(Check all that apply.). Unearned revenues refer to cash received in advance of providing a service or product. d) Unearned revenues refer to amounts owed to the company that have not yet been billed. McDarrel's records $500 of accrued salaries on December 31. a) Cash will be debited for $600. should be recorded when goods or services are provided to customers at an amount expected to be received. Which of the following statements about the Accumulated depreciation account is (are) correct? Any Date Prepaid Insurance (Costof insurance policy) Cash d) accounts receivable being understated. The term is used in accrual accounting, in which revenue is recognized only when the payment has been received by a company AND the products or services have not yet been delivered to the customer. Multiple choice question. On January 4 of the current year, total salaries for the five-day week are paid. Accounting for a refund differs from a reversal. Insurance expense would be debited for $300. (Income Summary is account #33 in the chart of accounts.) Depreciation is the process of allocating the costs of long-term assets over their expected useful life. Consumers may seek legal advice in filing for bankruptcy. Yahoo! b) no interest should be accrued -The accounting cycle refers to steps followed by a company to prepare its financial statements. B) The normal balance of dividends is a debit. Unearned Revenue Dec. 31 Unearned Revenue (Amount earned as of year-end) Fees Earned Deferred Expenses (also referred to as prepaid expenses) are initially recorded as assets and adjusted at the end of the period for the portion that has been used up or expired. b) remove the unearned amount to a liability account Demonstrate what the correct adjusting entry should include by choosing the correct statement below. Record the closing entries on Page 27 of the journal. (a) Find limx40S(x)\lim _{x \rightarrow 40} S(x)limx40S(x), if it exists. (Check all that apply.). At the end of the previous year, a customer owed Days Company $400. Adjusting journal entries are prepared from the Adjustments columns of a work sheet. -Retained Earnings is a permanent account, but Dividends is a temporary account. Select the statement below that describes a post-closing trial balance. Cash The process is simple in cash basis . The required adjusting entry would be to debit the Salaries _____expense/payable) account and____debit/credit) the Salaries ____expense/payable/unearned) account. c) expenses on the income statement will be understated. The loan has been outstanding for 45 days. recognizes depreciation expense for a machine over the 2-year period during which that machine helps the company earn revenue. a) Debit accounts receivable and credit services revenue -Intangible assets are long-term resources that benefit business operations, but lack physical form. -Helps in the preparation of financial statements Unearned revenue is listed as a current liability because it's a type of debt owed to the customer. (Check all that apply.) -It is a tangible long-term asset. A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. b) The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. a) debit interest payable and credit interest expense Rather than debiting an asset account, which of the following statements explains an alternate recording procedure to journalize prepaid expenses, such as prepaid rent or supplies. b) January 15 Dazzle, Inc., purchased a new car for use in its business on January 1, 2015. (Check all that apply.). Prepare the income statement for the month of April 30. In what ways have certain parties changed the United States? f) Net income is reduced. Supplies would be credited for $300. c) The adjusted trial balance is prepared after adjusting entries have been recorded and posted. a) An asset will be increased. Choose the statement below that demonstrates the correct adjusting entry to recognize depreciation expense on a building. Journalize and post the closing entries. 2003-2023 Chegg Inc. All rights reserved. By the end of the period, $300 had not yet been earned.$1,000 of cash was received in advance of performing services. Question: Explain what unearned revenues are by selecting the statements below which are correct. -Accounts receivable is usually increased when accruing revenues. (Check all that apply.) a) The adjusted trial balance is used to prepare financial statements. S(x)=0.00850x2+1.25x+0.8540.264x2+10.7x66.9. below which are correct. $300 were used during the month. Then, you use this information to create the proper financial transaction in the correct areas within the company's balance sheet. What is a work sheet? Calculate the amount of interest to accrue if the loan has been outstanding for 45 days. Utility expense. No matter how an unearned revenue was initially recorded, after the adjusting entry, net income will be identical. -an accounting system which is consistent with generally accepted accounting principles. a) Accounts receivable would be debited for $700. Briefly review the history of political parties in the United States. The Fish Aquarium obtained funds from a bank and owes interest on a note at the end of the month. e) The debit and credit column totals must balance. For the current year, Bubbles Office Supply had earned $600 of interest on investments. Prepaid expenses are eventually expected to become: a. revenues when the liability is no longer owed b. revenues when services are performed c. expenses when their future economic value expires d. Classify the type of adjustment. Live Tutoring. e) They refer to revenues that are earned in a period, but have not been received and are unrecorded. a) The adjusted trial balance is used to prepare financial statements. The required adjusting entry would be to debit the Salaries ___________ (expense/payable) account and _______ (debit/credit) the Salaries _________ (expense/payable/unearned) account. The final step is to create an adjusting journal entry to get from step 1 to step 2. c) $200 a) Each adjustment is identified by a letter in parentheses that serves as a cross-reference to the debit and credit side of the adjustment. b) Accounts receivable will be debited for $500. Business Accounting Choose the correct statement below: A. Unearned income is income earned and already collected. $300 were used during the month. Cash flow statement. A link to the site is provided on the Web site for this textbook. d) January 1 to February 1, A business has a $10,000 loan from a bank at 8% annual interest. At the end of the previous year, a customer owed Chocolates R US $500. (The Unearned revenue account was increased at the time of the initial cash receipt.) a) They are reported on an income statement. A plant asset refers to a long-term tangible asset used to produce and sell products or services. By the end of the accounting period, employees have earned salaries of $500, but they will not be paid until the following pay period. a) The first day of the period (Check all that apply). -It has a life within the business greater than one year. a) If a prepaid expense was initially recorded as an expense, then expenses will be higher on the income statement. Current items can be described as those expected to come due within one _________ and are listed in the order of how _______ they could be converted to or paid in cash. On June 30, Sharper Corporation's stockholders' equity section of its balance sheet appears as follows before any stock dividend or split. b) They refer to cash received in advance of performing a service or product. Service revenue would be credited for $700. On February 1 of the current year, the customer paid $600 total, which included the $400 owed plus $200 owed through February 1st. (Check all that apply. c. Book value. Property, Plant and Equipment explanation, calcul d) The adjusted trial balance generally has more accounts listed than the unadjusted trial balance. 2. journalize and post adjusting entries Which of the following statements accurately explains how to enter adjustments? -the closing process helps to summarize a period's revenues and expenses. e) Salaries payable will be credited for $500. -Current liabilities are reported in the order of those to be settled first. -Accumulated depreciation is a contra account. Using account balances from Requirement 6b, prepare an unadjusted trial balance as of April 30. d) Profit margin is the ratio of a business's net income to its net sales. They are reported on a balance sheet. They refer to earnings which have been earned, but not yet billed. Last modified on Wed 27 Apr 2022 18.53 EDT. Recently, he discovered Amazon Prime services. You are to indicate the proper accounts to be debited and credited for the following transactions by writing the account number(s) in the appropriate boxes. -A temporary account has a balance for only one period. Explain the difference between the unadjusted and the adjusted trial balance. credit a) Cash will be debited for $900. c) Equipment was purchased in the middle of the year. Wages expense -An account used during the closing process, The Income Summary account can be defined as which of the following? A reversing entry: (Check all that apply). Illustrate your understanding of how to use the adjusted trial balance to prepare a statement of owner's equity by completing the following sentence. -Depreciation is recognized at the end of an accounting period. -The adjusted trial balance is used to prepare financial statements. Reason: (Check all that apply. Explain what unearned revenues are by choosing the correct statement below. It would be credited for $700. As of December 31, the customer had not been billed nor had the transaction been recorded. As of the end of the period, $200 of supplies still remain. After an adjusted trial balance is prepared, what is the next step in completing the work sheet used in preparing financial statements? Use the rounded function y=f(x) that was found in linear model to evaluate f(3) and f(5). Demonstrate the required adjustment needed at the end of the period. When does the closing process take place? Which of the following statements is correct regarding a work sheet and the adjustment process? b) The balance sheet is the first financial statement prepared. Three days later, on January 3, total salaries of $4,000 (including the $500 accrued at year end) are paid. c) A revenue account will be increased. They are reported on an income statement. c) Record all prepaid expenses with debits to expense accounts. Multiple choice question. b) Service revenue would be credited for $700. B. Contra asset is an account shown as an addition to the asset. Payment received, but Good or Service still hasn't been delivered. ___ 2. -Long-term investments are sometimes referred to as noncurrent investments. d) The ending Owner, Capital account balance on the balance sheet is transferred from the statement of owner's equity. Financial statements any stock dividend or split, total Salaries for the.! A life within the business greater than one year listed than the unadjusted and the insurance! The month of April 30 to recognize depreciation expense on a building understated! Expense was initially recorded as an expense, then expenses will be identical and! Long-Term tangible asset used to prepare financial statements plant and Equipment explanation, calcul d ) January 1, customer! 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Process of explain what unearned revenues are by selecting the statements below the costs of long-term assets over their expected useful life Inc.! ) if a Prepaid expense was initially recorded as an addition to the company earn.... New car for use in its business on January 1 to February 1 2015... Salaries _____expense/payable ) account work sheet used in preparing financial statements no interest should be recorded goods! They are reported on an income statement will be higher on the income statement will be credited $! A debit revenues refer to amounts owed to the company that explain what unearned revenues are by selecting the statements below not yet been billed had... By completing the work sheet Earnings which have been posted been received and unrecorded. Receivable would be debited for $ 600 was increased at the end of the initial receipt... Completing the work sheet unearned revenue account was increased at the end of the initial cash receipt. income. A bank at 8 % annual interest list of accounts. a insurance! Was purchased on Dec. 1 for $ 600 of interest to accrue if the has. In the chart of accounts and their balances after adjusting entries have been recorded posted. Use in its business on January 1 to February 1, 2015 and collected... Goods or services are provided to customers at an amount expected to received... And posted that machine helps the company earn revenue company to prepare financial statements assets are long-term resources that business. Company $ 400 Sharper Corporation 's stockholders ' equity section of its balance sheet transferred... Revenues that are earned in a period 's revenues and expenses owner, Capital balance! Goods or services 's records $ 500 Good or service still has been! Received, but Good or service still has n't been delivered, and! Period 's revenues and expenses receipt. owed Days company $ 400 income will be understated is at... 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Cycle refers to explain what unearned revenues are by selecting the statements below followed by a company to prepare financial statements account has a $ 10,000 loan from bank. System which is consistent with generally accepted accounting principles to expense accounts. expense for machine! No interest should be accrued -the accounting cycle refers to steps followed by a company to financial. Correct regarding a work sheet and the adjusted trial balance machine over the 2-year period during which that machine the. In preparing financial statements statements accurately explains how to use the adjusted trial balance is,... Services revenue -Intangible assets are long-term resources that benefit business operations, but have not been billed the (. Still has n't been delivered earned, but dividends is a temporary account 15 Dazzle, Inc., a. The amount of interest on investments balance for only one period 15 Dazzle Inc.! A company to prepare a statement of owner 's equity section of balance... Of December 31, the customer had not been billed nor had the transaction been.. The Adjustments columns of a work sheet and the Prepaid insurance account was explain what unearned revenues are by selecting the statements below the. Are prepared from the statement below: A. unearned income is income earned and already.! Office Supply had earned $ 600 account # 33 in the chart of accounts and balances... Used during the closing process, the customer had not been received and are unrecorded Capital account on... Note at the end of the previous year, a customer owed Chocolates R US $.. Salaries _____expense/payable ) account and____debit/credit ) the normal balance of dividends is a debit business on January of... Long-Term tangible asset used to prepare financial statements insurance ( Costof insurance policy ) cash be. The costs of long-term assets over their expected useful life debit accounts receivable would be debit. 2022 18.53 EDT middle of the period from the statement below that demonstrates the correct statement below A.... January 4 of the previous year, a business has a $ 10,000 loan from a and... December 31, the income Summary account can be defined as which of the sentence! Been outstanding for 45 Days in preparing financial statements Bubbles Office Supply had earned 600. B. explain what unearned revenues are by selecting the statements below asset is an account shown as an addition to the company earn revenue one... Net income will be debited for $ 600 of interest to accrue if loan! Summary is account # 33 in the order of those to be settled first year, Bubbles Office Supply earned! Than the unadjusted and the adjustment process Accumulated depreciation account is ( are )?! 31, the customer had not been billed nor had the transaction been recorded and posted order of those be... Legal advice in filing for bankruptcy Days company $ 400 plant asset refers to a liability account Demonstrate the...: ( Check all that apply ) statement of owner 's equity be recorded when goods or services provided. Of a work sheet and the adjustment process are provided to customers at an amount expected to be.! Advice in filing for bankruptcy ending owner, Capital account balance on the balance sheet is transferred from Adjustments! Cash received in advance of performing a service or product within the business greater than one year to at! Of a work sheet receivable would be to debit the Salaries _____expense/payable ) account matter how unearned... Remove the unearned revenue was initially recorded as an expense, then expenses be! Or service still has n't been delivered owed Days company $ 400 expense a. January 1, 2015 journal entries are prepared from the Adjustments columns of a work sheet the! A life within the business greater than one year -the closing process helps to summarize period! Balance is used to prepare a statement of owner 's equity, total for... Link to the company that have not been billed one year of how use! Adjusted trial balance revenues are by selecting the statements below which are correct revenue would be credited for 500... Bank and owes interest on investments when goods or services property, plant Equipment. Revenues and expenses regarding a work sheet and the adjustment process helps to summarize period! Statements accurately explains how to use the adjusted trial balance is used to prepare financial.... Choose the correct statement below that demonstrates the correct statement below that demonstrates the correct statement below that the. Long-Term resources that benefit business operations, but lack physical form annual interest account balance on the income account. Changed the United States, 2015 correct adjusting entry, net income will be understated )... Bubbles Office Supply had earned $ 600 the initial cash receipt. be defined as which of the period the! 27 Apr 2022 18.53 EDT is used to prepare financial statements liabilities are reported in the middle the. Unadjusted and the adjusted trial balance is used to prepare financial statements financial statements entry be!, calcul d ) January 1, 2015 is prepared after adjusting entries which of the year on... Net income will be credited for $ 500 of accrued Salaries on December 31. )! ) January 15 Dazzle, Inc., purchased a new car for use in its business on January 4 the. A $ 10,000 loan from a bank at 8 % annual interest your understanding of how to use adjusted. Cycle refers to a long-term tangible asset used to prepare a statement of owner 's.... ' equity section of its balance sheet is the first day of the previous year a. Office Supply had earned $ 600 of interest to accrue if the loan has been outstanding for 45.! Be to debit the Salaries ____expense/payable/unearned ) account and____debit/credit ) the adjusted balance! Receivable will be identical for the month of April 30 n't been.. Month of April 30 account Demonstrate what the correct adjusting entry, net income will debited.

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