Adjusting the Accounts

According to the textbook, which accounting assumption allows the economic life of a business to be divided into artificial time periods?

What is the primary difference between accrual-basis accounting and cash-basis accounting?

The revenue recognition principle dictates that revenue should be recognized in the accounting period in which:

The expense recognition principle, often referred to as the matching principle, states that:

Adjusting entries are classified as either:

Pioneer Advertising purchased supplies costing $2,500 on October 5. An inventory count on October 31 reveals that $1,000 of supplies are still on hand. What is the adjusting entry for supplies on October 31?

On October 4, Pioneer Advertising paid $600 for a one-year fire insurance policy with coverage beginning October 1. What is the adjusting entry on October 31?

The process of allocating the cost of a plant asset to expense over its useful life is called:

A contra asset account, such as Accumulated Depreciation, has a normal balance of a:

Pioneer Advertising received $1,200 on October 2 for services to be completed by December 31. By October 31, the company determines it has earned $400 of the revenue. What is the adjusting entry on October 31?

An adjusting entry for an accrued revenue would involve:

Pioneer Advertising performed services worth $200 in October that were not billed. The adjusting entry on October 31 would be:

An adjusting entry for an accrued expense, such as salaries, would involve:

Pioneer Advertising's employees worked three days in October for which they were not paid until November. The accrued salaries at October 31 were $1,200. The adjusting entry on October 31 would be:

Pioneer Advertising signed a three-month, $5,000 note payable on October 1 with an annual interest rate of 12 percent. What is the adjusting entry for interest on October 31?

What is the primary purpose of an adjusted trial balance?

Which of the following accounts from Pioneer Advertising's adjusted trial balance on page 136 would appear in the income statement?

Under the alternative treatment for prepaid expenses described in Appendix 3A, a company initially debits an expense account. If some of the prepaid item remains unused at year-end, the adjusting entry would involve:

According to Appendix 3B, which fundamental quality of useful information helps provide accurate expectations about the future?

The principle that dictates that companies should record assets at their cost is the:

Every adjusting entry must affect:

Failure to prepare an adjusting entry for an accrued expense would result in:

Failure to prepare an adjusting entry for an unearned revenue that has now been partially earned would result in:

Book value of a plant asset is defined as:

A company purchases a one-year insurance policy on June 1 for $3,600. The adjusting entry on December 31 would be:

What is the term for an accounting period that is one year in length?

Which of the following is NOT a reason cited in the text for why a trial balance may not contain up-to-date and complete data?

If a company has a fiscal year ending on the Friday closest to December 31, which company mentioned in the text follows this practice?

Which financial reporting concept weighs the cost that companies incur to provide information against the benefit that users will gain from having it?

If a company initially records a prepayment by debiting an expense account, what does a credit balance in that expense account signify after an adjusting entry?

Which of the following describes an accrued expense?

The use of the same accounting principles and methods from year to year within a company is known as:

An unadjusted trial balance shows a balance of $3,600 in the Prepaid Insurance account. At the end of the period, it is determined that $1,500 of the insurance is unexpired. What is the amount of the insurance expense adjustment?

An unadjusted trial balance shows a balance of $9,200 in the Unearned Service Revenue account. At the end of the period, it is determined that one-half of the revenue has been earned. What is the adjusting entry?

The adjusted trial balance for Skolnick Co. on page 138 shows a credit balance of $14,200 for Service Revenue and $800 for Rent Revenue. It also shows a debit balance of $9,400 for Salaries and Wages Expense. What is the total revenue reported on the income statement?

What type of adjusting entry is made to record revenue for services performed but not yet received in cash or recorded?

An adjusted trial balance serves as the primary basis for preparing which of the following?

Which of the following is an example of an adjusting entry for a prepaid expense?

If a company fails to make an adjusting entry for accrued revenues, what is the impact on the financial statements?

The information for preparing the income statement is taken from which columns of the adjusted trial balance?

A company uses the alternative method for unearned revenues (crediting a revenue account upon receipt of cash). On November 1, it collects $1,800 for three months of service. What is the adjusting entry on December 31?

Which of the following is considered an enhancing quality of useful information, according to Appendix 3B?

If a company fails to adjust for a prepaid expense, what is the effect on the financial statements?

A company has a weekly payroll of $7,000 for a five-day work week, paid every Friday. If the year-end, December 31, falls on a Wednesday, what is the necessary adjusting entry?

The adjusted trial balance for Pioneer Advertising on page 136 shows a debit balance for Owner's Drawings of $500. Where is this amount used?

The primary objective of financial reporting, as stated in Appendix 3B, is to provide information that is:

A company purchases a building for $300,000. Under the historical cost principle, if the building's fair value increases to $350,000 the following year, the company should report the building on its balance sheet at:

A deferral is an adjusting entry where:

The adjusted trial balance for Skolnick Co. on page 138 has total debits of $37,310. What would be the total credits?

On January 1, a company purchases equipment for $15,000. The equipment has a 5-year life and no salvage value. Using straight-line depreciation, what is the book value of the equipment at the end of the second year?