Acc Ch.4 Extra Practice

The closing entry for dividends involves a debit to ______ and a credit to ______.

Retained Earnings; Dividends

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

to ensure that all assets and liabilities are reported at appropriate amounts and that all revenues and expenses are reported in the proper period

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

wages payable

If a company recorded an adjusting entry by debiting Interest Expense for $500 and Interest Payable for $50 in error, then the

adjusted trial balance's debits will not equal its credits

a(n) ______ trial _____ is prepared immediately _____ the adjusting entries have been recorded and _____ the financial statement are prepared

adjusted; balance; after; before

Without _______ entries, financial statements would present an incomplete and misleading picture of the company's financial position.

adjusting

How does the timing of adjusting entries differ from the accounting for daily transaction

adjustments are made at the end of the accounting period because making them on a daily basis would be inefficient

Closing journal entries are recorded

after the financial statements have been prepared

What two accounts are used to record the adjusting entry for the amortization of long-term assets that lack physical substance?

amortization expense; accumulated amortization

If an adjusting entry decreased an asset on the balance sheet, then one can conclude that

an expense was increased on the income statement

The step in the accounting cycle where entries are recorded to update retained earnings and zero out temporary accounts is referred to as the

closing process

Salaries and Wages Payable is

credited when the wages that were previously recorded paid

The balance in the Dividends account represents a reduction to Retained Earnings under stockholders' equity. Therefore, the Dividends account has a normal _______ balance.

debit

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

debit Salaries and Wages Payable ;credit Cash

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 amortization expense and a credit to accumulated amortization

The closing entry for dividends involves a debit to Retained Earnings and a credit to Dividends.The debit to Retained Earnings causes a(n) ________ in the balance of the account.

decrease

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

depreciation

Adjusting entries are made at the

end of the accounting period, while daily transactions are made throughout the accounting period.

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 ________ will be debited and Salaries and Wages _______ will be credited by $700

expenses; payable

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

The Accounts Receivable account should be

increased when adjusting at the end of the period of any revenues from fulfilling obligations to buyers which has not yet been collected or recorded

An adjusting entry affects

one balance sheet account and one income statement account

If a company records a debit to Salaries and Wage Payable and a credit to Cash, what has occurred? The company is

paying for salaries and wages that had been accrued earlier

________ ensure that the revenues recognized and expenses incurred during the period are reflected in the income statement.

Adjusting entries

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

depreciation expense: accumulated depreciation

Which of the following entries records the adjustment to revenue for which the seller has performed its obligations but has not yet been collected or billed?

Debit Accounts Receivable and credit Sales Revenue

What is the effect of the December 31 adjusting entry to record $400 of revenue for which the seller has performed for its customers but not yet collected?

Accounts Receivable should be increased by $400 and Sales Revenue should be increased by $400

Why are the adjustments important to the preparation of the financial statements?

- Adjustments ensure that the balance sheet reports all of the economic resources the company owns and all of the obligations the company owes. - Unadjusted financial statements could present a misleading and incomplete picture of the company's financial results. - Adjustments ensure the revenues the seller has performed of its obligation and expenses incurred are reflected in the income statement.