chapter 3 Adjusting Process

Revenue is reported on the income statement in the period earned. The accounting concept supporting this reporting is

All adjusting entries affect

Accrued revenues are revenues that

If an adjustment for $7,500 in accrued revenues is omitted, how will this affect the financial statements?

Prepaid expenses

The adjusting entry for accrued expenses includes

The unearned subscriptions account reflected a balance of $32,500 prior to any adjustments. It is determined that $9,800 in subscriptions remain unearned at the end of the period. The adjusting journal entry should include a

Because collecting the adjustment data requires time, the adjusting entries are often

When recording an adjusting entry for a prepaid expense

When recording an adjusting entry for unearned revenues

If the following adjusting entry is omitted, what effect will it have on net income? Depreciation Expense 4,300 Accumulated Depreciation 4,300

The adjusted trial balance is prepared

Once the adjusted trial balance is balanced, it can be used to prepare

The adjusted trial balance

an adjustment to record unrecorded fees earned was posted during the current period. Which of the following would cause the adjusted trial balance totals to be unequal?

In the vertical analysis of a balance sheet

Which of the following statements is true about vertical analysis?

Comparing each line of a financial statement with a total amount from the same financial statement

The following are line items from the vertical analysis of an income statement: Amount Percent Total revenues $600 300% Total expenses 400 200 Net income $200 100% What needs to be changed on the statement?

unearned revenues

The adjusting entry to record depreciation includes

The adjusted trial balance is prepared

Using the following information, prepare a vertical analysis of two years' income statements. Fees Earned is $153,500 for Year 2 and $149,700 for Year 1. Operating expenses are $122,800 for Year 2 and $127,245 for Year 1. Which of the following statements are true?

After which of the following errors would the adjusted trial balance totals not agree?

In the vertical analysis of an income statement

The recording of adjusting entries is supported by the

Which statement is true regarding the cash basis of accounting?

Indicate which of the following accounts will never require an adjusting entry.

Barry Company received $8,000 full payment in advance for services that are 60 percent complete at the end of the period. The adjusting entry will

The accumulated depreciation account is called

Clever Computers has a 5-day work week and pays the office staff $3,050 each week. If the month ends on a Thursday, the adjusting entry will credit Wages Payable for

The adjusting entry for accrued revenues

All of the following are types of adjustments except

If the following adjusting entry is omitted, what effect will it have on the financial statements? unearned rent debit 1900 rent revenue credit 1900

Which of the following errors would cause the adjusted trial balance to be unequal ?

The purpose of the adjusted trial balance is to verify

Adjusting entries are dated

Which of the following is true regarding adjusting entries? a. Adjusting entries are dated as of the first day of the new accounting period. b. Adjusting entries are not posted to the ledger. c. Adjusting entries are optional with accrual-basis accounting. d. None of these statements are true.

The following are line items from the vertical analysis of a balance sheet: total assets $300000 300% total liab. $200000 200% total o.e. $100000 100% total liab&oe $300000 300%

GreenSource Company began the period with $330 in supplies. During the month, an additional $1,500 of supplies were purchased. A physical inventory at the end of the period revealed that there were $585 of supplies on hand. The adjusting entry should include a

If an adjustment for salaries earned but not recorded or paid in the amount of $85,000 were to be omitted, how would this affect the financial statements? a. Expenses would be understated on the income statement by $85,000. b. Net income would be overstated on the income statement by $85,000. c. Liabilities would be understated on the balance sheet for $85,000. d. All of these effects would occur.

Revenue is reported on the income statement in the period earned. The accounting concept supporting this reporting is a. the adjusting principle. b. the income statement principle. c. the revenue recognition principle. d. the cash basis principle

The $9,600 balance in Fellows Company's prepaid insurance account represents 6 months' of insurance. The insurance was purchased on December 1. Which of the following should be included in the adjusting journal entry on December 31? a. debit to Cash for $9,600 b. debit to Prepaid Insurance for $1,600 c. debit to Insurance Expense for $9,600 d. debit to Insurance Expense for $1,600

if an adjusting entry for depreciation expense debit 4300 and acc. dep credit 4300 is omitted, what effect will it have on net income? a. Net income will be overstated by $4,300. b. Net income will be understated by $4,300. c. Net income will be overstated by $8,600. d. It will have no effect on net income

The adjusted trial balance is prepared a. to verify the equality of total debit and credit balances. b. to determine whether the balance sheet is in balance. c. to determine the net income or loss. d. for all of these reasons

Which of the following statements is not true about vertical analysis? a. Each line item is expressed as a percentage of some total or key amount within the same statement. b. It is useful for analyzing relationships within a financial statement. c. The dollar amount of change in each line item is calculated. d. It is useful for analyzing changes in financial statements over time.

Barry Company received $8,000 full payment in advance for services that are 60 percent complete at the end of the period. The adjusting entry will