Question 1

The adjustment for supplies used during the period will result in a debit to the ________ account and a credit to the ________ account.

Accepted Answer

The Supplies account is decreased with a credit and Supplies Expense is increased with a debit when supplies are used.

Question 2

The annual depreciation taken on a vehicle totals $4,350.The vehicle has been in service for three full years and the adjusting entries have been completed for the year.At the end of the third year,the balance in the Depreciation Expense account is $________ and the balance in the Accumulated Depreciation account is $________.

Accepted Answer

Accumulated Depreciation is a balance sheet account and Depreciation Expense is an income statement account.As a balance sheet account,Accumulated Depreciation will increase over time as it accumulates the depreciation of each period.At the end of three years,that account balance will equal $13,050 (or $4,350 × 3).As an income statement account,Depreciation Expense will include only the depreciation of the current accounting year,which is $4,350.

Question 3

Prepaid Rent should be ________ and Rent Expense should be ________ for rent incurred during the period.

Accepted Answer

Prepaid Rent is decreased and Rent Expense is increased when rent is incurred for a period of time.

Question 4

How does the timing of adjusting entries differ from the accounting for daily transactions?

Accepted Answer

Adjustments are entries made at the end of every accounting period to report revenues and expenses in the proper period and assets and liabilities at appropriate amounts.Companies wait until the end of the accounting period to adjust their accounts because daily adjustments would be costly and time-consuming.

Question 5

After the adjustments have been completed,the adjusted balance in the Supplies Expense account represents the cost of supplies:

Accepted Answer

Supplies are decreased and Supplies Expense is increased when supplies are used.

Question 6

Bakersfield Corp.pays income tax at an average rate of 30 percent.This year its revenue is $145,000 and its expenses are $101,500.The adjusting entry to record the income tax expense will:

Accepted Answer

The related adjusting entry will increase liabilities (Income Tax Payable)and also increase expenses (Income Tax Expense)by $13,050 [or ($145,000 - $101,500)× 30%].The increase to expenses will decrease net income and,as a result,stockholders' equity.

Question 7

Which of the following account balances will typically be decreased as a result of adjusting entries?

Accepted Answer

Interest Payable would be increased if interest has been incurred but not paid at the end of an accounting period.As cash is received or paid,it is recorded in the accounting system;adjusting journal entries never involve cash.Accumulated Depreciation is increased for the amount of Depreciation Expense recorded for the period.Supplies is an asset that is created when cash is paid in advance;the account is reduced when the related expense is recorded in adjusting entries.

Question 8

The adjusting entry to record the supplies used during the period will result in a(n):

Accepted Answer

The Supplies account is decreased with a credit and Supplies Expense is increased with a debit when supplies are used.

Question 9

When recording an adjustment for the use of equipment during the current accounting period,which two accounts are affected?

Accepted Answer

This adjustment affects Accumulated Depreciation,a contra-asset account,and Depreciation Expense.

Question 10

The balance in the Prepaid Insurance account after the adjusting entries have been recorded represents the:

Accepted Answer

Prepaid Insurance reports the amount of insurance paid for in advance that has not yet expired.

Question 11

Why is the balance in the Depreciation Expense account generally different from the balance in the Accumulated Depreciation account?

Accepted Answer

Accumulated Depreciation is a balance sheet account and Depreciation Expense is an income statement account.As a balance sheet account,Accumulated Depreciation will increase over time as it accumulates the depreciation of each period.As an income statement account,Depreciation Expense will include only the depreciation of the current accounting year.

Question 12

After the adjustments have been completed,the adjusted balance in the Accumulated Depreciation account represents the:

Accepted Answer

As a balance sheet account,Accumulated Depreciation will increase over time as it accumulates the depreciation of each period.

Question 13

What are the effects on the accounting equation from the adjustment for depreciation?

Accepted Answer

This adjustment increases Accumulated Depreciation,a contra-asset account,and also increases Depreciation Expense.The increase in the contra-asset account decreases total assets.The increase to the expense account decreases net income and,as a result,it also decreases total stockholders' equity.

Question 14

How does the adjustment for depreciation differ from other deferral adjustments?

Accepted Answer

The depreciation adjustment uses a contra-asset account rather than reducing the asset accounts directly.

Question 15

To recognize the use of and benefit received from long-lived assets,such as equipment,during the accounting period,________ Expense should be recorded.

Accepted Answer

This adjustment affects Accumulated Depreciation,a contra-asset account,and Depreciation Expense.

Question 16

Receipt of a prepayment from a customer is originally recorded as a liability.Later,at the end of the accounting period,an adjustment is recorded causing a(n)________ in the liability account and a(n)________ in the revenue account.

Accepted Answer

This type of deferral adjustment involves increasing a revenue account on the income statement and decreasing a liability on the balance sheet.

Question 17

After the adjustments have been completed,the balance in the Rent Expense account represents the:

Accepted Answer

Expenses are recorded in the same period as the revenues to which they relate (the expense recognition or "matching" principle).The balance in the Rent Expense account represents the cost of rent used during the period to generate revenue.

Question 18

After the adjustments have been completed,the adjusted balance in the Supplies account represents the cost of supplies:

Accepted Answer

The adjusted balance in the Supplies account represents the cost of supplies on hand at the end of the accounting period.

Question 19

After the adjustments have been completed,the adjusted balance in the Depreciation Expense account represents the:

Accepted Answer

As an income statement account,Depreciation Expense will include only the depreciation of the current accounting year.

Question 20

When should supplies be recorded as an expense?

Accepted Answer

Expenses are recorded in the same period as the revenues to which they relate (the expense recognition or "matching" principle).Supplies expense is recorded when supplies are used.

Quiz 4: Adjustments,Financial Statements,and Financial Results

The adjustment for supplies used during the period will result in a debit to the account and a credit to the account.

Prepaid Rent should be and Rent Expense should be for rent incurred during the period.

How does the timing of adjusting entries differ from the accounting for daily transactions?

After the adjustments have been completed,the adjusted balance in the Supplies Expense account represents the cost of supplies:

Bakersfield Corp.pays income tax at an average rate of 30 percent.This year its revenue is $145,000 and its expenses are $101,500.The adjusting entry to record the income tax expense will:

Which of the following account balances will typically be decreased as a result of adjusting entries?

The adjusting entry to record the supplies used during the period will result in a(n) :

When recording an adjustment for the use of equipment during the current accounting period,which two accounts are affected?

The balance in the Prepaid Insurance account after the adjusting entries have been recorded represents the:

Why is the balance in the Depreciation Expense account generally different from the balance in the Accumulated Depreciation account?

After the adjustments have been completed,the adjusted balance in the Accumulated Depreciation account represents the:

What are the effects on the accounting equation from the adjustment for depreciation?

How does the adjustment for depreciation differ from other deferral adjustments?

To recognize the use of and benefit received from long-lived assets,such as equipment,during the accounting period,________ Expense should be recorded.

Receipt of a prepayment from a customer is originally recorded as a liability.Later,at the end of the accounting period,an adjustment is recorded causing a(n) in the liability account and a(n) in the revenue account.

After the adjustments have been completed,the balance in the Rent Expense account represents the:

After the adjustments have been completed,the adjusted balance in the Supplies account represents the cost of supplies:

After the adjustments have been completed,the adjusted balance in the Depreciation Expense account represents the:

When should supplies be recorded as an expense?

Quiz 4: Adjustments,Financial Statements,and Financial Results

The adjustment for supplies used during the period will result in a debit to the ________ account and a credit to the ________ account.

Prepaid Rent should be ________ and Rent Expense should be ________ for rent incurred during the period.

How does the timing of adjusting entries differ from the accounting for daily transactions?

After the adjustments have been completed,the adjusted balance in the Supplies Expense account represents the cost of supplies:

Bakersfield Corp.pays income tax at an average rate of 30 percent.This year its revenue is $145,000 and its expenses are $101,500.The adjusting entry to record the income tax expense will:

Which of the following account balances will typically be decreased as a result of adjusting entries?

The adjusting entry to record the supplies used during the period will result in a(n) :

When recording an adjustment for the use of equipment during the current accounting period,which two accounts are affected?

The balance in the Prepaid Insurance account after the adjusting entries have been recorded represents the:

Why is the balance in the Depreciation Expense account generally different from the balance in the Accumulated Depreciation account?

After the adjustments have been completed,the adjusted balance in the Accumulated Depreciation account represents the:

What are the effects on the accounting equation from the adjustment for depreciation?

How does the adjustment for depreciation differ from other deferral adjustments?

To recognize the use of and benefit received from long-lived assets,such as equipment,during the accounting period,________ Expense should be recorded.

Receipt of a prepayment from a customer is originally recorded as a liability.Later,at the end of the accounting period,an adjustment is recorded causing a(n) ________ in the liability account and a(n) ________ in the revenue account.

After the adjustments have been completed,the balance in the Rent Expense account represents the:

After the adjustments have been completed,the adjusted balance in the Supplies account represents the cost of supplies:

After the adjustments have been completed,the adjusted balance in the Depreciation Expense account represents the:

When should supplies be recorded as an expense?

The adjustment for supplies used during the period will result in a debit to the account and a credit to the account.

Prepaid Rent should be and Rent Expense should be for rent incurred during the period.

Receipt of a prepayment from a customer is originally recorded as a liability.Later,at the end of the accounting period,an adjustment is recorded causing a(n) in the liability account and a(n) in the revenue account.