The preparation of adjusting entries is:
-
straightforward because the accounts that need adjustment will be out of balance.
-
optional when financial statements are prepared.
-
needed to ensure that the expense recognition principle is followed.
-
only required for accounts that do not have a normal balance.
The preparation of adjusting entries is:
-
straightforward because the accounts that need adjustment will be out of balance.
-
optional when financial statements are prepared.
-
needed to ensure that the expense recognition principle is followed.
-
only required for accounts that do not have a normal balance.
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Question 23
If a resource has been consumed but a bill hasnot been received at the end of the accountingperiod, then
an expense should be recorded when the bill is received. | ||
an expense should be recorded when the cash is paid out. | ||
an adjusting entry should be made recognizing the expense. | ||
it is optional whether to record the expense before the bill isreceived. |
3 points
Question 24
Prepaid expenses are
paid and recorded in an asset account before they are used orconsumed. | ||
paid and recorded in an asset account after they are used orconsumed. | ||
incurred but not yet paid or recorded. | ||
incurred and already paid or recorded. |
3 points
Question 25
If a business has received cash in advance of services performedand credits a liability account, the adjusting entry needed afterthe services are performed will be
debit Unearned Service Revenue and credit Cash. | ||
debit Unearned Service Revenue and credit Service Revenue. | ||
debit Unearned Service Revenue and credit Prepaid Expense. | ||
debit Unearned Service Revenue and credit AccountsReceivable. |
3 points
Question 26
The preparation of adjusting entries is
straight forward because the accounts that need adjustment willbe out of balance. | ||
often an involved process requiring the skills of aprofessional. | ||
only required for accounts that do not have a normalbalance. | ||
optional when financial statements are prepared. |
3 points
Question 27
On January 1 of the current year, Doolittle Company purchasedfurniture for $7,560. The company expects to use the furniture for3 years. The asset has no salvage value. The book value of thefurniture at December 31of this year is
$0. | ||
$2,520. | ||
$5,040. | ||
$7,560. |
3 points
Question 28
Husker Du Supplies Inc. purchased a 12-month insurance policy onMarch 1 of the current year for $1,800. At March 31, the adjustingjournal entry to record expiration of this asset will include a
debit to Prepaid Insurance and a credit to Cash for $1,800. | ||
debit to Prepaid Insurance and a credit to Insurance Expense for$200. | ||
debit to Insurance Expense and a credit to Prepaid Insurance for$150. | ||
debit to Insurance Expense and a credit to Cash for $150. |
Jacki Lopez started JVL Consulting on January 1, 2014. Thefollowing are the account balances at the end of the first month ofbusiness, before adjusting entries were recorded:
Accounts Payable | $300 |
Accounts Receivable | 800 |
Cash | 6,500 |
Consulting Revenue | 6,000 |
Equipment | 7,000 |
Jacki Lopez, Capital | 15,000 |
Jacki Lopez, Drawing | 2,000 |
Prepaid Rent | 4,000 |
Supplies | 1,000 |
Adjustment data:
Supplies on hand at the end of the month: $300
Unbilled Consulting Revenue: $850
Rent expense for the month: $2,000
Depreciation on equipment: $150
1. Prepare the adjusting entries in general journal form. Youwill need to add accounts that do not appear on the trial balancebefore adjustments. 2. Prepare the adjusted trial balance