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Exam 3: The Adjusting Process

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Question 21

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Jupiter Company signed a one-year $36,000 note payable at 8% interest on March 1,2019.How much interest expense must be accrued on May 31,2019? (Round any intermediate calculations to two decimal places,and your final answer to the nearest whole number. )

A) $2,880
B) $1,080
C) $720
D) $360

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Question 22

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Global Enterprises Company signed a one-year $48,000 note payable at 8% interest on April 1,2018.If Global only adjusts its accounts once a year at year-end,how much interest expense was accrued on December 31,2018? (Round any intermediate calculations to two decimal places,and your final answer to the nearest whole number. )

A) $960
B) $3,840
C) $2,880
D) $3,200

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Question 23

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Which of the following accounting principles does NOT help to explain the timing and recognition of revenues and expenses?

The sum of all the depreciation expenses recorded to date for a depreciable asset is called residual value.

Cash received in advance of providing the service is called ________.

The employees of Leichester Services Company worked the last two weeks of December,2016.They received their paychecks on January 2,2017.Which of the following accounts should appear on the income statement for the year ended December 31,2016?

Dynamic Services Company purchased computers that are to be used in its consulting services.Based on the matching principle,the related account that should appear on the income statement for the year ended December 31,2018 is ________.

The purpose of the adjusted trial balance is to ensure that no errors were made during the adjusting process.

Unearned revenue is recorded when ________.

The liability created when a business collects cash from its customers before completing a service or delivering a product is called ________.

The worksheet is not a journal,a ledger,or a financial statement.

The accounting records for Social Event Planning Services include the following select unadjusted balances on December 31,2018: Salaries Expense,$6,000;Service Revenue: $18,000;Unearned Revenue,$400;Supplies Expense,$600;Rent Expense,$300;Depreciation Expense-Equipment,$200. During December,the company worked with a new client and provided event planning services for an upcoming event.It will receive the full amount of $1,500 when the event is completed in January 2019.As of the end of December 2018,it performed one-third of the services covered by the contract.The company made the accrual adjustments.The balance of Service Revenue,as shown on the adjusted trial balance,should be a ________.

Adjusting entries record revenues in the period in which cash is received and expenses in the period when cash is paid.

A worksheet is an internal document that helps summarize data for the preparation of financial statements.

Under accrual basis accounting,an expense is recorded only when cash is paid.

What type of account is Prepaid Rent,and what is its normal balance?

Watson Tax Planning Service has the following plant assets: Communications Equipment: Cost,$7,200 with useful life of eight years;Furniture: Cost,$24,000 with useful life of 12 years;and Computer: Cost,$13,200 with useful life of four years.(Assume residual value of all the assets is zero. ) Watson's monthly depreciation expense calculated using the straight-line method is ________.(Round any intermediate calculations and your final answer to the nearest cent. )

A good or service is considered transferred when the customer places an order or requests a service.

Wentfield Services Company records deferred expenses as expenses when payment is made in advance and deferred revenues as revenues when the payment is received in advance.At the end of the year,Wentfield Services Company makes the necessary adjustments based on accrual basis accounting.On July 1,it paid rent for an office in the amount of $24,000 for the period July 1 through June 30 of the following year.Prepare the year-end adjusting entry on December 31.Omit explanation.

What is the term used for the difference between the Equipment account balance and the Accumulated Depreciation-Equipment account balance?