accounting learnsmart 4

Adjusting entries are made at the _________ of the accounting period, while daily transactions are made throughout the accounting period. (Enter one word per blank.)

end

Adjustments help to ensure that all ______ are recorded in the period in which they are incurred.

expenses

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

Balance sheet accounts, such as Supplies or Prepaid rent, __________ (increase/decrease) as a result of deferral adjustments. (Enter one word per blank.)

increase

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

Adjustments ensure that liabilities are reported as all amounts ______ at the end of the accounting period.

owed

When should supplies be recorded as an expense?

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

Accrual adjustments will increase balance sheet accounts for ______.

amounts of revenue generated and expenses incurred but not yet collected or paid

Deferral adjustments affect the balance sheet by ______.

decreasing assets for amounts used and liabilities for amounts of services/goods delivered to customers

The two categories of adjusting entries include ______ adjustments and ______ adjustments.

deferral accrual

The two groups of adjusting entries are ______ entries.

deferrals and accruals

Beauty and the Bistro, Inc. had $5,000 of supplies available to use during the year. At the end of the year, it recorded an adjusting entry for $4,500 for the amount used during the year. Supplies on the balance sheet equals ______.

$500

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.

- analyze the accounts to determine the amount of adjustment - record the adjusting entry in the journal - summarize the adjusting entries in the account

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

- prepare the adjusting entries - prepare an adjusted trial balance - prepare the financial statements

How can accrual adjustments for interest on loans to others that have not yet been collected affect the balance sheet and the income statement?

Accrual adjustments can increase assets and increase revenues

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

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

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

How do deferral adjustments for prepaid expenses—such as rent—that were initially recorded as assets affect assets on the balance sheet and expenses on the income statement?

Deferral adjustments decrease assets and increase expenses.

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

Unadjusted trial balance

Adjusting entries include __________ adjustments for revenues from providing goods or services that have not yet been collected and expenses incurred but not yet paid. They also include adjustments for amounts collected in advance of providing the goods or services and expenses incurred that were previously recorded as assets. (Enter one word per blank.)

accural deferral

____________ adjustments are used when cash has not been exchanged in a prior transaction, and _____________ adjustments are used when cash has been exchanged in a prior transaction. (Enter one word per blank.)

accural, deferral

True or false: Supplies is an asset account because it contains the value of supplies that have not been used, but still remain an economic resource for the company.

true

Which of the following account balances will typically be reduced as a result of adjusting entries? (Select all that apply.)

Prepaid Rent Supplies Deferred Revenue

Adjusting entries are required to ______.

adjust the unadjusted balances to the desired balances

Adjustments ensure that Blank______ balances are reported at amounts representing the economic benefits that remain at the end of the current period.

assets

The two categories of adjusting entries include ______ adjustments and ______ adjustments.

idk

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

liabilities to increase