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Exam 12: Accruals, Deferrals, and the Worksheet

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Question 21

Multiple Choice

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Allowance for Doubtful Accounts is

A) deducted from Sales in the Revenue section of the income statement.
B) listed in the Operating Expenses section of the income statement.
C) subtracted from Accounts Receivable in the Asset section of the balance sheet.
D) added to Accounts Receivable in the Assets section of the balance sheet.

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

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Question 22

Multiple Choice

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An adjusting entry is usually not required for a revenue item when it is

A) paid for by the customer and recorded in one period but not fully earned until a later period.
B) earned, recorded and paid for by the customer in one period.
C) budgeted, paid for, and partially earned in one period but not fully earned until a later period.
D) earned in one period but not paid for by the customer or recorded until a later period.

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

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Question 23

Multiple Choice

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On June 1, 2019, a firm purchased a 1-year insurance policy for $2,400 and paid the full premium in advance. The insurance expense associated with this policy for the year ending December 31, 2019, is

The quantity of goods that a business has on hand for sale to customers is called ________.

Determine the account and amount to be debited and the account and amount to be credited for the following adjustment. On December 31, 2019, the Notes Payable account had a balance of $12,000, for a 5-month, 8 percent note issued on December 1, 2019.

The adjusting entry to record accrued interest on a note payable requires a

On August 1, 2019, a firm purchased a 1-year insurance policy for $3,600 and paid the full premium in advance. The insurance expense associated with this policy for the year ending December 31, 2019, is

Abe & Anna Split Ice Cream Parlor paid $3,000 cash for a 6-month advertising contract on September 30, 2019. The amount of advertising expense reported on the Income Statement for the year ending December 31, 2019, for this advertising contract is

Determine the account and amount to be debited and the account and amount to be credited for the following adjustment. Equipment purchased for $65,000 on January 3, 2019, has an estimated life of 6 years and an estimated salvage value of $3,800. The firm uses the straight-line method of depreciation. Determine the adjustment for the month ended January 31, 2019.

The objective of matching revenues and expenses to specific fiscal periods is most nearly attained when revenues and expenses are recognized in the period during which cash related to the transactions is received or paid.

Net income is recorded on the net income line in the ________column of the Balance Sheet section of the worksheet.

Accrued expenses are

On November 1, 2019, a firm accepted a 5-month, 10 percent note for $1,200 from a customer with an overdue balance. The accrued interest recorded for this note for the year ended December 31, 2019, is

Determine the account and amount to be debited and the account and amount to be credited for the following adjustment. The company uses the periodic inventory system. The beginning inventory for a merchandising business was $32,000, and the ending inventory is $45,000.

The net income for an accounting period appears on the worksheet in the

On December 1, 2019, a firm accepted a 6-month, 12 percent note for $10,000 from a customer. The adjusting entry on December 31 to record the interest earned on the note is:

The trial balance of Premier Lighting Co. shows Merchandise Inventory of $35,000. The company uses the periodic inventory system. Based on a count taken on December 31, merchandise inventory at the end of the year actually totaled $28,000. The adjusting entry to remove the old merchandise inventory balance would be:

Determine the account and amount to be debited and the account and amount to be credited for the following adjustment. On December 31, 2019, the Notes Payable account had a balance of $6,000 for a 3-month, 9 percent note issued on November 1, 2019.

Under a periodic inventory system, Merchandise inventory is adjusted in two steps because both the beginning and ending inventory figures are needed to prepare the income statement.

If an account has a credit balance of $2,200 in the Trial Balance section of a worksheet and there is a credit of $400 in the Adjustments section, the account balance in the Adjusted Trial Balance section of the worksheet is