ACCT ch3 Quiz – Flashcards

Accrual accounting records revenue only when it is earned.

Service revenue of $360.

Revenue to be recorded only after the business has earned it.

Updating the accounts at the end of the period.

Recording the usage of office supplies during the period.

Salaries Expense 120 Debit Salaries Payable 120 Credit

Account balances after adjustments

Balance sheet: assets understated, equity understated Income statement: revenues understated

Is an internal document that helps summarize data for the preparation of financial statements.

Service Revenue 2000 Debit Unearned Revenue 2000 Credit

$700

Net Income would be overstated (Expenses understated) and Balance Sheet liabilities would be understated. By accidently omitting an adjusting entry for salaries incurred but not paid, you would be omitting a debit to Salaries Expense (which if omitted Net Income would be overstated and expenses would be understated) and you would be omitting a credit to Salaries Payable (which if omitted the Balance Sheet liabilities would be understated).

Supplies Expense 800 Debit Office Supplies 800 Credit. To determine the amount of adjustment, you need to determine the amount of supplies that were used during the period. From the $1,200 worth of supplies at the beginning of the year, subtract the amount of supplies that are still left at the end of the year to get supplies used ($1,200 - $400 = $800 supplies used). Debit Supplies Expense and credit Supplies for this amount.

Salaries Expense 3000 Debit Salaries Payable 3000 Credit

$8000

Depreciation Expense - Equipment 2000 Debit, Accumulated Depreciation - Equipment 2000 Credit When journalizing for depreciation, the amount of Depreciation Expense is debited, and Accumulated Depreciation is credited. Depreciation Expense is included on the Income Statement; Accumulated Depreciation will appear as a contra asset on the Balance Sheet.

Supplies Expense 800 Debit, Cash 800 Credit When the purchased office supplies are used within the same accounting period, you can record the transaction as a debit to Supplies Expense at the time the cash is paid for the office supplies instead of as an Asset (Office Supplies).

$7000

$18,000 When you have a debit balance and a debit adjustment, you add the amounts together (15,000 + 3,000 = $18,000) for the Adjusted Trial Balance.

Accounts Receivable 900 Debit Service Revenue 900 Only half of the revenue has actually been earned but we do not get any cash payment until it is completed on January 31. To make sure that revenues that have been earned are reflected on the company's current financial statements, we record half of the total ($900) as a debit to Accounts Receivable and a credit to Service Revenue.

Update the account balances at the end of each period to match revenues and expenses to the appropriate period.

$22,000 When you have a credit balance and a credit adjustment, you add the amounts together (20,000 + 2,000 = $22,000) for the Adjusted Trial Balance.

Service Revenue of $600 Each show earns $200 of Service Revenue ($1,000 / 5 shows = $200 per show). Three shows have been performed so $600 has been earned as Service Revenue ($200 * 3 shows = $600). Therefore, $600 is earned and Service Revenue is on the income statement. Cash is not on the Income Statement, but rather the Balance Sheet. The $1,000 of cash that is received is recorded on the balance sheet as Unearned Service Revenue when received. As the revenue is earned, this account is debited and Service Revenue is credited.

Accounts Payable Assets, Expenses, and Drawing would have normal debit balances on the Adjusted Trial Balance. Liabilities, Capital, and Revenues would have normal credit balances on the Adjusted Trial Balance. Accounts Payable is a liability and would have a credit balance, so it is the only account listed that would not have a debit balance.

Recording the amount of Salaries Expense for employees that is not paid yet. Accrued expenses are those expenses that have occurred, but have not been paid or recorded.

Interest Expense 100 Debit Interest Payable 100 Credit Interest that has been accumulated on a notes payable but not paid yet, needs an adjusting entry to debit Interest Expense (which appears on the income statement) and credit Interest Payable (which appears as a liability on the Balance Sheet).

It summarizes data for the preparation of the financial statements. The worksheet does not replace a journal, ledger or financial statements. It summarizes the data for the preparation of the financial statements.

Cash 2200 Debit Unearned Service Revenue 2200 Credit When receiving cash in advanced for future revenues, but the revenues will be earned within the same accounting period, you can record the transaction as a credit to Service Revenue at the time the cash is received instead of as a liability (unearned).

Recording the amount of Salaries Expense for employees that is not paid yet.

Cash

It summarizes data for the preparation of the financial statements.

Net Income would be overstated (Expenses understated) and Balance Sheet assets would be overstated. By accidentally omitting an adjusting entry for the use of supplies, you would be omitting a debit to Supplies Expenses (which if omitted Net Income would be overstated and Expenses would be understated) and you would be omitting a credit to Office Supplies (which if omitted the Balance Sheet Assets would be overstated).

Cash Assets, Expenses, and Drawing would have normal debit balances on the Adjusted Trial Balance. Liabilities, Capital, and Revenues would have normal credit balances on the Adjusted Trial Balance. Cash is an asset and would have a debit balance, so it is the only account listed that would not have a credit balance.

Net Income would be overstated (Expenses understated) and Balance Sheet liabilities would be understated By accidently omitting an adjusting entry for salaries incurred but not paid, you would be omitting a debit to Salaries Expense (which if omitted Net Income would be overstated and expenses would be understated) and you would be omitting a credit to Salaries Payable (which if omitted the Balance Sheet liabilities would be understated).

$22,000 When you have a credit balance and a credit adjustment, you add the amounts together (20,000 + 2,000 = $22,000) for the Adjusted Trial Balance.

Cash 2200 Service Revenue 2200 When receiving cash in advanced for future revenues, but the revenues will be earned within the same accounting period, you can record the transaction as a credit to Service Revenue at the time the cash is received instead of as a liability (unearned).