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Exam 3: The Adjusting Process

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Question 1

True/False

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The financial statements are prepared from the unadjusted trial balance.

A) True
B) False

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Question 2

Multiple Choice

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Prepaid expenses have

A) not yet been recorded as expenses but have been paid
B) been recorded as expenses and paid
C) been incurred and paid
D) not yet been recorded as expenses or paid

E) B) and C)
F) None of the above

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Question 3

Multiple Choice

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The unearned rent account has a balance of $72,000. If $18,000 of the $72,000 is unearned at the end of the accounting period, the amount of the adjusting entry is

Prepaid expenses are eventually expected to become

The general term used to indicate delaying the recognition of an expense already paid or of a revenue already received is

On November 1, clients of Great Designs Company prepaid $4,250 for services to be provided in the future at a rate of $85 per hour.​ (a) Journalize the receipt of cash.(b) As of November 30, Great Designs shows that 15 hours of services have been provided on this agreement. Prepare the necessary journal entry.(c) Determine the total unearned fees in hours and dollars at November 30.

The adjusted trial balance verifies that total debits equals total credits before the adjusting entries are prepared.

On December 31, the balance in the office supplies account is $1,385. A physical count shows $435 worth of supplies on hand. Prepare the adjusting entry for supplies.

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.

If there is a balance in the prepaid rent account after adjusting entries are made, it represents a(n)

If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry?

​Which of the following accounts would likely be included in a deferral adjusting entry?

Adjusting entries affect at least one

Record journal entries for the following transactions.​ (a) On December 1, $18,000 was received for a service contract to be performed from December 1 through April 30.(b) Assuming the work is performed evenly throughout the contract period, prepare the adjusting journal entry on December 31.

The updating of accounts when financial statements are prepared is called the adjusting process.

Match the type of account (a - e) with the business transactions that follow. -Electric bill to be paid next month. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

The entry to adjust for the cost of supplies used during the accounting period is

By ignoring and not posting the adjusting journal entries to the appropriate accounts, net income will always be overstated.

Listed below are accounts to use for transactions (a) through (j), each identified by a number. Following this list are the transactions. You are to indicate for each transaction the accounts that should be debited and credited by placing the account number(s) in the appropriate box.

The entry to adjust the accounts for salaries accrued at the end of the accounting period is