They refer to cash received in advance of. a) Service revenue would be credited for $700. Multiple select question. ), 1. enter the unadjusted trial balance c) Credit to Salaries Payable for $500; Debit to Salaries Expense for $2,000 Demonstrate. A plant asset refers to a long-term tangible asset used to produce and sell products or services. Which of the following is the proper adjusting entry? -The accounting cycle contains 10 steps. g) Six months of rent were paid in advance. As of December 31, the customer had not been billed nor had the transaction been recorded. Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. 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. A plant asset refers to the stock purchased by a business held for future investment. Unearned revenues refer to amounts owed to the company that have not yet been billed. (Check all that apply.) Explain your understanding of what an accrued expense is by selecting the statements below which are correct. Cash would be credited for $4,000. c) Equipment was purchased in the middle of the year. The company immediately debited the Insurance expense account. ), Machinery They are also called accounts receivable. 6. The required adjusting entry would be to debit the Salaries ___________ (expense/payable) account and _______ (debit/credit) the Salaries _________ (expense/payable/unearned) account. You can also search the Web using the term approved credit counseling agencies. Insurance expense would be debited for $300. (Check all that apply.). No matter how an unearned revenue was initially recorded, after the adjusting entry, net income will be identical. \text{Retained earnings }&\underline{\text{\hspace{13pt}660,000}}\\ (Check all that apply.) (The Supplies account was increased at the time of the initial purchase.) (Check all that apply.). Describe the final step in the adjusting process. a) debit interest payable and credit interest expense A plant asset can be defined by which of the following statements? Explain your understanding of what an accrued expense is by selecting the statements below which are correct. On December 27, a business completed a $400 service that had not yet been billed or recorded as of December 31. O An unearned revenue on the income statement. e) The debit and credit column totals must balance. a) Salaries expense would be debited for $3,500. Prepare an income statement, a statement of owners equity (no additional investments were made during the year), and a balance sheet. -Most companies use a one-year period or operating cycle in deciding which assets and liabilities are current. (Check all that apply.). A plant asset is the portion of a current asset which will be used up in the next accounting period. f) The ending Owner, Capital account balance on the balance sheet is taken directly from the adjusted trial balance. ), Which of the following describe the salaries payable account? -The Accumulated depreciation account allows the original cost of the asset to remain in the plant asset account. Sheldon Company had $500 for one day of accrued salaries on December 31 of the prior year. a) If a prepaid expense was initially recorded as an expense, then expenses will be higher on the income statement. -Temporary accounts have a balance for one period only. Land currently being used, Identify which of the accounts below would be classified as a plant asset account. Credit Interest expense for $30. $1,000 of cash was received in advance of performing services. Accounts receivable will be credited for $500. They refer to earnings which have been earned, but not yet Property, Plant and Equipment explanation, calcul d) debit accounts receivable. A temporary account will not appear on a post-closing trial balance. Supplies expense would be debited for $600. 1. prepare an unadjusted trial balance Take a look at the P&L and then read a breakdown of it below. Closing means to transfer account balances from_______ accounts so that they will start with a ________ balance at the beginning of the next period. Explain what unearned revenues are by selecting the statements below which are correct. Demonstrate what the correct adjusting entry should include by choosing the correct statement below. B. To a) Income statement, balance sheet, statement of owner's equity, statement of cash flows Examples of accrued expenses are wages expense and interest expense. Illustrate your understanding of how to use the adjusted trial balance to prepare the balance sheet by completing the following sentence. $1,000 of cash was received in advance of performing services. $21,000 of equipment is purchased on December 1. A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. Demonstrate your understanding of adjusting for prepaid expenses by selecting the statement that is correct. At the end of the previous year, a customer owed Chocolates R US $500. $300 were used during the month. It is a listing of all permanent accounts and their balances after closing. Amazon refers to its revenue as "sales," which is equally as common as a term. (Check all that apply.). A revenue not yet recognized, collected in advanc; Generally accepted accounting principles require the use of accruals and deferrals in the determination of income. Accounts receivable will be credited for $400. b) debit interest payable and credit cash c) Record receipt with a credit to the Rent revenue account. -Accumulated depreciation accumulates the total depreciation taken on an asset since its purchase. Debit Unearned revenues for $600. Multiple choice question. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. -Financial statements are prepared more easily using the adjusted trial balance than with the general ledger. c) Debit Accounts receivable for $600. Multiple select question. a) Record all prepaid expenses with credits to liability accounts. Example of Unearned Revenue a) An adjusted trial balance is a list of accounts and balances prepared before adjustments are posted. 46. By the end of the accounting period, the loan had been outstanding for 30 days. c) debit interest expense and credit interest payable (The Unearned revenue account was increased at the time of the initial cash receipt.) c) Salaries payable will be debited for $500. -Any unused prepaids existing at end of period are transferred to asset accounts. The formula to figure out the profit margin of a company is ______ (Net income/Accounts receivable/Net sales) divided by _______ (Net income/Cash/Net sales). (Check all that apply.). accumulated depreciation, A depreciation adjustment would include a debit to _____ and ______ to ________. Unearned Revenue Defined. -an accounting system which is consistent with generally accepted accounting principles. It is as a prepayment Also it is a liability account that should be recorded at the balance sheet. Define plant assets by selecting the correct statements below. accrued ______ are earned in a period that are both unrecorded and not yet received in cash. Franchise, Identify the accounts below that would be classified as intangible assets on a classified balance sheet. By the end of the period, $300 had not yet been earned. (Check all that apply. Explain. credit Adjustments involve increasing both an expense and a liability account. b) Service revenue would be credited for $700. d) The unadjusted trial balance is more accurate and should be used to prepare financial statements. -the closing process resets the balances in temporary accounts to zero. Financial statements are prepared more easily using the adjusted trial balance than with the general ledger. McDarrel's records $500 of accrued salaries on December 31. $1,000 of cash was received in advance of performing services. Salaries payable will be credited for $500. -A temporary account b) They refer to cash received in advance of performing a service or product. Supplies on hand. d) Profit margin is the ratio of a business's net income to its net sales. Which of the following is the proper adjusting entry? Multi-step income statements are one of the two income statement formats businesses can use to report their profits. e) Total assets will be increased. A plant asset refers to a long-term tangible asset used to produce and sell products or services. b) The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. Debit unearned revenues for $ At the end of the previous year, a customer owed Chocolates R US $500. Briefly review the history of political parties in the United States. (Put the first step at the top.) All adjustments can easily be seen in the _______ trial balance columns and then an ________ trial balance can be prepared. However, in some cases, when the delivery of the goods or services may take more than a year, the respective unearned revenue may be recognized as a long-term liability. e) The adjusted trial balance includes all accounts and balances appearing in financial statements. The trial balance at May 31 is as follows. Hub. Wages expense $1,000 of cash was received in advance of performing services. c) Cash, building, equipment It is also known as deferred revenues Advertisement Previous Next Advertisement a. c) revenue being overstated A company using a calendar year-end will record an adjusting entry for a bill received on January 15 for services received during the month of December on: -The adjusted trial balance is used to prepare financial statements. Equipment The journal entry to record the payment of salaries on January 4 includes: d) Accounts receivable will be credited for $500. a 24-month insurance policy was prepaid Three days later, on January 3, total salaries of $4,000 (including the $500 accrued at year end) are paid. They refer to cash received in advance of performing a service or product. On January 4 of the current year, total salaries for the five-day week are paid. (Income Summary is account #33 in the chart of accounts.) Which statements below are true regarding permanent and temporary accounts? By the end of the period, $300 had not yet been earned. A 12-month insurance policy was purchased on Dec. 1 for $4,800 and the Prepaid insurance account was initially increased for the payment. a) Salaries expense would be debited for $3,500. (Check all that apply.). b) It reports amounts owed to employees and is a liability. -Depreciation is recognized at the end of an accounting period. At the end of January, the total value of the services provided to Mr. Y is $15,000. If an adjusting entry for unearned revenue is not recorded, what is the effect on the financial statements? (Check all that apply.) It reports sales in two categories, products and services, which then combine to form total net . What is a work sheet? Explain what unearned revenues are by selecting the statements below which are correct. Multiple choice question. -A temporary account is closed at the end of an accounting period. (Check all that apply.). g) Six months of rent were paid in advance. e) Salaries payable will be credited for $500. Unearned revenues refer to income reported on the income. -It has a life within the business greater than one year. Demonstrate the required adjusting journal entry by selecting from the choices below. They are reported on a balance sheet. Determine which of the following transactions may require adjustments. h) An employee was paid his weekly wages in full at the end of the week. -Permanent accounts are reported on the balance sheet. Assume that Microsoft recognized $2000 million of unearned revenue as revenue during the year, what entry for unearned revenue did Microsoft make during the year? Then, use the words and their definitions to create a matching quiz. This principle is a major part of the _________ process. Accounting for a refund differs from a reversal. -Accounts payable (Check all that apply.). Which of the following describes accrued revenue? Supplies would be credited for $300. Therefore, the revenue must initially be recognized as a liability. -Retained Earnings is a permanent account, but Dividends is a temporary account. e) Unearned revenue would be debited for $700. -Current liabilities are reported in the order of those to be settled first. Register Now. The note is dated December 1 and is due on February 1. ), $1,000 of supplies were purchased at the beginning of the month. (Check all that apply. f) Accounts are generally listed in the same order as listed in the chart of accounts. a) liabilities on the balance sheet will be overstated. Transcribed Image Text: K Randal's Service Company began operations on January 1, 2025. In order to prepare a balance sheet using the account balances on an adjusted trial balance, all of the _____ (expenses/assets) and their debit balances are transferred to the balance sheet as well as all of the _____ (liabilities/revenues) and their ______ (debit/credit) balances. The time span from when cash is used to purchase goods until cash is received from the sale of goods is called the _______ cycle, Accounts receivable Describe the final step in the adjusting process. c) They refer to earnings which have been earned but not yet billed. Accumulated depreciation is a contra account. Credit c) Service revenue would be credited for $200. g) New accounts may need to be added because of the adjusting process. -The adjustment can be combined into one adjustment amount. (The Unearned revenue, account was increased at the time of the initial cash receipt.) At the end of the previous year, a customer owed Days Company $400. a) Cash will be debited for $600. c) The date is unimportant Demonstrate the required adjusting entry by choosing the correct statement below. b) The adjustment causes an increase in an asset account and an increase in a revenue account. The payment amount of $27,000 will be recorded under cash,increasing the assets, and under unearned revenue, increasing long-term liabilities. What is the trend in the average unit price of VCRs between 1998 and 2003? -They are reported on a balance sheet. d) Adjustments involve increasing both an expense and a liability account. -Depreciation is the original cost of an asset minus any residual value and this amount is expensed over its useful life. Accrual basis accounting recognizes __________ when earned and records __________ when _________ in order to adhere to the matching principle. Match the statements below with the appropriate terms: A. Prepaid Expenses B. Unearned Revenues C. Accrued Revenues D. Accrued Expenses Statements: 1. A reversing entry: (Check all that apply). credit The chart of accounts used by Norton Printing Company is listed below. c) Debit Interest revenue for $600. Debit Interest payable for $30. B. Contra asset is an account shown as an addition to the asset. $1,000 of cash was received in advance of performing services. Building The adjusted trial balance is prepared after adjusting entries have been recorded and posted. b) The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. interest revenue. They are reported on a balance sheet. Which of the following statements describes the expense recognition (matching) principle? Chimney Sweeps provided chimney cleaning services to several clients during the month of February. d) The original date of the transaction being adjusted. Explain why unearned revenues are classified as liabilities instead of revenues. They refer to costs that are incurred in a period, but are both unpaid and unrecorded. Explain your understanding of what an accrued expense is by selecting the statements below which are correct. Norfolk Southern Corp. reports revenue in its income statement when the performance obligation is satisfied instead of when cash is received. Which of the following describes accrued revenue? Journalize and post the closing entries. Determine which of the following transactions may require adjustments. (Check all that apply). C) The normal balance of unearned revenues is a credit. Wages expense will be debited for $4,000. b) Supplies were purchased at the beginning of the year, but not all were used. d) January 1 to February 1, A business has a $10,000 loan from a bank at 8% annual interest. a) They are reported on an income statement. Which of the following accounts is considered a prepaid expense? At the end of the previous year, a customer owed Days Company $400. (Check all that apply.) Cash will be debited for $900. It paid $25,000 for the car. A depreciation adjustment would include a debit to ______ (depreciation expense/accumulated depreciation/building) and ______(debit/credit) to ____depreciation expense/accumulated depreciation/building). The required adjusting entry would be to debit the Interest ________ (expense/payable/receivable) account and _______ (debit/credit) the Interest ______ (expense/payable/receivable) account. d) liabilities on the balance sheet will be understated. The revenue recording in the accounting books of an entity is necessary to calculate the net income. Able Company owes interest on a note for a loan. 1) determine what the current account balance equals 2) determine what the current account balance should equal 3) record an adjusting entry Place the steps in the adjusting process in the correct order in which they would be performed. Define the Salaries payable account by selecting the appropriate statement below. Utility expense. Demonstrate the required adjusting entry by choosing the correct statement below. Supplies expense would be debited for $600. -Notes receivable due in 2 years (Check all that apply.) -They are reported on an income statement. (a) Find limx40S(x)\lim _{x \rightarrow 40} S(x)limx40S(x), if it exists. -Links accounts and adjustments to financial statements Let's take a closer look to understand how revenue works for a very large public company. Stock Retained Earnings 9 2 Accounts Receivable 3 Paper Supplies 4 Copy Machines 5 Accounts Payable 6 Note Payable . c) They refer to earnings which have been earned but not yet billed. -Intangible assets are long-term resources that benefit business operations, but lack physical form. Demonstrate the required adjusting entry of the business by completing the following sentence. Six months of rent were paid in advance. Examples of accrued expenses are wages expense and interest expense. Show your understanding of the steps involved in adjusting entries by placing the following steps in the correct order of preparation. What is a plant asset? Explain what unearned revenues are by choosing the correct statement below. 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