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Exam 3: The Adjusting Process

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Question 1

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What is the purpose of an adjusted trial balance? What type(s) of error does it detect? What type(s) of error does it not detect?

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The purpose of an adjusted trial balance...

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Question 2

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The account type and normal balance of Prepaid Expense is

A) revenue, credit
B) expense, debit
C) liability, credit
D) asset, debit

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

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Question 3

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Proper reporting of revenues and expenses in a period is due to the accounting period concept.

The adjusting entry for rent earned that was previously recorded in the unearned rent account is

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.

If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.

The Supplies account had a beginning balance of $1,750. Supplies purchased during the period totaled $3,500. At the end of the period before adjustment, $350 of supplies were on hand. Prepare the adjusting entry for supplies.

A company realizes that the last two day's revenue for the month was billed but not recorded. The adjusting entry on December 31 is debit Accounts Receivable and credit Fees Earned.

Unearned revenue is a liability.

A one-year insurance policy was purchased on June 1, 2011 for $1,500. The adjusting entry on December 31, 2011 would be:

Depreciation on Office Equipment is $3,300. The adjusting entry on December 31, 2011 would be:

Journalize the six entries to adjust the accounts at December 31. (Hint: One of the accounts was affected by two different adjusting entries).

The following adjusting journal entry found in the journal is missing an explanation. Select the best explanation for the entry.

Which of the following is an example of accrued revenue?

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry.

The adjusting entry to record the depreciation of equipment for the fiscal period is

The balance in the unearned fees account, before adjustment at the end of the year, is $10,250. Journalize the adjusting entry required if the amount of unearned fees at the end of the year is $3,125.

If the debit portion of an adjusting entry is to an asset account, then the credit portion must be to a liability account.

Deferrals are recorded transactions that delay the recognition of an expense or revenue.

If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the assets at the end of the period will be understated.