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Exam 3: The Adjusting Process

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Question 21

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

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$1,385 - $...

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Question 22

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Which of the following is an example of an accrued expense?

A) Salary owed but not yet paid
B) Fees received but not yet earned
C) Supplies on hand
D) A two-year premium paid on a fire insurance policy

E) All of the above
F) B) and C)

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Question 23

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

Which one of the accounts below would likely be included in an accrual adjusting entry?

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry.

The updating of accounts is called the adjusting process.

At year-end, the balance in the prepaid insurance account, prior to any adjustments, is $6,000. The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

How will the following adjusting journal entry affect the accounting equation?

The unexpired insurance at the end of the fiscal period represents

On January 31, the end of the first month of the year, the usual adjusting entry transferring expired insurance to an expense account was omitted. Which items will be incorrectly stated because of the error on (a) the income statement for January and (b) the balance sheet as of January 31? Also indicate whether the items in error will be overstated or understated.

Adjusting journal entries are dated on the last day of the period.

The balance in the supplies account, before adjustment at the end of the year is $6,250. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

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

A company pays an employee $3,000 for a five day work week, Monday - Friday. The adjusting entry on December 31, which is a Wednesday, is debit Wages Expense, $1,800 and credit Wages Payable, $1,800.

Adjusting entries affect at least one

The Accumulated Depreciation's account balance is the sum of the depreciation expense recorded in past periods.

Vertical analysis is useful for analyzing financial statement changes over time.

What is the purpose of an adjusted trial balance? What types of errors does it detect? What types of errors does it not detect?

Adjusting entries are made at the end of an accounting period to adjust accounts on the balance sheet.

On January 2, Safe Boating Monthly received a check for $96 from a subscriber for a 12-month subscription. The January issue was mailed on January 15th. Prepare the necessary entries for the month of January.