a contra-account rather than reducing the asset accounts directly

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 affects on the accounting equation from the adjustment for income tax expense accrued, but not paid, at the end of the accounting period

Total liabilities will increase and total stockholders equity will decrease

Cash _______________ are short term, Highly _______________ investments purchased within __________________ of maturity

equivalents, liquid, three months

If a bank reconciliation included a deposit in transit of $790, the entry to record this reconciling item would include a

nothing, because the deposit has already been recorded

_________________ of duties is essential for safeguarding assets

segregation

restricted cash is reported __________________

separately as an asset on the balance sheet

Accumulated depreciation has a normal _________ balance which indicates that it ____________ total assets

Credit, decreases

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

False

True or false: The adjusting entry to record interest owed for the period will cause the balance in the note payable account to increase

False

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

Liability

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

Paid

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

False