Adjusting Entries(Quick Test #1)

1. Generally an __________-type adjusting entry will cause revenues to be reported on the income statement before a sales invoice is prepared.

2. An adjusting entry that involves prepaid insurance is known as a __________-type or prepayment-type adjusting entry.

3. Adjusting entries are usually dated as of the __________ day of the accounting period.

4. An adjusting entry usually involves an __________ statement account and a __________ sheet account.

5. Adjusting entries are required by the __________ principle.

6. The adjusting entry for depreciation will include a debit to Depreciation Expense and a credit to __________ __________.

7. Adjusting entries help to convert accounting records from the cash basis of accounting to the __________ basis of accounting.

8. Insurance premiums that have not expired as of the balance sheet date are reported in the account __________ Insurance.

9. Insurance premiums that have expired during the accounting period are reported in the account Insurance __________.

10. Adjusting entries will explain the difference between an __________ trial balance and an adjusted trial balance.

11. Unearned revenues and customer deposits are reported as __________ on the balance sheet.

12. Accumulated depreciation is a contra – __________ account.

13. Accrued __________ are reported on the balance sheet as liabilities.

14. Prepaid or unexpired costs are reported on the balance sheet as __________.

15. An adjusting entry that involves the accrual of an expense will also involve this type of account.

16. An adjusting entry that involves the accrual of revenue will also involve this type of account.

17. A company with a calendar year and calendar months is more likely to need adjusting entries for which group of employees?

18. The cost of utilities such as electricity and natural gas are likely to require this type of adjusting entry.

19. Prepayments are associated with __________.

20. Failure to accrue interest expense at the end of an accounting period will mean that the reported net income will be __________.

21. Failure to accrue interest expense at the end of an accounting period will mean that the reported amount of liabilities will be __________.

22. Accumulated depreciation will appear on which financial statement?

23. Which adjusting entries involve advance payments?

24. Which adjusting entries involve amounts that will be paid in future accounting periods?

25. Which adjusting entries are more likely to be followed with a reversing entry?

26. Failure to accrue interest earned as of December 31 will cause an understatement of __________.

27. Accruing wages expense as of December 31 has what effect on the December 31 balance sheet?

28. The amount of accrued interest at December 31 is $__________.

29. The account to be debited when ABC Co. accrues interest at December 31 is __________ __________.

30. On December 1 a company paid $1,200 for the insurance premium covering the cost of insurance from December 1 through May 31. When making the payment on December 1, the company debited Prepaid Insurance for $1,200 and it credited Cash for $1,200. The adjusting entry to be made as of December 31 will include a debit to the account __________ __________ and a credit to the account __________ __________ for $ __________(omit cents).

31. On December 1 a company paid $1,200 for the insurance premium covering the cost of insurance from December 1 through May 31. When making the payment on December 1, the company debited Insurance Expense for $1,200 and it credited Cash for $1,200. The adjusting entry to be made as of December 31 will include a debit to the account __________ __________ and a credit to the account __________ __________ for $ __________(omit cents).

32. A retailer opened its store for business on December 10. Its electric meter was read by the electric utility for the first time on January 9 and the resulting bill was $300. The adjusting entry to be made as of December 31 will include a debit to the account Electricity __________ for $__________ (round to the nearest $100).

33. On December 31 a company made the following adjusting entry:

The reversing entry to be entered in January will include a debit to the account __________ __________.

34. A company’s asset account Supplies had a debit balance of $20,000 at the beginning of the year. At the end of the year the account had a debit balance of $17,000. During the year all of the supplies purchased were debited to this account. If the amount of supplies purchased had a cost of $200,000, the amount of Supplies Expense for the year will be $__________.

35. On December 1, 2023 Hosting Services LLC received $120,000 from customers who paid for twelve months of service (December 1, 2023 through November 30, 2024). The $120,000 received on December 1 was debited to Cash and credited to Hosting Revenues. The adjusting entry to be made as of December 31 will include a debit to the account __________ __________ for $ __________ (omit cents).

36. On December 1, 2023 Hosting Services LLC received $120,000 from customers who paid for twelve months of service (December 1, 2023 through November 30, 2024). The $120,000 received on December 1 was debited to Cash and credited to Unearned Hosting Revenues. The adjusting entry to be made as of December 31 will include a debit to the account __________ __________ __________ for $ __________ (omit cents).

37. The adjusting entry to be made as of December 31 will include a debit to the account __________ __________ for $ __________(omit cents).

38. If the firm fails to make an adjusting entry on December 31, its net income will be $__________ too __________ (high, low).

39. If the firm fails to make an adjusting entry on December 31, its liabilities will be __________ (overstated, understated) by $__________.

40. If the firm fails to make an adjusting entry on December 31, its owner’s equity will be __________ (overstated, understated) by $__________.