Financial Accounting Smartbook

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

decreased; increased

_______________ adjustments involve adjusting entries where the revenue has been earned or the expense has been incurred, and the cash will be collected or paid in the future.

Accrual

The adjusting entry to record revenues earned, but not yet billed (accrued revenues), affects which of the following financial statements? (Check all that apply.)

Balance sheet Statement of stockholders' equity Income statement

Which of the following depreciate over time and require an adjusting entry at the end of the accounting period?

Buildings and equipment

Which of the following accounts would be listed above Property and equipment (net of accumulated depreciation) on a classified balance sheet? (Check all that apply.)

Cash Accounts Receivable

Which of the following line items appear on a statement of stockholders' equity? (Check all that apply.)

Common stock Retained earnings from the prior period Dividends declared Net income

__________ 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.

Miss Step, the bookkeeper, forgot to record the adjusting entry for some accrued expenses during the period. This will cause which of the following items on the statement of stockholders' equity to be in error? (Check all that apply.)

Ending retained earnings Net income Total stockholders' equity

Miss Step, the bookkeeper, forgot to record the adjusting entry for some accrued expenses during the period. This will cause which of the following items on the statement of stockholders' equity to be in error? (Check all that apply.)

Ending retained earnings will be overstated. Net income will be overstated.

Why is an adjustment necessary for interest accrued on a note payable at the end of the period if the interest will not be paid until the note is due? (Check all that apply.)

Even though the interest will not be paid until a future period, the expense was actually incurred during the current accounting period. The adjustment is needed to accurately portray the interest liability of the company, all amounts owed should be reported on the balance sheet.

When should supplies be recorded as an expense?

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

Match the financial statement line item with the financial statements on which the item would appear.

Net income = Both the income statement and the statement of stockholders' equity Cash = Both the balance sheet and the statement of cash flows Dividends = The statement of stockholders' equity Accumulated depreciation = The balance sheet Depreciation expense = The income statement Retained earnings = Both the statement of stockholders' equity and the balance sheet Supplies = The balance sheet Supplies expense = The income statement

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

Revenue earned, but not yet collected, for interest on a note receivable

Which of the following are found on the balance sheet?

Supplies Accrued expenses payable Unearned revenue

Chipotle had $10 of supplies at the beginning of the period and purchased $80 of supplies during the period. At the end of the period, it had $5 of supplies on hand. After the adjusting entry has been recorded at the end of this period, the financial statements will reported which of the following? (Select all that apply.)

Supplies of $5 on the balance sheet and Supplies expense of $85 on the income statement

If there is an error in recording an adjusting entry on the income statement causing Net Income to overstated, then ______. (Check all that apply.)

Total stockholders' equity on the balance sheet will be overstated Retained Earnings on the statement of stockholders' equity will be overstated

Miss Step, the bookkeeper, forgot to record the adjusting entry for supplies used during the period. This will cause which of the following items on the statement of stockholders' equity to be overstated?

Total stockholders' equity, net income, ending retained earnings

Which of the following transactions constitute an accrual adjustment involving an expense account?

Wages incurred but not yet paid to employees as of the end of the accounting period Taxes incurred but not yet paid to the government as of the end of the accounting period

If the adjusting entry to record supplies used during the period is not recorded, then ______.

assets and stockholders' equity will be overstated

A closing entry may include a ______.

credit to Wages Expense

The post-closing trial balance checks that total _____ equal total _____ at the end of the period.

debits; credits

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

decrease

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; expense

Property and equipment, net is reported on the balance sheet at the

net book value

Accounts Receivable should be increased for ______.

revenues earned during the period, but not yet collected

Interest Receivable should be increased for ______.

revenues earned during the period, but not yet collected

After the closing entries have been posted, the new balance in the retained earnings account will equal the retained earnings reported on the balance sheet.

true