Quiz 7: ADJUSTING ENTRIES

How many of the following events would require an expense to be recorded? -Ordering office supplies -Hiring a receptionist -Paying employees' salaries for the current month -Receiving but not paying a current utility bill -Paying for insurance in advance

2

ABC opened for business on January 1, 2018, and paid for two insurance policies effective that date. The liability policy was $54,000 for 18 months, and the crop damage policy was $18,000 for a two-year term. What was the balance in ABC's Prepaid Insurance account as of December 31, 2018?

27,000

A company has the following transactions: 1. Pay employees' salaries for the current period. 2. Pay rent in advance. 3. Pay dividends to stockholders in the current period. 4. Receive (but do not pay) a utility bill. 5. Use supplies previously purchased. How many of these transactions result in an expense being reported in the current period using accrual-basis accounting?

3

ABC paid dividends of:$2,500, $0, $1,500 and $2,000 over the first four years of the company's existence. If Retained Earnings after year four has an ending balance of $8,000, what is the average annual amount of net income (loss) over the past four years for ABC?

3,500

The adjusting entry required when amounts previously recorded as deferred revenues are earned by providing goods or services to customers includes:

A debit to a liability

Receiving a utility bill for costs in the current period but delaying payment until the following period is an example of a(n):

Accrued expense

Which of the following are made ONLY at year end Transaction Entries Adjusting Entries Closing Entries

Adjusting Entries Closing Entries

ABC purchases inventory for $2,000 and incurs shipping costs of $100 for the goods to be delivered. To record this transaction, the company debits Inventory for $2,000, debits Selling Expenses for $100, and credits Cash for $2,100. Which of the following statements is correct?

Assets are understated

A company orders office supplies in June. Those supplies are received and paid for in July. The supplies are used in August. In which month should the company record supplies expense?

August

The ultimate goal of doing accounting is to

Bill the client

Which of the following are made AFTER the financial statements are prepared? Transaction Entries Adjusting Entries Closing Entries

Closing Entries

ABC provides music for special occasions. On January 14, the Smith family hired ABC for an upcoming family wedding for an agreed upon fee of $10,000. The wedding was scheduled for May As part of the agreement, the Smiths paid ABC half of the fee at the end of April with the remaining amount due by the end of June. How would ABC record the receipt of the final payment in June?

Credit to Accounts Receivable

At the beginning of December, ABC had $2,000 in supplies on hand. During the month, supplies purchased amounted to $3,000, but by the end of the month the supplies balance was only $800. What is the appropriate month-end adjusting entry?

Debit Supplies Expense $4,200, credit Supplies $4,200

Receiving cash from customers before services are performed results in:

Deferred Revenues

When a magazine sells one-year subscriptions to customers but receives the full amount of cash immediately, it is an example of a(n):

Deferred revenue

When a company pays cash for equipment, what is the effect on the accounting equation for that company?

No Change

Which of the following events would require an expense to be recorded -Ordering office supplies -Paying employees' salaries for the current month -Hiring a receptionist -Paying for insurance in advance -Receiving but not paying a current utility bill

Paying employees' salaries for the current month Receiving but not paying a current utility bill

An example of an adjusting entry would not include:

Paying salaries to company employees

Which of these transactions increased the given company's total assets Purchased equipment by signing a note payable Issued common stock for cash Paid rent for the current month Collected cash from customers on account

Purchased equipment by signing a note payable Issued common stock for cash

When a company makes an end-of-period adjusting entry that includes a credit to Prepaid Rent, the debit is usually made to

Rent Expense

When a company makes an end-of-period adjusting entry that includes a credit to Prepaid Rent, the debit is usually made to:

Rent Expense

When a company makes an end-of-period adjusting entry, which includes a debit to Supplies Expense, the usual credit entry is made to:

Supplies

A company receives a $50,000 cash deposit from a customer on October 15 but will not provide services until November 20. Which of the following statements is true?

The company records deferred revenue on October 15

If a company records cash received for services to be provided in the future with a debit to Cash and a credit to Service Revenue, how will this error affect total assets for the current period?

Total assets will be correct

Which of the following are made BEFORE a trial balance is prepared? Transaction Entries Adjusting Entries Closing Entries

Transaction Entries

Which of the following are made when the business does something? Transaction Entries Adjusting Entries Closing Entries

Transaction Entries

Investors and Creditors are interested in which of these entries? Transaction Entries Adjusting Entries Closing Entries

Transaction Entries Adjusting Entries

For which of the following must Debits equal Credits? Transaction Entries Adjusting Entries Closing Entries

Transaction Entries Adjusting Entries Closing Entries

Which of the following is/are made BEFORE the financial statements are prepared Transaction Entries Adjusting Entries Closing Entries

Transaction Entries Adjusting Entries

The adjusting entry required when amounts previously recorded as deferred revenues are earned by providing goods or services to customers includes:

a debit to a liability

The owner of an office building should report rent collected in advance as a debit to Cash and a credit to:

a liability

Which of the following items would not appear in an income statement?

cash

What do we end with in a bathtub

ending balance

The Change in the Bathtub equals

increase - decrease

In a Big Bath, a firm

increases Expenses

Periodic Inventory Accounting is

less expensive to maintain than Perpetual Inventory Accounting

Permanent accounts are found:

on the balance sheet

Temporary accounts are found

on the income statement

What do we start with in a bathtub

opening balance

All balance sheet accounts are

permanent

All income statement accounts are

temporary

Prior to year-end adjusting entries, what would explain the Allowance for Uncollectible Accounts having a debit balance?

the amount of actual uncollectible accounts in the current year was greater than the estimate of uncollectible accounts made at the end of the prior year