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Exam 3: The Adjusting Process

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Question 61

True/False

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A company receives $360 for a 12-month trade magazine subscription on August 1.The adjusting entry on December 31 is a debit to Unearned Subscription Revenue,$150,and a credit to Subscription Revenue,$150.

A) True
B) False

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Question 62

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What effect will the following adjusting journal entry have on the accounting records?

A) increase net income
B) increase revenues
C) decrease expenses
D) decrease net book value

E) B) and C)
F) A) and C)

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Question 63

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Using the following account balances for Garry's Tree Service,prepare a trial balance. ​

The term used to describe an expense that has not been paid and has not yet been recognized in the accounts by a routine entry is

An adjusting entry would adjust revenue so it is reported when earned and not when cash is received.

Prepare adjusting entries for the following transactions:

The adjusting entry to record the depreciation of a building for the fiscal period is

When is the adjusted trial balance prepared?

Which of the following pairs of accounts could not appear in the same adjusting entry?

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.

DogMart Company records depreciation for equipment.Depreciation for the period ending December 31 is $1,400 for office equipment and $2,650 for production equipment.Prepare the two entries to record the depreciation.

Under the accrual basis,some accounts in the ledger require updating at the end of the period.Discuss the three main reasons for this updating and give an example of each.

The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting

The type of account and normal balance of Unearned Consulting Fees is

Smokey Company purchases a one-year insurance policy on July 1 for $3,600.The adjusting entry on December 31 is

When preparing an income statement vertical analysis,each revenue and expense is expressed as a percent of net income.

The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed

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

The revenue recognition principle states that revenue should be recorded in the same period as the cash is received.