Question 1

At December 31, 2011, before any year-end adjustments, Cable Car Company's Insurance Expense account had a balance of $1,450 and its Prepaid Insurance account had a balance of $3,800.It was determined that $3,000 of the Prepaid Insurance had expired.The adjusted balance for Insurance Expense for the year would be

Accepted Answer

The expired prepaid insurance of $3,000 should be added to the existing insurance expense of $1,450, resulting in an adjusted insurance expense of $4,450.

Question 2

Hercules Company purchased a computer for $3,600 on December 1.It is estimated that annual depreciation on the computer will be $720.If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

Accepted Answer

The depreciation for one month (December) is calculated as $720 annual depreciation divided by 12 months, resulting in $60.

Question 3

If a company fails to make an adjusting entry to record supplies expense, then

Accepted Answer

The answer of If a company fails to make an...

Question 4

A new accountant working for Unitas Company records $800 Depreciation Expense on store equipment as follows: $\begin{array} { l  }
 \text { Depreciation Expense }&800 \
 \text { Cash}& &800\
\end{array}$
 The effect of this entry is to

Accepted Answer

The entry incorrectly reduces cash instead of accumulated depreciation, leading to an overstatement of the book value of the assets.

Question 5

Depreciation expense for a period is computed by taking the

Accepted Answer

The answer of Depreciation expense for a period is computed...

Question 6

Unearned revenues are

Accepted Answer

Unearned revenues are received in advance and recorded as a liability because the payment has been received but the goods or services have not yet been provided. Once the goods or services are delivered, the unearned revenue is recognized as revenue and the liability is reduced.

Question 7

An asset-expense relationship exists with

Accepted Answer

Prepaid expense adjusting entries establish an asset-expense relationship because they involve recording expenses that have been paid in advance and are recognized as assets until the benefit is actually consumed or the service period lapses, at which point they are expensed.

Question 8

Depreciation is the process of

Accepted Answer

Depreciation is the process of allocating the cost of an asset to expense over its useful life in a rational and systematic manner. This is done to match the cost of using the asset with the revenue earned from using the asset. Therefore, option C is the correct answer. Option A is incorrect because fair value is not used in the process of depreciation. Option B is incorrect because assets are not increased in value over their useful life, but rather their cost is allocated to expense. Option D is incorrect because assets are not written down to their real value each accounting period.

Question 9

The balance in the office supplies account on June 1 was $5,200, supplies purchased during June were $2,500, and the supplies on hand at June 30 were $2,000.The amount to be used for the appropriate adjusting entry is

Accepted Answer

The answer of The balance in the office supplies account...

Question 10

Bee-In-The-Bonnet Company purchased office supplies costing $8,000 and debited Office Supplies for the full amount.At the end of the accounting period, a physical count of office supplies revealed $3,200 still on hand.The appropriate adjusting journal entry to be made at the end of the period would be

Accepted Answer

The company initially recorded the entire $8,000 as Office Supplies. At the end of the period, $3,200 worth of supplies remain, meaning $4,800 ($8,000 - $3,200) were used. The adjusting entry should reflect the used supplies as an expense: Debit Office Supplies Expense $4,800 and Credit Office Supplies $4,800.

Question 11

Which of the following reflect the balances of prepayment accounts prior to adjustment?

Accepted Answer

Prepayment accounts represent payments made in advance for goods or services that will be received in the future. Prior to adjustment, these accounts are typically overstated on the statement of financial position because the full amount of the payment has been recorded, but the portion that relates to the current period has not yet been recognized as an expense on the income statement. As a result, the income statement accounts are typically understated because the expense has not been recognized. Choice C reflects this understanding.

Question 12

What is the proper adjusting entry at June 30 , the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $€ 20,500$, and unexpired amounts per analysis of policies of $€ 6,000 ?$

Accepted Answer

The expired portion of the prepaid insurance is $€ 20,500 - € 6,000 = € 14,500$. Therefore, the adjusting entry should debit Insurance Expense and credit Prepaid Insurance for $€ 14,500$.

Question 13

Accumulated Depreciation is

Accepted Answer

Accumulated Depreciation is a contra asset account which reduces the value of the corresponding asset account on the balance sheet. It represents the total amount of depreciation expense that has been charged to the asset over its useful life.

Question 14

Accrued expenses are

Accepted Answer

Accrued expenses are expenses that have been incurred but not yet paid. They are recorded as a liability because they represent a debt that has not been paid. Example of accrued expenses includes salaries and wages, interest, rent, and utilities.

Question 15

Action Real Estate received a check for $18,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client.Unearned Rent was credited for the full $18,000.Financial statements will be prepared on July 31.Action Real Estate should make the following adjusting entry on July 31:

Accepted Answer

The answer of Action Real Estate received a check for...

Question 16

A liability-revenue relationship exists with

Accepted Answer

Unearned revenue adjusting entries involve recognizing revenue that has been received but not yet earned. This creates a liability on the balance sheet, as the company now owes the customer a good or service. As the company delivers the good or service, the liability decreases and revenue is recognized. Therefore, there is a liability-revenue relationship with unearned revenue adjusting entries. Prepaid expense and accrued expense adjusting entries typically involve recognizing expenses, not revenue, and accrued revenue adjusting entries involve recognizing revenue that has been earned but not yet received, which does not create a liability.

Question 17

If an adjustment is needed for unearned revenues, the

Accepted Answer

The answer of If an adjustment is needed for unearned...

Question 18

As prepaid expenses expire with the passage of time, the correct adjusting entry will be a

Accepted Answer

Prepaid expenses are initially recorded as assets because the payment has been made in advance for a specific period of time. As time passes, the portion of the asset that has been used up (or expired) is recognized as an expense. Therefore, the correct adjusting entry will be a debit to an expense account (to recognize the expense) and a credit to an asset account (to reduce the balance of the prepaid expense). Choice B correctly reflects this entry.

Question 19

A company usually determines the amount of supplies used during a period by

Accepted Answer

The amount of supplies used during a period is determined by taking the difference between the balance of the Supplies account at the beginning of the period (plus any purchases during the period) and the cost of supplies on hand at the end of the period. This method accounts for any supplies used during the period.

Question 20

Prepaid expenses are

Accepted Answer

Prepaid expenses are paid and recorded in an asset account before they are used or consumed. They represent future expenses that have been paid in advance, such as rent, insurance, or subscriptions. The prepaid expense is then gradually used or consumed over time, and its value is recognized as an expense in the income statement.

Quiz 3: Adjusting the Accounts

Hercules Company purchased a computer for $3,600 on December 1.It is estimated that annual depreciation on the computer will be $720.If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

If a company fails to make an adjusting entry to record supplies expense, then

A new accountant working for Unitas Company records $800 Depreciation Expense on store equipment as follows: $\begin{array} { l } \text { Depreciation Expense }&800 \\ \text { Cash}& &800\\\end{array}$ The effect of this entry is to

Depreciation expense for a period is computed by taking the

Unearned revenues are

An asset-expense relationship exists with

Depreciation is the process of

The balance in the office supplies account on June 1 was $5,200, supplies purchased during June were $2,500, and the supplies on hand at June 30 were $2,000.The amount to be used for the appropriate adjusting entry is

Which of the following reflect the balances of prepayment accounts prior to adjustment?

What is the proper adjusting entry at June 30 , the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $€ 20,500$ , and unexpired amounts per analysis of policies of $€ 6,000 ?$

Accumulated Depreciation is

Accrued expenses are

A liability-revenue relationship exists with

If an adjustment is needed for unearned revenues, the

As prepaid expenses expire with the passage of time, the correct adjusting entry will be a

A company usually determines the amount of supplies used during a period by

Prepaid expenses are

Quiz 3: Adjusting the Accounts

Hercules Company purchased a computer for $3,600 on December 1.It is estimated that annual depreciation on the computer will be $720.If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

If a company fails to make an adjusting entry to record supplies expense, then

Depreciation expense for a period is computed by taking the

Unearned revenues are

An asset-expense relationship exists with

Depreciation is the process of

The balance in the office supplies account on June 1 was $5,200, supplies purchased during June were $2,500, and the supplies on hand at June 30 were $2,000.The amount to be used for the appropriate adjusting entry is

Which of the following reflect the balances of prepayment accounts prior to adjustment?

What is the proper adjusting entry at June 30 , the end of the fiscal year, based on a prepaid insurance account balance before adjustment, €20,500€ 20,500€20,500 , and unexpired amounts per analysis of policies of €6,000?€ 6,000 ?€6,000?

Accumulated Depreciation is

Accrued expenses are

A liability-revenue relationship exists with

If an adjustment is needed for unearned revenues, the

As prepaid expenses expire with the passage of time, the correct adjusting entry will be a

A company usually determines the amount of supplies used during a period by

Prepaid expenses are

What is the proper adjusting entry at June 30 , the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $€ 20,500$ , and unexpired amounts per analysis of policies of $€ 6,000 ?$