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Exam 3: Adjusting Accounts for Financial Statements

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Question 91

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Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________________________.

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Question 92

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On December 31,Cartier Company had performed $8,000 of management services for clients that had not yet been billed to the clients.Prepare an adjusting entry to record these fees.

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Question 93

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The adjusted trial balance must be prepared before the adjusting entries are made.

An adjusting entry may include an entry to Cash.

If on January 1 of this year,a company paid $12,000 rent for one year and adjusting entries are made at the end of each month,the balance of Prepaid Rent at December 1 of this year should be $1,000.

Under the alternative method for accounting for unearned revenues,which of the following pairs of journal entry formats is correct?

BioVert Company had $2,500 of store supplies on hand at the beginning of 2015.During 2015 BioVert purchased $250 worth of store supplies.On December 31,2015,$1,125 worth of store supplies remained.What is the amount of BioVert Company's store supplies expense for 2015?

Depreciation expense is an example of accrued expense.

Prepaid expenses,depreciation,accrued expenses,unearned revenues,and accrued revenues are all examples of:

Adjusting entries are required to match revenues and expenses.

Interim financial reports cover a firm's business activity for one year.

On December 14,2015,Kinsmen Company received $7,700 for consulting services that will be performed in January 2016.Prepare a general journal entry to record the receipt.

The adjusting entry to record the earned but unpaid salaries of employees at the end of the accounting period is:

A contra account is an account the balance of which is added to the balance of an associated account to show a more proper amount for the item recorded in the associated account.

In general journal form,record adjusting entries for the following items for Cornish Accounting Co.at December 31,2015. a)On January 3,2015,$5,500 of supplies were purchased and recorded as an asset.A count revealed $500 still on hand at December 31,2015. b)Services performed during December but not yet billed to customers totalled $2,500. c)On July 1,2015,a $10,000 car was purchased on account.The car is expected to last 4 years and have no residual value at the end of its useful life. d)On December 31,2015 utilities owed but not yet paid amounted to $500. e)On January 10,2015 Cornish Accounting Co.accepted a $5,000 deposit from a client for tax work to be completed during the year.The deposit was recorded as unearned revenue.On December 31,2015 all the tax work for the client is complete.

During August,Gallery Corp.purchased $4,000 worth of supplies.At August 31 the adjusted balance in the Supplies account was $2,800.The adjusting entry included a $1,200 debit to Supplies Expense.

Cesar Cielo's consulting business receives an advance payment of 70% of services to be performed.In August,Cesar agreed to perform $20,000 worth of services to be performed in September.Record the entry for the receipt of cash during the month of August.

Accrued expenses reflect transactions where cash is paid before a related expense is recognized.

__________________________ refer to costs incurred in a period that are both unpaid and unrecorded.______________________ refer to revenues earned in a period that are both unrecorded and not yet received in cash or other assets.

The accrual basis of accounting is a system of accounting in which the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues.