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If you have difficulty answering the following questions, learn more about this topic by reading our Adjusting Entries (Explanation).
What type of entry will increase the normal balance of the general ledger account Service Revenues?
What type of entry will increase the normal balance of the general ledger account that reports the amount owed as of the balance sheet date for a company's accrued expenses?
What type of entry will increase the normal balances of the general ledger accounts Electricity Expense, Insurance Expense, Interest Expense, and Repairs Expense?
What type of accounts are Interest Receivable and Fees Receivable?
What type of entry will decrease the normal balances of the general ledger accounts Interest Receivable and Fees Receivable?
What type of accounts are Deferred Revenues and Unearned Revenues?
What type of entry will decrease the normal balances of the accounts Deferred Revenues and Unearned Revenues?
What type of accounts are Prepaid Insurance, Prepaid Advertising, and Prepaid Expenses?
What type of entry will decrease the normal balances of the accounts Prepaid Insurance and Prepaid Expenses, and Insurance Expense?
What type of accounts are Accumulated Depreciation and Allowance for Doubtful Accounts?
What type of entry will increase the balances that are normally found in the accounts Accumulated Depreciation and Allowance for Doubtful Accounts?
In the case of a company's accrued interest expense, which of the following occurs first?
In the case of a bank's accrued interest revenues, which occurs first?
In the case of a company deferring insurance expense, which occurs first?
In the case of a company's deferred revenues, which occurs first?
Which of the following will be included in the adjusting entry to accrue interest expense?
Which of the following will be included in the adjusting entry to accrue interest income or interest revenues?
The adjusting entry that reduces the balance in Prepaid Insurance will also include which of the following?
The adjusting entry that reduces the balance in Deferred Revenues or Unearned Revenues will also include which of the following?
The ending balance in the account Prepaid Insurance is expected to report which of the following?
The ending balance in the account Deferred Revenues (or Unearned Fees) should report which of the following?
Which type of adjusting entry is often reversed on the first day of the next accounting period?
Typically an adjusting entry will include which of the following?
Use the following information to answer questions 24 - 29:
A company borrowed $100,000 on December 1 by signing a six-month note that
specifies interest at an annual percentage rate (APR) of 12%. No interest or principal
payment is due until the note matures on May 31. The company prepares financial
statements at the end of each calendar month. The following questions pertain to the
adjusting entry that should be entered in the company's records.
What date should be used to record the December adjusting entry?
How many accounts are involved in the adjusting entry?
What is the name of the account that will be debited?
What is the name of the account that will be credited?
What is the amount of the debit and the credit?
What would be the effect on the financial statements if the company fails to make the adjusting entry on December 31?
Use the following information to answer questions 30 - 35:
A bank lent $100,000 to a customer on December 1 that required the customer to
pay an annual percentage rate (APR) of 12% on the amount of the loan. The loan is due
in six months and no payment of interest or principal is to be made until the note is due
on May 31. The bank prepares monthly financial statements at the end of each calendar
month. The following questions pertain to the adjusting entry that the bank will be making
for its accounting records.
What date should be used to record the December adjusting entry?
How many accounts are involved in the adjusting entry?
What is the name of the account that should be debited?
What is the name of the account that should be credited?
What is the amount of the debit and the credit?
What would be the effect on the financial statements if the company fails to make the adjusting entry on December 31?
Use the following information to answer questions 36 - 41:
On December 1, your company paid its insurance agent $2,400 for the annual insurance premium covering the twelve-month period beginning on December 1. The $2,400 payment was recorded on December 1 with a debit to the current asset Prepaid Insurance and a credit to the current asset Cash. Your company prepares monthly financial statements at the end of each calendar month. The following questions pertain to the adjusting entry that should be written by the company.
What date should be used to record the December adjusting entry?
How many accounts are involved in the adjusting entry?
What is the name of the account that will be debited?
What is the name of the account that will be credited?
What is the amount of the debit and the credit?
What would be the effect on the financial statements if the company fails to make the adjusting entry on December 31?
Use the following information to answer questions 42 - 47:
On December 1, your company paid its insurance agent $2,400 for the annual insurance premium covering the twelve-month period beginning on December 1. The $2,400 payment was recorded on December 1 with a debit to the income statement account Insurance Expense and a credit to the current asset Cash. Your company prepares monthly financial statements at the end of each calendar month. The following questions pertain to the adjusting entry that should be written by the company.
What date should be used to record the December adjusting entry?
How many accounts are involved in the adjusting entry?
What is the name of the account that will be debited?
What is the name of the account that will be credited?
What is the amount of the debit and the credit?
What would be the effect on the financial statements if the company fails to make the adjusting entry on December 31?
Use the following information to answer questions 48 - 53:
On December 1, XYZ Insurance Co. received $2,400 from your company for the annual insurance premium covering the twelve-month period beginning on December 1. XYZ Insurance Co. recorded the $2,400 receipt as of December 1 with a debit to the current asset Cash and a credit to the current liability Unearned Revenues. XYZ Insurance Co. prepares monthly financial statements at the end of each calendar month. The following questions pertain to the adjusting entry that should be written by the XYZ Insurance Co.
What date should be used to record the December adjusting entry?
How many accounts are involved in the adjusting entry?
What is the name of the account that will be debited?
What is the name of the account that will be credited?
What is the amount of the debit and the credit?
What would be the effect on the financial statements if the company fails to make the adjusting entry on December 31?
Use the following information to answer questions 54 - 59:
On December 1, your company began operations. On December 3, it purchased $1,500 of supplies on credit and recorded the transaction with a debit to the current asset Supplies and a credit to the current liability Accounts Payable. Your company prepares monthly financial statements at the end of each calendar month. At the end of the day on December 31, your company estimated that $700 of the supplies were still on hand in the supply room. The following questions pertain to the adjusting entry that should be entered by your company.
What date should be used to record the December adjusting entry?
How many accounts are involved in the adjusting entry?
What is the name of the account that will be debited?
What is the name of the account that will be credited?
What is the amount of the debit and the credit?
What would be the effect on the financial statements if the company fails to make the adjusting entry on December 31?
Use the following information to answer questions 60 - 65:
On December 1, your company began operations. On December 4, it purchased $1,500 of supplies on credit and recorded the transaction with a debit to the income statement account Supplies Expense and a credit to the current liability Accounts Payable. Your company prepares monthly financial statements at the end of each calendar month. At the end of the day on December 31, your company estimated that $700 of the supplies were still on hand in the supply room. The following questions pertain to the adjusting entry that should be entered by your company.
What date should be used to record the December adjusting entry?
How many accounts are involved in the adjusting entry?
What is the name of the account that will be debited?
What is the name of the account that will be credited?
What is the amount of the debit and the credit?
What would be the effect on the financial statements if the company fails to make the adjusting entry on December 31?
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