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Exam 3: The Adjusting Process

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Question 41

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Two income statements for Midnight Enterprises are shown below.​ (a)Prepare a vertical analysis of Midnight Enterprises' income statements. (b)Does the vertical analysis indicate a favorable or unfavorable trend?

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(a)​ (b)The vertical analysis is indica...

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Question 42

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The cash basis of accounting records revenues and expenses when the cash is exchanged,while the accrual basis of accounting

A) records revenues when they are earned and expenses when they are paid
B) records revenues and expenses when they are incurred
C) records revenues when cash is received and expenses when they are incurred
D) records revenues and expenses when the company needs to apply for a loan

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

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Question 43

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Depreciation on equipment for the year is $6,300. (a)Record the journal entry if the company prepares adjustments once a year. (b)Record the journal entry if the company prepares adjustments on a monthly basis.

The revenue recognition principle states that revenue should be recorded in the same period as the cash is received.

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

Match the type of account (a through e) with the business transactions that follow. -Annual depreciation on equipment,recorded on a monthly basis.

Journalize the six entries to adjust the accounts at December 31. (Hint: One of the accounts was affected by two different adjusting entries).​​ ​​​​​​​​​​​​​​​​​​​​​​​

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.

A business pays biweekly salaries of $20,000 every other Friday for a 10-day period ending on that day.The last payday of December is Friday,December 27.Assume the next pay period begins on Monday,December 30 and the proper adjusting entry is journalized at the end of the fiscal period (December 31).Journalize the entry for the payment of the payroll on Friday,January 10.

Which account would normally not require an adjusting entry?

Adjusting entries are

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

Prepaid rent,representing rent for the next six months' occupancy,would be reported on the tenant's balance sheet as a (n)

Two income statements for Toby Sam Enterprises are shown below.​Prepare a vertical analysis of Toby Sam Enterprises' income statements.Has operating income increased or decreased as a percentage of revenue?

Which of the following is not a characteristic of the accrual basis of accounting?

When is the adjusted trial balance prepared?

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.

The entry to adjust the accounts for salaries accrued at the end of the accounting period is

If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted,the assets at the end of the period will be understated.

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