a liability–revenue relationship exists with:

(S.O. 27. $11,500, Depreciation expense………………………………………………… 4,000, Insurance expense……………………………………………………. (a) SUSAN DEY COMPANY, _____________________________________________________________________________, (b) SUSAN DEY, SOLUTIONS TO REVIEW QUESTIONS AND EXERCISES. and capital accounts? 6) For accrued expense adjusting entries, the incorrect statement is: a. a liability-expense account relationship exists. Change ), You are commenting using your Twitter account. Insurance began on July 1, 2008 for a one-year policy. 6) An adjusting entry for accrued expenses results in an increase (a debit) to an expense account and an increase (a credit) to a liability account. an assest-expense relationship exist with. 3) Every adjusting entry affects one balance sheet account and one income statement account. 3. 29. ( Log Out / 7. l. Revenues received and recorded as liabilities before they are earned. (S.O. An asset—expense relationship exists with. 17,000, Supplies …………………………………………………………………………. The accounts in the adjusted trial balance contain all data that are needed for the preparation of financial statements. (S.O. Answer (c) is incorrect because an asset account is increased (a debit) and a revenue account is increased (a credit). The other answer choices are correct. Item Ans. _____ 1. Therefore, this account must be credited for $300. The difference between the cost of the asset and its related accumulated depreciation is referred to as the book value of the asset. Office Supplies……………………………………………………… 2,700, Office Supplies Expense………………………………….. 2,700, c. Office Supplies Expense……………………………………….. 2,700, Office Supplies………………………………………………… 2,700, d. Office Supplies Expense……………………………………….. 300, Office Supplies………………………………………………… 300. A liability-revenue account relationship exists with unearned revenues. A liability—revenue account relationship exists with an unearned rent revenue adjusting entry. 2) The revenue recognition principle states that revenue should be recognized in the accounting period cash is received. Before we will be ready to prepare financial statements from the trial balance, additional steps need to be taken. c. expenses should be matched with revenues. What type of relationship exist with an unearned revenue adjusting entry? Answer Save. Unearned revenues are revenues received and recorded as liabilities before they are earned. 1. unearned revenue adjusting entries. Answer: Specific … Prior to adjustment, assets and revenues are understated, adjusting entries require a DEBIT to an asset account and a CREDIT to a revenue account, Prior to adjustment, liabilities and expenses are understated, adjusting entry results in a DEBIT to an expense account and a CREDIT to a liability account, prepared after all adjusting entries have been journalized and posted, - income statement prepared from revenue and expense accounts. b. 3) In general, adjusting entries are required each time financial statements are prepared. The adjusting entry on December 31, 2008 by Maricel will include a: 12. (F) Prior to adjustment, expenses are overstated and assets are understated. B) accrued expense adjusting entries. Change ), synchronized between the left brain and right brain. Further, the Commissioner provides at Schedule 1 of the Ruling a list of questions which when answered, will give an indication as to whether an employer/employee relationship exists. a. liability accounts. c. the adjusting entry results in an increase (a debit) to a revenue account and an increase (a credit) to an asset account. (b) Prepare a balance sheet at November 30, 2008. 1 Answer to 104.If a resource has been consumed but a bill has not been received at the end of the accounting period, then: a.an expense should be recorded when the bill is received. Prior to adjustment, the balances are Unearned Fees $0 and Fees Earned $4,000. 9. b. 15,000, Insurance Expense………………………………………….. 15,000, b. 2. (S.O. (b) Because the effective date of the policy is April 1, only 3/4 of one year is expensed ($100,000 X 1/5 X 3/4 = $15,000). _____ 17. d. Accounting periods that are one year in length. 19. The purpose of an adjusted trial balance is to prove the equality of the total debit balances and the total credit balances in the ledger after all adjustments have been made. 5. h. A list of accounts and their balances after all adjustments have been made. 7) Financial statements are prepared directly from the: *19. 3,000, c. Interest Expense…………………………………………………… 6,000, Interest Payable………………………………………………. Relevance. should always be the same. exchanges have commercial substance. (d) The total cost of supplies is $1,350 ($900 + $450). Item Ans. Supplies on hand at December 31, 2008, $3,000. At December 31, one-fourth of the painting of the house remains to be done. m. Entries made at the end of the accounting period to insure that the revenue recognition and matching principles are followed. 21. 6) Cathy Cline, an employee of the Wheeler Company, will not receive her paycheck until April 2. Choice (c) is the matching principle. _____ 5. A liability-revenue account relationship exists with unearned revenues. The adjusting entry results in a debit to a liability account and a credit to a revenue account. _____ 4. An asset-revenue account relationship exists with accrued revenues. (b)accrued expense adjusting entries. Prior to adjustment, assets and revenues are understated. The unadjusted balance in Office Supplies Expense is $3,000. When an unearned revenue is initially credited to a revenue account, the procedures are similar to those described above for prepaid expenses. True; False; Question 49. 15. The balances of the Depreciation Expense and the Accumulated Depreciation accounts. 6) Accrued expenses are prepayments of expenses that will benefit more than one accounting period. What is the starting place for adjusting entries? e. To illustrate an accrued expense adjusting entry, assume Schwenk Company incurs salaries of $4,000 during the last week of October that will be paid in November. n. The principle that revenue be recognized in the accounting period in which it is earned. A liability revenue relationship exists with? (a) Choice (b) is the time-period assumption. (S.O. *Note: All asterisked (*) items relate to material contained in the Appendix to the chapter. _____ 19. $40,000, Less: Accumulated depreciation……………………………………….. 16,000 24,000, Total assets……………………………………………………….. $63,250, Notes payable…………………………………………………………… $ 7,500, Accounts payable……………………………………………………… 5,950, Interest payable………………………………………………………… 350, Unearned fees………………………………………………………….. 7,500, Salaries payable……………………………………………………….. 5,000, Total liabilities…………………………………………………….. 26,300, S. Dey, Capital………………………………………………………….. 36,950, Total liabilities and owners’ equity…………………………. _____ 13. Item Ans. 7. d. The adjusting entry results in a debit to an expense account and a credit to an asset account. Depreciation is the process of allocating the cost of an asset to expense over its useful life in a rational and systematic manner. 16. b. a. Explain the time period assumption. An asset-revenue account relationship exists with accrued revenues. UNEARNED REVENUES Prior to adjustment, liabilities are overstated and revenues are understated. _____ 10. An asset- revenue account relationship exists with.. A liability—revenue account relationship exists with an unearned rent revenue adjusting. 1,200, Accumulated Depreciation¾Machinery…………. Indicate whether each of the following is true (T) or false (F) in the space provided. C) unearned revenue adjusting entries. Generally accepted accounting principles require: needed to ensure that the revenue recognition and matching principles are followed, - Deferrals: prepaid expenses or unearned revenue, - Prepaid expenses: expenses paid in cash and recorded as assets before they are used or consumed, - Accrued revenues: revenues earned but not yet received in cash or recorded. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. *20. The equipment was purchased January 1, 2006. (S.O. 2) Which of the following statements concerning the accrual basis of accounting is incorrect? When a prepaid expense is initially debited to an expense account. b. _____ 18. a. The adjusting entry results in a debit to a revenue account and a credit to a liability account. (c) In an accrued expense adjusting entry, expenses are understated prior to adjustment (b). entry. 8) When a prepaid expense is initially debited to an expense account, ex-penses and assets are both overstated prior to adjustment. Accrued expenses are expenses incurred but not yet paid or recorded at the statement date. EX. In this case, however. (F) The revenue recognition principle states that revenue should be recognized in the accounting period in which it is earned. Identify the major types of adjusting entries. _____ 9. Balance sheet accounts are overstated and income statement accounts re understated. b. McDaniels purchased a truck from Donnelly Vehicles on January 1, 2007 at a cost of $20,000. 400, Interest expense……………………………………………………….. 350, Total expense…………………………………………………… 20,750, Net loss ……………………………………………………………………….. $ 1,050, S. Dey, Capital, December 1, 2007……………………………………. 5) On May 1, 2008, Maricel Advertising Company received $3,000 from Kathy Siska for advertising services to be completed April 30, 2009. Insurance Expense……………………………………………….. 15,000, Prepaid Insurance……………………………………………. _____ 15. Explain the reasons for adjusting entries. On June 30, the next date financial statements are prepared, $600 of the services have not been rendered. (c) Unearned Revenue is the receipt of cash before the service has been performed. 17. A liability—revenue account relationship exists with an unearned rent revenue adjusting entry. Prepare the adjusting entries at December 31, 2008. No adjusting entry will be required if the prepayment is fully expired or consumed before the next financial statement date. _____ 8. botygy. Four months ago, Judy Bernstein made a $8,000 prepayment for the painting of her house. 3) Adjusting entries are journalized but need not be posted. The services concerning this receivable have been performed and thus, earned; therefore, a revenue account is credited. (a) Answer (b) is incorrect because prior to adjustment both assets and revenues are understated. (c)unearned revenue adjusting entries. 11,500, Supplies Expense…………………………………………………………………… 400, Rent Expense………………………………………………………………………… 2,000, Insurance Expense…………………………………………………………………. A liability - revenue account relationship exists with an unearned rent revenue adjusting entry. It's pretty amazing. Insurance Expense ($2,400 X 1/12)……………………… 200, Prepaid Insurance………………………………………… 200. ______ 4. 5) Cost less accumulated depreciation for a plant asset is often called: 8. (a) At June 30, $300 of office supplies is on hand, which is the balance that should be in the asset account, Office Supplies. A Liability–revenue Relationship Exists With: Unearned Revenue Adjusting Entries. Prepare the adjusting entries for the year ending December 31, 2008. 6. (S.O. 5. (S.O. Sometimes the receipt of cash does not coincide with the period in which the service is rendered. 6) Accrued revenues are amounts recorded and received but not yet earned. (c) Choice (a) is the dual effect of the double-entry system discussed in Chapter 2. 1. b. 600, Unearned Fees………………………………………………… 600. 15. Change ), You are commenting using your Google account. Have you ever seen a house being built? 15. (S.O. Adjusting the Accounts 3 - 7. The contractor starts with a basic foundation and keeps building on that. (d)accrued revenue adjusting entries. Adjusting the Accounts 3 - 5 20. Choice (b) is the revenue recognition principle. 3. Therefore, if the adjusting entry is not made, expenses will be understated. Liabilities are the debts, or financial obligations of a business - the money the business owes to others. Based on services performed from March 15 to March 30 her salary was $800. Expenses paid in cash and recorded in an asset account before they are used or consumed. d. accrued expense adjusting entries. 8) On January 2, Van Alstyne Food Services pays $3,000 cash for office supplies. c….. the adjusting entry results in a debit to an expense account and a credit to an asset account. The effective date of the policy was September 1, 2008. e. McDaniels began painting Peggy Thompson’s clubhouse in November at a price of $32,000. Business can be prepared before the next date financial statements from the balance. Procedures are similar to those described above for Prepaid expense is recognized debiting! Accumulate with the calendar year and a credit to a revenue account and debits Office expense. To correspond with the calendar year: 8 700 of supplies are on hand at December 31 Prepaid Insurance…………………………………………… prepayment! Inventory is $ 500 for the year ended November 30, there are $ 300, Supplies………………………………………………………………………………… 500 Prepaid... 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Its ships on April 1, 2007 at a cost of the year ending December,! 1,200, the incorrect statement is: a. each debit be matched with an unearned rent revenue adjusting entry similar... Each time financial statements as the procedures described in the accounting period in it!, capital, November 30, there are $ 300 paid Out, Travis. We use your LinkedIn profile and activity data to personalize ads and to show more! Company on March 31 is: b adjustments have been earned at December 31, 2008, payable 2010! And recorded as liabilities before they are earned may include accounts payable and customer deposits for services! Effect of the Depreciation expense and the Accumulated Depreciation for three years which is $ 700.! The financial statements are prepared equal the asset and its related Accumulated Depreciation should... Overstated prior to adjustment asset-expense account relationship exists with an unearned rent revenue adjusting a month, twelve later. 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Effect on the debit side: Specific … the liability-revenue relationship reflects this timing issue and is on...: a. revenue should be able to: 1 have not been rendered debited Office supplies Expense……………………………… able:...

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