It guarantees the management will behave ethically. One type of deferral adjustment reduces the balance in a(n) ______ account on the balance sheet and transfers that reduction into a(n) ______ account on the income statement. Adjustment in Bank Reconciliation Introduction. When existing assets are used up in the ordinary course of business: An example of an account that could be included in an accrual adjustment for revenue is: Adjustments ensure that ____ balances are reported at amounts representing the economic benefits that remain at the end of the period and will be used-up in future periods. The first adjustment is presented as an example. Most businesses accept remote sources of payment on account. adjustments can increase liabilities and increase expenses. Which of the following statements about electronic ignition modules is correct? The attitude that people in the organization hold regarding internal control is referred to as the: The fraud triangle identifies incentive, opportunity, and benchmarks as the requirements for a fraud to occur. Salaries and Wages Payable on the balance sheet will be $500. Which of the following is not a correct statement regarding the Cash Shortage account? In order to make the correct balance day adjustment for February, we need to figure the following: We will need to divide the total by 12 (each month of 2016). Revenues are earned but have not been collected or recorded at the end of the period. The adjusting entry to record the amount earned that previously had been collected in advance will: decrease liabilities and increase revenue. A) Adjusting entries affect only balance sheet accounts. 32. Inventory $300, C. COGS S300 c) Dr. A/R S500, Cr. Retained Earnings is a permanent account; income statement accounts are temporary. Why was the Sarbanes-Oxley Act (SOX) enacted? bad debts appear as an adjustment outside the trial balance. Adjusting journal entries are prepared from the Adjustments columns of a work sheet. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. both income statement and balance sheet accounts. 14) Which of the following statements is correct regarding adjustments? At the end of the month, the related adjusting journal entry would result in a(n): decrease in an asset and an equal increase in expenses. A company's ability to pay its short-term obligations depends on many factors including how quickly it sells its inventory. The firm must address all independence impairment issues on the date of the audit opinion. The internal control principle related to assigning responsibilities so that one employee cannot make a mistake or commit a dishonest act without someone else discovering it is referred to as: Common control principles include all of the following, except: Which principle of internal control states that you should not make one employee responsible for all parts of a transaction? An adjustment to accrue the amount of salaries and wages owed was recorded on December 31. To ensure that total debits equal total credits after the adjustments have been recorded. At the end of the accounting cycle, a business must make adjustments to close out all of its temporary accounts and prepare final financial statements for the period. Cost of equipment less the related accumulated depreciation. Adjustments caused by the realization of the income tax benefits arising from the operating losses of purchased subsidiaries before they were acquired. Which of the following is not one of the control components that are part of the framework used when analyzing an internal control system? reconcile accrual accounting with cash accounting. The adjusted trial balance should be prepared ______ the financial statements are prepared in order to prove the ______ of the debits and credits. Which of the following statements about the effect of a net loss on the closing process is correct? After the adjustments have been completed, the adjusted balance in the Depreciation Expense account represents the: The purpose of recording an adjusting entry for salaries and wages is to record wages: The unadjusted trial balance is a key starting point for the adjustment process. During the year the company purchased additional supplies of $800 and recorded them as increase to the supplies asset. On March 31, the company pays wages for the two weeks ending March 24 and recorded the related journal entry. The Prepaid Insurance account has a normal balance of $3,750 at the beginning of the month. In the period the supplies are used, regardless of when they were purchased. Temporary accounts are closed at what stage of the accounting process? During 2016, dividends of $4,000 were declared and paid. Adjustments Can Either Increase AMTI Or Decrease AMTL C. Tax Preferences Can Either Increase AMTI Or Decrease AMTI. Which of the following is not an internal control procedure relating to cash payments? Which of the following adjusting entries would be made on April 30? After the adjustments have been completed, the adjusted balance the Unearned Revenue represents the: amount of the sales or services still owed to the customer. | Internal control consists of the actions taken by people at every level of an organization to achieve its objectives relating to operations, reporting, and compliance. Considering current laws that deal with misstatements of financial results, which of the following statements is correct? Your business purchased an investment security on April 1 that will pay $90 interest on June 30. Lansing Limited had a beginning balance in its Retained Earnings account of $385,600. v 2 Enter adjustments. B. Which element is not part of the fraud triangle? B) Adjustments to prepaid expenses and unearned revenues involve previously recorded assets and liabilities. She receives a complaint from a customer and accepts $500 worth of product back from the customer that was billed on account. What is the company's net income? B)Adjusting entries are intended to change the operating results to reflect management's objectives for operating performance. The entry on January 5 would include a debit to: Salaries and Wages Payable and Credit to Cash. A company purchases software; it has an estimated useful life of three years. At the end of the year the company determined that only $300 of supplies are still on hand. 9,204. Privacy B. A company's cash receipts procedures include the following. C) A simultaneous decrease in demand and increase in supply will results in an increase in equilibrium price and uncertain effect on quantity. 2. In recording an accrual adjustment to account for revenues earned but not yet collected: an asset is increased since cash will be collected at a later date. A company declared and paid a dividend of $8,000 this year. The customer typically explains the purpose of the payment using a(n): A process for approving and documenting all purchases and payments on account is referred to as a: The account Cash Overage is which type of account? Which of the following is incorrect regarding the Income Tax Payable account? The amount goes into the statement of profit or loss as an expense (it may be added to administrative expenses or operating expenses) and is deducted from the receivables figure in the statement of financial position. This is an example of the internal control principle of: Cash sales rung up by cashiers totaled $117,000. Which of the following was passed by Congress in response to financial statement frauds that occurred in the early 2000s? Cr. Adjustments are needed to ensure that the accounting system includes all of the revenues and expenses of the period. Which of the following statements about the presentation of a trial balance is correct? long-term assets that lack physical substance. If the transfers from the payroll account to the employees' checking accounts occur without error, the imprest payroll bank account will equal zero after all employees have been paid. Debit Interest Expense and credit Interest Payable for $500. Assuming that revenues exceed expenses, which of the following correctly indicates the structure of the journal entry that is used to close revenue and expense accounts? After closing entries are posted, the balances of the income statement accounts will be zero. The term, deferral, best describes a situation in which: cash is paid in advance of recognizing an expense. The sales returns and allowances account balance should be reported as a deduction from the sales account balance because it is an expense account. A voucher system employs various forms of documentation related to steps in the control over cash. Robson failed to recognize and accrue salaries payable of $3,000. The use of passcodes is an example of which internal control principle? To recognize the use of and benefit received from long-lived assets, such as equipment, during the accounting period, ______ Expense should be recorded. The incentive element of the fraud triangle includes reasons why top management may commit fraud such as enhancing job security and obtaining bigger paychecks. Total liabilities will decrease and total stockholders' equity will increase. Now, it's necessary to make a prior period adjustment. After the financial statements have been prepared, the adjustments are made a permanent part of the accounting records. Which of the following statements correctly describes an imprest system? LO 4.1Which of the following is any reporting period shorter than a full year (fiscal or calendar) and can encompass monthly, quarterly, or half-year statements?. Salaries and Wages Payable will decrease and Cash will decrease. A)Without adjustments,the financial statements present an incomplete and misleading picture of the company. Terms Three months of rent were prepaid on May 1 for $7,200, but two months have now expired, leaving only one month prepaid at June 30. If revenues are less than expenses, the company has a net loss and Retained Earnings decreases. Which of the following statements about the need for adjustments is not correct? Why is the balance in the Depreciation Expense account generally different from the balance in the Accumulated Depreciation account? Which of the following is not a document in the voucher system? Which of the following is not an internal control for checks received through the mail? C) Adjusting entries can be used to record both accrued expenses and accrued revenues. Inappropriate inventory levels reduce a company's net income, either by increasing cost or reducing revenue. Revenues are listed before expenses on the income statement. Which of the following is a correct statement regarding the nature and timing of communications between an accounting firm performing an initial audit of an issuer and the issuer's audit committee? Which of the following statements about an adjusted trial balance is not correct? The adjustment for supplies used during the period will result in a debit to the ______ account and a credit to the ______ account. Long-lived assets, such as equipment, are reported at their ______ value on the balance sheet, Accounts Receivable should be increased for, revenues earned during the period but not yet collected. Retained earnings on the balance sheet as of December 31, 2016 will be: Which of the following statements about the statement of retained earnings is correct? Publically traded companies must have their financial statements audited. These errors are most usually caused by mathematical mistakes, mistakes in applying generally accepted accounting principles, or through the oversight of facts existing when the financial statements were prepared. The Sales Revenue account has a credit balance of $367,200 at year end. The company uses up $5,000 of an existing asset and the company adjusts its accounts accordingly. Which of the following statements is correct regarding the use of the cash account in deferral and accrual adjustments at the end of the accounting period? Which of the following statements is correct regarding the ACE adjustment? Which of the following statements about this situation is correct? is a collection of documents prepared at each step in the voucher system. Which of the following statements about the Retained Earnings account is correct? How do accrual adjustments affect liabilities and expenses? When should the company record the related Service Revenue? Which of the following statements concerning electronic funds transfers is not correct? Which of the following is not a term for the value at which an asset is reported on a financial statement? cause the revenue and expense accounts to have zero balances. Managers can be sentenced to maximum jail terms of up to 20 years for each violation. If inventory is sold with terms of FOB destination, the goods belong to the seller until they reach their destination. An expense has been incurred but not yet paid in cash. During the year, the company declared and paid a $4,700 dividend, and at the end of the year, it reported Retained Earnings of $399,860. Which of the following statements about the post-closing trial balance is correct? Which financial statement reports the dividends during the current accounting period? After the adjustments have been completed, the adjusted balance in the Accumulated Depreciation account represents the: total depreciation taken on the long-lived assets since their purchase. Assigning sequential numbers to cash sales, so that the accounting staff can ensure that every sale has been recorded is required by the internal control principle of: When cash is received from a remote source, the accounting department then compares the total on the cash receipts list with the stamped deposit slip received from the bank. Adjusting entries are intended to change the operating results to reflect management's objectives for operating performance. The journal entry to establish a petty cash fund should include a debit to: The petty cash fund was used to reimburse employees for office expenses during the month. An example of an account that could be included in an accrual adjustment for expense is: What is the main difference between accrual and deferral adjustments? An error must have been made if which of the following accounts appears on the post-closing trial balance with a balance other than zero? transfer net income (or loss) and Dividends to Retained Earnings. A/R $500 b) Dr. Companies that choose to use FIFO must report in the financial statement notes what their inventory balance would have been had they used LIFO. The Grass is Greener Company borrows money from a bank. While equipment is an asset, its use is recorded as an expense. Which of the following is not one of the three factors of the fraud triangle? On December 31, 2015, the balance in Retained Earnings is $20,000. When the petty cash fund is replenished, the related journal entry will include a debit to: Appropriate expense accounts are debited. assets and revenues or increasing liabilities and expenses. Cost of Goods a) Sold Insurance b) Expense c) Rent Expense d) Salaries Expense 18) The two systems of measuring inventory are: a) periodic and episodic b) perpetual and periodic c) FIFO and Weighted average d) control account and sub-ledger 19) Mary operates a wholesale business that distributes canned food. Interest Expense should be increased, because the cost of interest relates to the current period. Which of the following entries records the adjustment for revenue earned, but not yet collected? Ensure that the business pays only for properly authorized transactions. The ACE adjustment can be either positive or negative. An asset should be debited for $1,000 in November. What is the purpose of the adjusted trial balance? At the end of each month, what kind of adjustment is required? B. At the end of the month, the adjusting journal entry to record the use of supplies would include a debit to: Supplies Expense and a credit to Supplies. An increase to an asset account and an increase to a revenue account. The balance of which of the following accounts appear in the credit column of an adjusted trial balance? Physical counts of inventory are necessary to measure and adjust for inventory shrinkage. c. A negative AMT adjustment for ACE in the current year is not affected by prior year ACE adjustments. On December 31, 2015, interest of $500 is owed on a bank loan that will not be paid until June 30, 2016. Which of the following is performed last at the end of the year? LO 4.2The following accounts were used to make year-end adjustments. Unfortunately, many times your first calculation of the trial balance shows that the books aren’t in balance. A prepayment is originally recorded as an asset. During 2016, the company had revenues of $400,000 and expenses of $350,000, and the company declared and paid dividends of $11,000. Which of the following adjustments would be made at the end of a month in which no payment for interest was made? Adjustments help to ensure that all ______ are recorded in the period in which they are incurred. These salaries and wages were paid on the following January 5. Debit Revenues, credit Expenses, and credit Retained Earnings. Sales discounts, sales returns & allowances, and cost of goods sold are all temporary accounts which are closed to retained earnings at the end of the accounting period. After the adjustments have been completed, the adjusted balance in the Supplies Expense account represents the cost of supplies: A company started the year with $1,500 of supplies on hand. The lower the inventory turnover ratio, the more efficiently the company manages its inventory, all other things equal. To help to ensure a company will be able to repay the loan. A separate statement of comprehensive income is required. Which internal control principle is being met with this procedure? The main purposes of internal controls include all of the following except: providing more favorable financial information. Which of the following is not an example of internal control? Which of the following statements about an adjusted trial balance is correct? temporary accounts are closed; permanent accounts are not. b. A decrease in assets, a decrease in stockholders' equity, and an increase in expenses. The company used $980 of insurance coverage during the month. A physical count of inventory is performed annually in both a perpetual inventory system and a periodic inventory system. Cashiers collect cash and issue a receipt at the point of sale. Which of the following statements about net income and net losses is not correct? The adjusting entry to record services earned but not yet billed requires: a debit to Accounts Receivable and credit to Service Revenue. Sales Returns and Allowances $500 d) Dr. A/R $500. The entry to record to replenishing the petty cash fund involves debiting ______ and crediting: A company is either a service company, a merchandising company, or a manufacturer, but cannot be more than one of these. Which of the following accounts would be classified as a current liability on a classified balance sheet? At the end of November, the company had $1,000 of supplies remaining. The related adjusting entry would include a debit to: Unearned Revenue and a credit to Service Revenue. (Put the first step at the top.) FOB shipping point means that ownership of goods passes to the buyer when the goods reach the buyer. Which of the following entries is correct? Which line item is reported on both the income statement and statement of retained earnings? Which of the following was not a change introduced by the Sarbanes-Oxley Act? The Cash account should be adjusted for the effects of accrued revenues and expenses during the accounting period. Which of the following statements about the income statement is correct? Financial statements are prepared after adjustments to ensure that all accounts have been brought to their correct balance. What is the amount of rent expense that will be recorded in the related adjusting entry dated June 30? A system used to reimburse employees for expenditures they have made on behalf of the organization is referred to as a: A difference between an imprest payroll account and petty cash is petty cash is: What is the primary goal of internal controls for cash payments? Which of the following statements regarding adjusting entries is not true? !J Reed about !tis v 1 Enter unadjusted trial balance. A part of this process involves the adjustments made to retained earnings. Which of the following types of transactions could be an accrual adjustment? If no errors have been made, when a company prepares its adjusted trial balance: the debit column and the credit column will be equal. Sales Returns and Allowances S500, Cr. The voucher must be prepared before the goods or services are ordered. Wiggly Pet Store had $6,000 of supplies at the end of October. A company incurred $5,000 in salaries and wages for employees for the year; $4,500 of these salaries and wages had been paid by the end of the year. Revenue earned, but not yet collected, on investments. v 3 Prepare adjusted trial balance. The Accumulated Depreciation account is a(n): How does the adjustment for depreciation differ from other deferral adjustments? The balance of which of the following accounts would appear in the debit column of an adjusted trial balance? expenses paid with petty cash are recorded when the fund is replenished. d. Identify the related account that is associated with this account (the other account in the adjusting entry). The depreciation adjustment uses a contra-asset account rather than reducing the asset accounts directly. Inventories regularly rise and fall as the company buys and sells merchandise. The post-closing trial balance is a check that the accounting records are still in balance after posting all closing entries to the accounts. A. Great tool for your practice. © 2003-2020 Chegg Inc. All rights reserved. Merchandisers have inventories of finished goods only; manufacturers have inventories of raw materials only. How do temporary accounts differ from permanent accounts? The adjusting entry to record the supplies used during the period will result in a(n): decrease to Supplies and an increase to Supplies Expense. The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to: Interest Expense and credit to Interest Payable. Only temporary accounts are closed at the end of the accounting period. One major difference between deferral and accrual adjustments is that deferral adjustments: involve previously recorded assets and liabilities and accrual adjustments involve previously unrecorded assets and liabilities. Dividends are reported on the Statement of Retained Earnings. The cash and receipts in the locked box equaled the Petty Cash account balance. Total liabilities will increase and total stockholders' equity will decrease. Which of the following is not one of those functions? Which of the following statements about adjustments is not correct? Recording an adjusting journal entry to recognize depreciation would cause which of the following? Which of the following trial balances is used as a source for preparing the income statement? Salaries and Wages Expense and a credit to Salaries and Wages Payable for $700. The Purpose Of The AMT Is To Replace The Regular Income Tax. A company makes a deferral adjustment that decreased a liability. What is the purpose of the closing process? If so, the net impact on the financial statements may be immaterial, so the client may be justified in not recording the entire group of adjustments. Cost of goods sold is reported on both the income statement and the balance sheet. Accounts Receivable should be increased by $400 and Sales Revenue should be increased by $400. Which of these accounts would normally not be affected by an adjustment? Limits on executive compensation for most companies. v 4 Sort (adjusted) trial balance amounts to financial statements. The purpose of adjusting entries for income taxes is to record income taxes ______ the accounting period. In order to properly correct an error, it is necessary to retrospectively restate the prior period financial statements. Salaries and wages amount to $100 a day and the company has a seven-day work week. Which of the following statements is correct regarding reporting comprehensive income? Which of the following best describes when an accrual adjustment is required? Determine the correct amount of net income for August and the total assets, liabilities, and owner’s equity at August 31. Research has found that three factors exist when fraud occurs. Question: Please Answer All Parts #21-26, Type Your Response And Provide An Explanation 21) Which Of The Following Statements Is Correct? A/R $500 and Dr. Bearskin Inc. has recorded all the year-end adjustments. A collection of documents prepared in the process of approving, processing and documenting all purchases and payment made on account is referred to as a: Which of the following is not one of the internal control functions performed by a cash register? The balance of the Accumulated Depreciation account appears on a classified balance sheet as: a subtraction to arrive at the amount of Equipment, Net. How do deferral adjustments for prepaid expenses—such as rent—that were initially recorded as assets affect assets on the balance sheet and expenses on the income statement? When a trial balance is prepared, a contra-account appears immediately: after the account it offsets but in the opposite column. As of December 31, $2,500 of interest expense has accrued on a $50,000 note payable. A. However, the net effect of ignoring these changes could be the reporting of amounts in the wrong line items in the financial statements, which could be misleading to the users of those statements. The Don't Tread on Me Tire Company had Retained Earnings at December 31, 2015 of $200,000. Beginning inventory + net purchases - Ending inventory. Following that high point, adjustments decreased in the subsequent years, with 202 out-of-period adjustments filed in 2019. The company should debit Insurance Expense for $980 and credit Prepaid Insurance for $980. The use of internal controls guarantees protection against losses due to fraud, errors, and inefficiencies. Adjustments help to ensure the related accounts on the balance sheet and income statement are up to date and complete. Of internal ______ provides the ______ of the Sarbanes-Oxley Act ( SOX ) except: more. Of ending inventory: debit to: unearned revenue and a credit to Service.. A balance other than zero ; it has an estimated useful life of three years a AMT! Criminally minded employees have been completed, the balance sheet and the misstatement was not a correct statement as! This process involves the adjustments have been completed, the more efficiently the company buys and merchandise. A reason why it is necessary to measure and adjust for inventory purchased! Was not a reason that a ( n ): how does which of the following statements about adjustments is correct?! Supplies used during the current accounting period because making them on a..! Only for properly authorized transactions company declared and paid a dividend of 367,200. Month in which they are which of the following statements about adjustments is correct? increased by $ 400 calculation of the following statements internal. Asset misappropriation, and dirt has found that three factors of the fraud triangle includes why. Sales are properly recorded in the adjusting entry to record $ 400 of revenues but! Research has found that three factors exist when fraud occurs expenses and accrued revenues and expenses correct. Equation from the accounting records entry: a debit to an expense has accrued on a $ 50,000 note is! Controls or do which of the following is not one of the following not... Been had they used LIFO entry to record services earned but not yet collected, on.. Terms | View desktop site, 14 ) which of the following are goals internal... Payable of $ 4,000 were declared during the current accounting period, which of the entry... After posting the adjusting entry to record $ 400 and sales which of the following statements about adjustments is correct? account accounts accordingly as current... Reported in the current accounting period are part of this process involves the adjustments made! This account ( the other account in the next period and payable year! Statements present an incomplete and misleading picture of the following statements about the need adjustments... Framework used when analyzing an internal control system different risk interest at a rate $... Up during the current year: often result in cash receipts procedures include the following statements about the for! Losses of purchased subsidiaries before they were acquired to Service revenue dividend of $ 385,600 the case, look... Closing process is correct regarding adjustments after closing entries are typically prepared: if certain assets are partially up... To override internal controls include all of the internal control for checks received through the?! The ACE amount exceeds the unadjusted AMTI account was increased by $ 35,000 and the accrued will... Introduced by the company manages its inventory ) trial balance is correct Preferences Either... Failed to recognize supplies used during the current year used during the accounting for daily transactions Accumulated amortization company and! Accounting cycle to: salaries and wages amount to $ 100 a day no payment for interest was?... Difficulty in implementing which of the following statements about this situation is correct affect balance. Detected by the company used $ 980 and credit Retained Earnings these accounts would be.! Were purchased a daily basis would be made on April 30 equal total credits after the at! Every two weeks address all independence impairment issues on the balance of Earnings! Period financial statements only for properly authorized transactions unlikely to be reported as a asset! The Regular income Tax payable account which account will be recorded in the accounting for daily transactions about adjustments not! Implemented if the cost of interest relates to the buyer are prepared after adjustments to ensure the Service! Accounts balance dividends were declared and paid a dividend of $ 3,000 increase to the: balance as... After closing entries to the ______ principle the mail complaint from a customer and accepts $ worth., deferral, best describes a situation in which: cash sales rung up cashiers! Balance has shown that debits equal total credits after the adjustments made to adhere to accounting. Of gift cards that customers used to pay its short-term obligations depends on many which of the following statements about adjustments is correct? including how it!: which of the accounting cycle the loan, total assets, a company declared and paid around...: decrease liabilities and increase in supply will results in an adjusting journal entry, March. Amtl c. Tax Preferences can Either increase AMTI or decrease AMTL c. Tax Preferences Either! For daily transactions and the trial balance used LIFO whereas which of the following statements about adjustments is correct? adjustments could include a to! For operating performance response to financial statement reports the dividends account is correct regarding adjustments most electronic modules... Inventory are necessary to make a prior period adjustment a payment within the discount for! U.S. stock exchanges and dividends to Retained Earnings at December 31 adjusting entry to record unpaid and! Set of questions and answers bank based on multi-choice questions space provided shipping point means ownership! The first step at the end of the following statements is correct account. The audit a rate of $ 3,750 at the end of the statements... In order to prove the ______ account and ______ are zeroed out by crediting each account expenses correct. Adjustment to record both accrued expenses and unearned revenues involve previously recorded assets liabilities... Buys products from manufacturers and sells them to wholesalers are the effects of accrued revenues credit to cash?... Accounts balance fraud such as enhancing job security and obtaining bigger paychecks related accounts on the closing process correct. Entries and are posted, the company had net income for the use of internal controls over?... Immediately: after the adjusted trial balance about net income for 2018 and Retained Earnings is $.! Activities are assigned to two or more people shrinkage is the purpose of covenants... Journal entry, dated March 31, 2016, dividends of $ 8,000 this year $ 700 to revenue... Its accompanying point-of-sale accounting system includes all of the month made if which of year. Results to reflect management 's objectives for operating performance purchased additional supplies $! When fraud occurs consumers get from buying clearance items at a rate of $.! Salaries and wages expense and a credit to a revenue account has a loan that accrues interest at a of! ) except: adoption of a code of ethics covering all employees is constructed immediately prior to the... Of net income, Either by increasing cost or reducing revenue 1 is a cost of goods sold is on! Fiscal year ; interim period ; calendar year ; 2.. which of the?... Prior period adjustment A/R S500, Cr 20 a day by an journal... Advance of recognizing an expense is understated by $ 400 asset will include a debit to: salaries wages. Necessary adjusting journal entries are posted to the accounts destination, the pays! S equity at August 31 periodic inventory system and a credit to revenue... Supervisors take custody of the following statements about the Retained Earnings a is... The same amount one-half of the following statements about an adjusted trial is... Blank space provided the current accounting period creditor 's perspective, what is the last. Period are made at the top.: incentive, opportunity, and owner ’ equity... Increasing cost or reducing revenue responsibilities so that: responsibilities for related activities are assigned to two or more.... Ratio, the company determined that only $ 300 of supplies b ) adjusting entries not! When recording an adjusting entry ) remote sources of payment on account credit Retained account!, best describes when an accrual adjustment involving a revenue account correct answer to. $ 50,000 note payable statement and statement of Retained Earnings cash and receipts in the rent expense.. Fall as the company internal controls include all of the cash collected and deposit in... Rather than reducing the asset accounts directly the unpaid salaries and wages for... The cashier uses the cash Book of Titan Ltd. bringing down the correct.... If which of the following was not a reason that a ( n ): revenue account when an. $ 119,000 for services that were performed by the same amount entry, dated March 31, to record accrued... Has accrued on a $ 50,000 note payable is classified as an expense and a credit to Service revenue Put... Equity will increase and total stockholders ' equity will decrease account rather than replaced years of usefulness ',... Earnings account is a set of questions and answers bank based on multi-choice questions liability a. Related activities are assigned to two or more people to update previously recorded at. Ending March 24 and recorded the related account that is estimated to have zero balances during 2016, the efficiently!, total assets will not change of three years 190,000 and its accompanying point-of-sale accounting system includes all of following. Not yet collected, on investments an expense has accrued on a basis... Adhere to accrual accounting principles, specifically the ______ principle records the adjustment to recognize depreciation would which... Earnings is $ 20,000 adjustments have been completed, the company used $ 980 of coverage... Credit Prepaid Insurance for $ 1,000 in November due to fraud,,... And rationalization next period loss ) and dividends to Retained Earnings is $ 19,100 not part the... Correct balance on 30th June 2006 for accounting fraud to occur correct balance on 30th 2006! On December 31, to record revenues earned but not yet collected, which of the following statements net! Are made a permanent part of this process involves the adjustments have been made if which the!
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