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Exam 3: Adjustments: Accruals and Deferrals

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Question 81

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Using accrual accounting, expenses are recorded and reported only

A) when they are incurred, whether or not cash is paid
B) when they are incurred and paid at the same time
C) if they are paid before they are incurred
D) if they are paid after they are incurred

E) A) and B)
F) C) and D)

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Question 82

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On January 1, Power House Co. prepaid the annual rent of $10,140. Prepare the journal entry to record this transaction.

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Question 83

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Indicate whether the following error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. ​ The entry for $975 of supplies used during the period was journalized as a debit to Supplies Expense for $795 and credit to Supplies for $975.

A company receives $6,500 for two season tickets sold on September 1. If $2,500 is earned by December 31, the adjusting entry made at that time is a debit to Cash, $2,500, and a credit to Ticket Revenue, $2,500.

Indicate whether the following error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. ​ The adjustment for accrued fees of $1,170 was journalized as a debit to Accounts Receivable for $1,170 and a credit to Fees Earned for $1,107.

The balance in the accumulated depreciation account is the sum of the depreciation expense recorded in past periods.

Prepare the December 31 adjusting entries for the following transactions. Omit explanations. 1. Fees accrued but not billed, $6,300 2. The Supplies account balance on December 31, $4,750; Supplies on hand, $960 3. Wages accrued but not paid, $2,700 4. Depreciation of office equipment, $1,650 5. Rent expired during year, $10,800 ​

Fees payable would appear on the balance sheet as a(n)

What is the correct debit and credit to record the adjusting entry for $800 of fees earned but not yet billed or paid?

Prepare the required entries for the following transactions:

The supplies account had a balance of $4,400 at the beginning of the year and was debited during the year for $2,400, representing the total of supplies purchased during the year. If $400 of supplies are on hand at the end of the year, the supplies expense to be reported on the income statement for the year is

Prepaid expenses are eventually expected to become

Accruals are needed when an unrecorded expense has been incurred or an unrecorded revenue has been earned.

On January 2, Dog Mart prepaid $30,000 rent for the year and recorded the prepayment in an asset account. Prepare the January 31 adjusting entry for rent expense.

A company pays $36,000 for twelve months' rent on October 1, recording the prepayment as an asset. The adjusting entry on December 31 is a debit to Rent Expense, $9,000, and a credit to Prepaid Rent, $9,000.

The estimated amount of depreciation on office equipment for the current year is $3,500. The correct adjusting entry to record this depreciation is

All of the following statements regarding vertical analysis are true except

Data for an adjusting entry described as "accrued revenue, $3,100" requires a

On January 2, Safe Motorcycling Monthly received a check for $72 from a subscriber for a 12-month subscription. The January issue was mailed on January 15. Prepare the necessary entries for the month of January.

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.