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Exam 3: The Adjusting Process

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Question 111

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Deferrals are recorded transactions that delay the recognition of an expense or revenue.

A) True
B) False

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Question 112

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Match the type of account (a - e) with the business transactions that follow. -Paid for one year's insurance policy. A)Prepaid expense B)Accrued expense C)Unearned revenue D)Accrued revenue E)None of these

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Question 113

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Complete the missing items in the Summary of Adjustments chart:

Softex and Sanibel Solutions are manufacturers of cotton products. Their income statements for a current year are below.​

(a) Explain the differences between accrued revenues and unearned revenues.(b) Explain the differences between accrued expenses and prepaid expenses.(c) Give an example of each.

REM Consulting is completing the accounting information processing at the end of the fiscal year, December 31. The following trial balances are available.​ (a) Reconstruct the adjusting entries and give a brief explanation of each.(b) What is the amount of net income?

The system of accounting where revenues are recorded when services have been performed or products have been delivered to customers and expenses are recorded when they are incurred is called the cash basis of accounting.

On January 1, the Newman Company estimated its property tax to be $5,100 for the year.​ (a)How much should the company accrue each month for property taxes? (b)Calculate the balance in Property Tax Payable as of August 31.(c)Prepare the adjusting journal entry for September.

On January 1, Great Designs Company had a debit balance of $1,450 in the office supplies account. During the month, Great Designs purchased $115 and $160 of office supplies and journalized them to the asset account upon purchasing. On January 31, an inspection of the office supplies cabinet shows that only $350 of office supplies remains. Prepare the January 31 adjusting entry for office supplies.

Identify the effect (a - h) that omitting each of the following items would have on the balance sheet.a.Assets and stockholders' equity overstated b.Assets and stockholders' equity understated c.Assets overstated and stockholders' equity understated d.Assets understated and stockholders' equity overstated e.Liabilities and stockholders' equity overstated f.Liabilities and stockholders' equity understated g.Liabilities overstated and stockholders' equity understated h.Liabilities understated and stockholders' equity overstated -Services provided to customers on the last day of the month were not billed.

The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a(n)

The estimated amount of depreciation on office equipment for the current year is $3,500. The correct adjusting entry to record this depreciation is

Two income statements for Toby Sam Enterprises are shown below: Prepare a vertical analysis of Toby Sam Enterprises' income statements. Has operating income increased or decreased as a percentage of revenue?

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

On January 2, Safe Motorcycling Monthly received a check for $72 from a subscriber for a 12-month subscription. The January issue was mailed on January 15. Prepare the necessary entries for the month of January.

Two income statements for Midnight Enterprises are shown below: (a) Prepare a vertical analysis of Midnight Enterprises' income statements.(b) Does the vertical analysis indicate a favorable or unfavorable trend?

If the adjustment for accrued salaries at the end of the period is inadvertently omitted, both liabilities and stockholders' equity will be understated for the period.

Identify the effect (a - h) that omitting each of the following items would have on the balance sheet.a.Assets and stockholders' equity overstated b.Assets and stockholders' equity understated c.Assets overstated and stockholders' equity understated d.Assets understated and stockholders' equity overstated e.Liabilities and stockholders' equity overstated f.Liabilities and stockholders' equity understated g.Liabilities overstated and stockholders' equity understated h.Liabilities understated and stockholders' equity overstated -A tenant paid 6 months' rent in advance when he moved in on the first day of the month. No entry was made on the last day of the month.

Two income statements for Danielle's Design Services are shown below: (a) Prepare a vertical analysis of Danielle's Design Services income statements.(b) What types of trends are indicated: favorable or unfavorable? (c) What other information would enhance the analysis?

Gizmo Inc. purchased a one-year insurance policy on October 1 for $1,800. The adjusting entry on December 31 would be