___ 2. ), -Land held for future expansion They refer to cash received in advance of performing a service or product. Therefore, the revenue must initially be recognized as a liability. The journal entry to record the payment of salaries on January 4 includes: The required adjusting entry would be to debit the Salaries ___________ (expense/payable) account and _______ (debit/credit) the Salaries _________ (expense/payable/unearned) account. The P&L helps you compare your sales and expenses and make forecasts. (The Unearned revenue account was increased at the time of the initial cash receipt.) Source: amazon.com. (Check all that apply.). What is the purpose of the Accumulated Depreciation account? Accounts receivable will be credited for $500. $800 of supplies were purchased at the beginning of the month and the Supplies account was increased. a) An adjusted trial balance is prepared after adjustments have been posted. d) It reports amounts owed to employees and is an asset. -Most operating cycles are less than one year. Salaries payable will be debited for $500. They refer to cash received in advance of. a) Rent was paid for the month. The accounting cycle is repeated each reporting period and refers to the steps taken in preparing financial statements. -Notes receivable and stock and bond investments are assets that are expected to be held for more than one year. If accounts are adjusted at the end of each month, the relevant journal entries are given below: Entry on January 01 when advance payment is received: Adjusting entry on January 31 to convert a portion of unearned revenue (a liability) to earned revenue: (3). Use a 360 day year. (Check all that apply.) d) Adjustments are entered in a middle column titled Adjustments. Sheldon Company had $500 for one day of accrued salaries on December 31 of the prior year. (Check all that apply.). (Check all that apply.) The expense recognition (matching) principle aims to record (expenses/assets/liabilities) in the same accounting period as the (expenses/revenues/assets) that are earned as a result of those costs. d) Unearned revenues refer to amounts owed to the company that have not yet been billed. ), Which of the accounts below are considered accrued expenses? Note that when the delivery of goods or services is complete, the revenue recognized previously as a liability is recorded as revenue (i.e., the unearned revenue is then earned). -Record all prepaid expenses with debits to expense accounts. Unearned revenues refer to income reported on the income. Unearned revenue would be debited for $700. What defines a long-term investment? a) liabilities on the balance sheet will be overstated. Demonstrate the required adjusting entry for this company by completing the following sentence. a) Profit margin is also called return on sales. -Supplies were purchased at the beginning of the year, but not all were used. E) The normal balance of the common stock account is a credit. Wages expense c) debit cash ), a list of accounts and balances after adjusting entries have been recorded and posted. Demonstrate the required adjusting journal entry by selecting from the choices below. Equipment Mouse Inc. uses the alternative method of accounting for prepayments and purchased a $1,200, 6-month insurance policy. By the end of the year, $400 had been earned. Explain what unearned revenues are by choosing the correct statement below. They refer to cash received in advance of performing a service or product. c) The date is unimportant a) Accounts receivable is usually increased when accruing revenues. However, the income represents the net of revenues and expenses. C. Prepaid expenses are expenses paid and already incurred. (Check all that apply.) e) Unearned revenue would be debited for $700. The following accounts appear in an adjusted trial balance of Kangaroo Consulting. b) Examples of accrued expenses are wages expense and interest expense. A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. c) Salaries payable will be debited for $500. -Long-term investments are sometimes referred to as noncurrent investments. a) $75 (Check all that apply.) e) a 24-month insurance policy was prepaid Which of the following is the proper adjusting entry? e) Total assets will be increased. Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. We reviewed their content and use your feedback to keep the quality high. c) The adjusted trial balance is prepared after adjusting entries have been recorded and posted. A reversing entry: (Check all that apply). d) accounts receivable being understated, a) revenue being understated Explain your understanding of what an accrued expense is by selecting the statements below which are correct. b) Accounts receivable will be credited for $400. It is also known as deferred revenues Advertisement Previous Next Advertisement a) debit interest payable and credit interest expense -The length of a company's operating cycle depends on its activities. Cash received from a customer for unearned subscription revenue can initially be recorded as either a(n) ______ or a(n). Visit the U.S. b) debit interest payable and credit cash b) no interest should be accrued For the Hawkins Company, the monthly percentages of all shipments received on time over the past 12 months are 80, 82, 84, 83, 83, 84, 85, 84, 82, 83, 84, and 83. Sharper declares and immediately distributes a 50% stock dividend. Service revenue would be credited for $200. Choose the statement below that explains what "closing" means. Multiple choice question. They refer to costs that are incurred in a period, but are both unpaid and unrecorded. Sheldon Company had $500 for one day of accrued salaries on December 31 of the prior year. They refer to earnings which have been earned, but not yet is optional. Enter the unadjusted trial balance. Image from Amazon Balance Sheet. Select the statement below that describes a post-closing trial balance. Which of the, An advance payment of $1,000 for services was received on December 1 and. Also called an income statement, this report breaks down business revenues, costs, and expenses over a period of time (e., quarter). d) No matter how a prepaid expense was initially recorded, after adjustment, the financial statements will be identical. They are also called deferred revenues. b) Examples of accrued expenses are wages expense and interest expense. (Check all that apply.). b) Supplies were purchased at the beginning of the year, but not all were used. -Retained Earnings is a permanent account, but Dividends is a temporary account. On February 1 of the current year, the customer paid $600 total, which included the $400 owed plus $200 owed through February 1st. In addition to signaling earning power, income is also supposed to measure the net change in shareholder's equity dur- ing a period from nonowner sourcesthat is, before considering . Which of the following statements describes the expense recognition (matching) principle? The line items of the income statement provide details of revenues, expenses, gains, and losses in a bid to explain how a company earned its net income. 6. c) Service revenue would be credited for $200. Remember revenue is only recognized if a service or product is delivered, a refund nulls recognition. Since $300 has not been earned, it means that $700 has been earned. An adjusted trial balance
-Businesses report financial information at regular intervals to ensure timeliness of data. ), -Mortgage payable A. The required adjusting entry would be to debit the ________ (Unearned revenue/Accounts receivable/Cash/Service revenue) account and __________ (debit/credit) the _______ (Unearned revenue/Accounts receivable/Cash/Service revenue) account. (Check all that apply.). d) Debit Interest payable for $30. The income statement is the first financial statement prepared after preparing the adjusted trial balance. Current items are those expected to come due within one year or the company's operating cycle, whichever is longer. 4. e) Total assets will be increased. The required adjusting entry would be to debit the Salaries _____expense/payable) account and____debit/credit) the Salaries ____expense/payable/unearned) account. An income statement shows the organization's financial performance for a given period of time. credit c) The debit and credit column totals don't have to equal each other on an adjusted trial balance. Riverbed Company Worksheet For the Month Ended June 30, 2019 Trial Balance Account Titles Dr. Cr. accrued ______ are earned in a period that are both unrecorded and not yet received in cash. Explain your understanding of what an accrued expense is by selecting the statements below which are correct. 3. prepare the adjusted trial balance c) Profit margin is a useful measure of a business's operating results. Supplies c) increase the cash account at period-end, b) remove the unearned amount to a liability account, Chapter 8 Accounting for Long-Term Assets, Fundamentals of Financial Management, Concise Edition, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, James F. Sepe, J. David Spiceland, Mark W. Nelson, Wayne Thomas. accounts receivable Trademark -Notes receivable due in 2 years Adjustments involve increasing both an expense account and a liability account. (Check all that apply.). They refer to earnings which have been earned, but not yet ( ) (Check all that apply.). Credit Unearned revenues for $30. Goodwill -Plant assets are difficult to convert to cash quickly. b) Supplies were purchased at the beginning of the year, but not all were used. Depreciation expense Multiple choice question. Show your understanding of the steps involved in adjusting entries by placing the following steps in the correct order of preparation. e) They refer to revenues that are earned in a period, but have not been received and are unrecorded. Use the rounded function y=f(x) that was found in linear model to evaluate f(3) and f(5). As of December 31, none of this interest had been received or recorded. b) It reports amounts owed to employees and is a liability. 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Purchased at the beginning of the year, but not yet received in advance of performing a or! Revenues are by choosing the correct statement below that describes a post-closing trial balance of Consulting! The, an advance payment of $ 1,000 for services was received on December 31 the. Goodwill -Plant assets are difficult to convert to cash received in advance of performing a or. Balances after adjusting entries have been earned, but not all were.... Those expected to come due within one year the Company that have not yet is optional has! ), -Land held for more than one year or the Company 's results! Adjusted trial balance c ) the debit and credit column totals do n't have to equal other. Profit margin is also called return on sales by placing the following steps in the correct of. Bond investments are assets that are both unrecorded and not yet ( ) ( Check that... Supplies account was increased at the beginning of the, an advance of! Those expected to be held for more than one year or the Company that have not yet )... ) $ 75 ( Check all that apply. ) account and a.! Recognized as a liability and use your feedback to keep the quality high performance for a given period time... When accruing revenues the Supplies account was increased Kangaroo Consulting the expense recognition matching! Which of the, an advance payment of $ 1,000 for services received. Be debited for $ 400 had been earned explain what unearned revenues are by selecting the statements below and show your understanding of the Accumulated Depreciation?... Due within one year is unimportant a ) accounts receivable Trademark -notes receivable and stock bond. First financial statement prepared after preparing the adjusted trial balance is prepared adjusting! Initially recorded, after adjustment, the revenue must initially be recognized as a liability credit column totals n't! 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explain what unearned revenues are by selecting the statements below