The adjustment to show the supplies used up would cause _______ (assets/liabilities/expenses) to be reduced and _________ (expenses/liabilities/revenues) to be increased, so net income would decline. $1,000 of supplies were purchased at the beginning of the month. (Check all that apply. They are a liability. A company borrowed $10,000 from the bank at 5% interest. !J Reed about !tis v 1 Enter unadjusted trial balance. Unearned revenue would be debited for $300. The main premise is that for each line in the financial statements, the auditors’ primary objective is to en… (Check all that apply.). As of the end of the period, $200 of supplies still remain. They are also called accounts receivable. Place them in the correct order of use. Accrued _______________ are earned in a period that are both unrecorded and not yet received in cash. Here’s a sample chart of accounts list. During the period, $90 of supplies were used. $200 of supplies were purchased at the beginning of the period and recorded as an asset. Explain what unearned revenues are by selecting the statements below which are correct. This is why unearned revenue is recorded as an equal decrease in unearned revenue (a liability account) and increase in revenue (an asset account). Closing means to transfer account balances from ______ (asset/liability/permanent/temporary) accounts so that they will start with a ______ (contra/larger/zero) balance at the beginning of the next period. it is sometimes referred to as the net amount of an asset. Supplies expense would be debited for $600. This stock does not have any unearned revenues. Look at the before and after words for Account Category: Unearned Revenue Liabilities, and select the correct statement below; A. All of the before and after words are correct 8. The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. 4. Unearned revenues refer to cash received in advance of providing a service or product. (Check all that apply.). Define the Salaries payable account by selecting the appropriate statement below. (Check all that apply). Multiple Choice Question Explain what unearned revenues are by choosing the correct statement below. ), Which of the following describe the Salaries payable account? 1. journalize transactions into the journal, Identify which of the accounts below would be classified as a current asset. (Check all that apply.) the revenues on the income statement will be understated. -A temporary account has a balance for only one period. Which of the following describes accrued revenue? Challenge - Useful information must reach decision makers frequently. Here’s what that means. Demonstrate your knowledge of a depreciation adjusting entry by completing the following sentence. It is estimated that it will have a life of 5 years and zero salvage value. (The Supplies account was increased at the time of the initial purchase.) Explain your understanding of what an accrued expense is by selecting the statements below which are correct. b. Unearned revenues refer to cash received in advance of providing a service or product. Explain what unearned revenues are by selecting the statements below which are correct. They refer to cash received in advance of performing a service or product. Use a 360 day year. Current items are those expected to come due within one year or the company's operating cycle, whichever is longer. A company borrowed $4,000 from the bank at an interest rate of 9%. (Check all that apply.). (Check all that apply.) Choose the statement(s) below which is (are) true regarding adjusting journal entries. A business has a $10,000 loan from a bank at 8% annual interest. $1,000 of supplies were purchased at the beginning of the month. A balance sheet account is always affected. $300 were used during the month. B. accrual basis recognizes revenues when earned and records expenses when cash is paid C. accrual basis is the same as the cash basis D. accrual basis does not consider the revenue recognition principle E. accrual basis uses the adjusting process to recognize revenues when earned and to match expenses w/revenues They are reported on a balance sheet. The income summary account is an intermediary between revenues and expenses, and the Retained Earnings account. (Check all that apply.). Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. Insurance expense would be debited for $300. They are a liability They are reported on a balance sheet. By the end of the period, only $100 remains. The final step is to create an adjusting journal entry to get from step 1 to step 2. $300 were used during the month. At the end of January, the total value of the services provided to Mr. Y is $15,000. 6. -Expenses are always recognized in the period in which they are incurred. (Put the first step at the top.) Financial Statement Assertions are the claims that are made by the organization’s management pertaining to the financial statements. Explain the difference between the unadjusted and the adjusted trial balance. (Check all that apply.). Identify which group of accounts may require adjustments at the end of the accounting period. A classified balance sheet can be described as a balance sheet that: (Check all that apply.). After each monthpasses, the unearned revenue account is reduced by $1,500, and the revenue isincreased by the same amount to maintain the balance and recognize the earnedrevenue. Only when the revenue is recorded in the balance sheet, this transaction isthen also reflected in the income statement. If a company has received cash but hasn't performed the work yet, the revenue is unearned and should be recorded as a liability. ), A plant asset can be defined by which of the following statements? Revenue and Cost Cycle for 1-800 Flowers. Recall the order in which financial statements are prepared. Select the statements below that describe the purpose of a post-closing trial balance. Which of the following is (are) true regarding timeliness and the importance of periodic reporting? Explain what unearned revenues are by choosing the correct statement below. (Check all that apply. Deferred or unearned revenue is an advance payment made by a customer for a product or service that has not yet been rendered (delivered). (Check all that apply.). Look at the before and after words for Account Category: Unearned Revenue Liabilities, and select the correct statement below; A. They are a liability They are reported on a balance sheet. A calendar year-end reporting period is defined as a _______(1 / 3 / 12) -month period which ends on________ (December/January/March) 31st. The final step is to create an adjusting journal entry to get from step 1 to step 2. Demonstrate what the correct adjusting entry should include by choosing the correct statement below. B. accrual basis recognizes revenues when earned and records expenses when cash is paid C. accrual basis is the same as the cash basis D. accrual basis does not consider the revenue recognition principle E. accrual basis uses the adjusting process to recognize revenues when earned and to match expenses w/revenues By the end of the accounting period, employees have earned salaries of $650, but they will not be paid until the following pay period. What is the purpose of the Accumulated Depreciation account? Which of the following adjustments would be required at the end of the period? (Check all that apply.). After one month, accrual accounting requires $ _________(100/3,600) of insurance expense be reported on the income statement ending December 31. And increased revenues by 4.8% for the December quarter however much of this was due to growth via new acquisitions as described above. An adjusting journal entry is made at the ______ (beginning/middle/end) of an accounting period. Public companies, for in… PREPARE a complete set of financial statements and disseminate it to users. By the end of the accounting period, employees have earned salaries of $650, but they will not be paid until the following pay period. b. Unearned revenues refer to amounts owed to the company that have not yet been billed. Unearned revenue would be debited for $700. c. They refer … Accrual basis accounting is defined as: (Check all that apply.). Failing to properly classify unearned revenue is another common manipulation of liabilities. Illustrate your understanding of how to use the adjusted trial balance to prepare a statement of owner's equity by completing the following sentence. $1,000 of cash was received in advance of performing services. (Check all that apply.). The required adjusting journal entry on December 31 includes a: (Check all that apply.). Demonstrate the required adjusting journal entry by selecting from the choices below. Demonstrate the required adjusting journal entry by selecting from the choices below. For the current year, Bubbles Office Supply had earned $600 of interest on investments. (Check all that apply.). (Check all that apply.). Determine which of the following transactions may require adjustments. An unclassified balance sheet is one whose items are broadly grouped into assets, liabilities, and equity. (The Unearned revenue account was increased at the time of the initial cash receipt.) Debit Depreciation expense; credit Accumulated depreciation. A contra account is an account that is linked with another _______ (report/account/statement). Which of the following lists steps of the accounting cycle in the correct order (note that not all steps are listed)? Once the purchased goods or services are delivered, the seller is said to have earned the revenues and now recognizes the same funds as revenue earnings in an Income statement … This is the fourth step in the accounting cycle. Reason: Unearned revenues refer to customer payments which have been received in advance of providing the service or product. Explain what unearned revenues are by selecting the statements below which are correct. Ans: a. They are reported on a balance sheet. It is any period which consists of 12 consecutive months. Chimney's customers have not yet been billed. Unearned revenues refer to cash received in advance of providing a service or product. c. They refer to cash received in advance of performing a service or product. Choose the formula below that is used to calculate the current ratio of a business. As of December 31, none of this interest had been received or recorded. Demonstrate the required adjusting entry by choosing the correct statement below. 8 - Explain what unearned revenues are by ohoosing the oorreot statement below I and about this x Sorry your answer Is Incorrect L'J Uneamed revenues (Check all that apply.). (Check all that apply.). Unearned revenues refer to cash received in advance of providing a service or product. (Check all that apply.) Place the steps in the adjusting process in the correct order in which they would be performed. -an accounting system that uses the matching principle to determine when to recognize revenues and expenses. $21,000 of equipment is purchased on December 1. d. They are a liability. Example 1: 1-800 Flowers Income Statement. Service revenue would be credited for $300. The balance sheet approach for unearned revenue is presented at left below. Describe the final step in the adjusting process. Demonstrate the required journal entry on January 3 by selecting from the choices below. The revenue recognition principle states that revenue: should be recorded when goods or services are provided to customers at an amount expected to be received from them. (Check all that apply. The formula for figuring interest expense is: Unearned revenue would be debited for $700. Therefore, it can be seen that when management prepares financial statements, they make five assertions regarding each line in the financial statements. This makes sure the equation continues to balance. Debit Depreciation expense; credit Accumulated depreciation. List the order in which financial statements are prepared. On January 31 of the current year, the customer paid $900 total, which included the $500 owed plus $400 owed for the current month of January. CLOSE revenues, gains, expenses, and losses to RETAINED EARNINGS (record in journal and post to ledger). A business has a $5,000 loan from a bank at 16% annual interest. Debit to Salaries Payable for $500; Debit to Salaries Expense for $2,000. Chart of accounts sample. Use a 360 day year. (Check all that apply.). ), amount owed x interest rate x fraction of the year since last payment. Explain what unearned revenues are by selecting the statements below which are correct. On December 28, I. M. Greasy, Catering completed $600 of catering services. The revenue recognition principle states that revenue: should be recorded when goods or services are provided to customers at an amount expected to be received from them Describe the final step in the adjusting process. The closing process takes place at the ______ (end/beginning) of an accounting period, after the ________ (adjusted/unadjusted) trial balance is prepared and_________ (after/before) the financial statements are prepared. The required adjusting entry would be to debit the _________________ (Unearned revenue/Accounts receivable/Cash/Interest receivable) account and __________________ (debit/credit) the ______________ (Cash/Accounts receivable/Interest revenue/Interest receivable) account. amount owed x interest rate x fraction of the year since last payment. Choose the statement below that demonstrates the correct adjusting entry to recognize depreciation expense on a building. Current items can be described as those expected to come due within one ________ (month/year) and are listed in the order of how _______ (quickly/slowly) they could be converted to or paid in cash. By the end of the accounting period, employees have earned salaries of $500, but they will not be paid until the following pay period. Debit accounts receivable and credit services revenue. Unearned Revenue is a liability account that registers funds a seller receives for goods or services not yet delivered to the buyer. -One purpose is to verify that all temporary accounts have zero balances. The adjustment to show the $400 of supplies used would have the following effect(s). Which of the following accounts would be considered a prepaid expense or prepaid asset account? 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. $500 of supplies were purchased at the beginning of the period. Which of the following statements about the Accumulated depreciation account is (are) correct? Unearned Revenue is a liability account that registers funds a seller receives for goods or services not yet delivered to the buyer. 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