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.
