Accounting Chapter 4 LS
After posting the adjusting entry to record revenues for which the seller has preformed its obligations, but has not yet collected, which account will be increased?
Accounts Receivable
Describe the effect that adjustments have on liabilities
Adjustments increase liabilities for the amount of any accrued and unpaid expenses at the end of the period.
Accrual adjustments will increase balance sheet accounts for
Amounts of revenue generated and expenses incurred but not collected or paid
What do adjusting entries never include
Cash
Interest is defined as ........ and it is classified as a blank account under stockholder's equity
Cost of borrowing money Expense account in stockholders equity
The balance in the dividends account represents a reduction in retained earnings under stockholder's equity. Therefore, the dividends account has a normal what kind of balance
Debit
The adjusting entry to record revenue for services the seller has preformed but not yet collected requires
Debit to accounts receivable and credit to service revenue
Why is the balance in the depreciation expense account generally different from the balance in the accumulated depreciation account?
Depreciation expense only reflects the current period depreciation. Accumulated depreciation contains depreciation since the asset was purchased.
Adjustments help to ensure that all ................... are recorded in the period in which they are incurred
Expenses
Interest incurred but not yet paid during an accounting period, should be recorded as an expense and
Liability
How does the adjustment for depreciation differ from other deferral adjustments?
The depreciation adjustment uses a contra account rather than the asset accounts directly.
What is an accrual adjustment
They occur when an expense or revenue has been incurred, but no cash has been exchanged. The cash will be paid or received in the future.
Why are adjustments needed at the end of an accounting period?
To ensure revenues and expenses are reported in the proper period
Adjusting entries to adjust supplies or prepaid rent have what effects
Total assets are decreases on the balance sheet The carrying value of assets are decreases Total expenses on the income statement are increased
What are the effects on the financial condition of the business from the adjustments for revenues from the seller fulfilling its obligations that have not been collected yet
Total assets will increase and total stockholders equity will increase
After the adjustments have been completed, the adjusted balance in income tax expense account represents
Total income tax that has been paid and accrued during the period
True or false: The balance in the interest expense account and the balance in the interest payable account may be different after the adjustments are posted
True
What's the adjustment process
Use the adjusted trial balance to determine the accounts requiring adjustment Record and post adjusting entries Prepare a adjusted trial balance to check the equality of the debits and credits Prepare financial statements Record closing journal entries and post to accounts Prepare a post closing trial balance
The adjusting entry to record wages incurred but not yet recorded includes a credit to
Wages payable
What is the purpose of the depreciation adjustment for long lived assets?
What is the purpose of the depreciation adjustment for long lived assets?
Which of the following entries will cause assets and stockholders equity to increase? Adjusting for services provided
but not yet collected
After the adjustments have been recorded, the adjusted balance in the Prepaid rent account represents the
the amount of the prepayment that remains towards future rental periods
After the adjustments have been completed, the balance in the "salaries and wages expense" account represents
total salaries and wages, paid and unpaid, that have been incurred during the accounting period
The deferral adjustment to record the amount of service revenue collected in advance for which the company has now satisfied the performance obligation includes a ......................
Debit to deferred revenue and credit to service revenue
