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Exam 3: The Adjusting Process

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Question 51

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Explain the difference between accrual basis accounting and cash basis accounting.

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Accrual basis accounting reports revenue...

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Question 52

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For each of the following, journalize the necessary adjusting entry: a. A business pays weekly salaries of $22,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the fiscal period, assuming that the fiscal period ends 1 on Tuesday, 2 on Wednesday. b. The balance in the prepaid insurance account before adjustment at the end of the year is $18,000. Journalize the adjusting entry required under each of the following alternatives: 1 the amount of insurance expired during the year is $5,300, 2 the amount of unexpired insurance applicable to a future period is $2,700. c. On July 1 of the current year, a business pays $54,000 to the city for license taxes for the coming fiscal year. The same business is also required to pay an annual property tax at the end of the year. The estimated amount of the current year's property tax allocated to July is $4,800. 1 Journalize the two adjusting entries required to bring the accounts affected by the taxes up to date as of July 31. 2 What is the amount of tax expense for July? d. The estimated depreciation on equipment for the year is $32,000.

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Question 53

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The systematic allocation of land's cost to expense is called depreciation.

The balance in the office supplies account on January 1 was $7,000,supplies purchased during January were $3,000,and the supplies on hand at January 30 were $2,000.The amount to be used for the appropriate adjusting entry is

Gracie,Inc.made a prepaid rent payment of $2,800 on January 1.The company's monthly rent is $700.The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is

The difference between the balance of a fixed asset account and the balance of its related accumulated depreciation account is termed the book value of the asset.

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

Adjusting entries affect balance sheet accounts at the exclusion of income statement accounts.

Adjusting entries affect only expense and asset accounts.

Accumulated depreciation is reported on the income statement.

What effect will this adjustment have on the accounting records?

A company receives $360 for a 12-month trade magazine subscription on August 1.The adjusting entry on December 31 is a debit to Unearned Subscription Revenue,$150,and credit to Subscription Revenue,$150.

The financial statements are prepared from the unadjusted trial balance.

If the adjustment for depreciation for the year is inadvertently omitted,the assets on the balance sheet at the end of the period will be understated.

Data for an adjusting entry described as "accrued wages,$2,020" requires a

Using accrual accounting,revenue is recorded and reported only

Prior to the adjusting process,accrued expenses have

As time passes,fixed assets other than land lose their capacity to provide useful services.To account for this decrease in usefulness,the cost of fixed assets is systematically allocated to expense through a process called

What effect will this adjusting journal entry have on the accounting records?

The entry to adjust for the cost of supplies used during the accounting period is