Multiple Choice
The revenue recognition principle mandates that revenue be reported when earned, regardless of when the revenue is collected. For this reason, when revenue is earned but not yet collected, an accrual entry is required to accurately report revenue earned. For the same reason, when cash is collected, in advance of the earnings process, a deferral entry is required, to accurately report revenue earned.
Analyzing transactions (to enable journal entries) is the only analytical part of the accounting cycle. Analysis is required for both the original transaction entries and the adjusting entries. All of the other steps are just methodical posting of the entries, summarizing of the balances, regrouping of the accounts for financial reports, and closing of the accounts for year-end. Only the journal entries require decision-making processes.
Accruals—when cash has not moved, but it is time to record the transaction (examples: Accounts Payable or Accounts Receivable). Deferrals—when cash has moved, but it is not time to record the transaction (examples: Prepaid Insurance or Unearned Revenue).
Adjusting entries always include at least one income statement account and at least one balance sheet account, because the adjustment process is done to shift revenues and expenses between the Balance Sheet and the Income Statement, depending on whether it is the correct period to include that income or expense (report on the Income Statement) or not (report on the Balance Sheet).
An entry to adjust the supplies account to the $400 balance is needed; Debit Supplies Expense for 800; Credit Supplies for 800.
An entry to adjust the Prepaid Insurance account to $6,000 balance is needed; Debit Insurance Expense for 6,000; Credit Prepaid Insurance for 6,000.
The adjusted trial balance is the summary of account balances after the adjustments have been posted, so it reflects the corrected balances of all accounts.
(A) Income Statement; (B) Balance Sheet; (C) Balance Sheet; (D) Income Statement; (E) Retained Earnings Statement; (F) Balance Sheet
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- Authors: Mitchell Franklin, Patty Graybeal, Dixon Cooper
- Publisher/website: OpenStax
- Book title: Principles of Accounting, Volume 1: Financial Accounting
- Publication date: Apr 11, 2019
- Location: Houston, Texas
- Book URL: https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters
- Section URL: https://openstax.org/books/principles-financial-accounting/pages/chapter-4
© Dec 13, 2023 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.
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2. Interest of $550 on a note receivable was earned at year-end, although collection of the interest is not due until the following year. 3. At year-end, wages payable of $5,600 had not been recorded or paid. 4. Office supplies were purchased during the year for $700, and $100 of them remained on hand (unused) at year-end. 1.
Step 2 of 4. 1. Calculate the amount that needs to be recorded while closing the revenue account. As mentioned in the given financial statement, the Net Sales amount of Company A is $229,234 and the other income is $2,745. Therefore, the amount to be credited to income summary account is. Step 3 of 4. 2.
Step-by-step solution. Step 1 of 44. Journal entries: Journal entry records the accounting transactions of a business in a journal book. All the business transactions are recorded in the chronological order using the double entry system of accounting. Step 2 of 44.
Accounting Connect Chapter 4. Get a hint. When transactions are entered in a general journal on what order? Click the card to flip 👆. Chronological order. In the order in which they occur. he general journal is similar to a diary. The general journal details, in chronological order, the economic events of the business. Click the card to flip ...
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A and C. Questions. 1. The revenue recognition principle mandates that revenue be reported when earned, regardless of when the revenue is collected. For this reason, when revenue is earned but not yet collected, an accrual entry is required to accurately report revenue earned. For the same reason, when cash is collected, in advance of the ...
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ACCT 2301 CHAPTER 4 HOMEWORK. Match each phrase with its definition. 1 Calculated as net sales minus cost of goods sold Gross profit 2 A current asset that includes the cost to buy goods and make them ready for sale
5-2 Short Answer- Skills in the Humanities. Final exam study guide for ACC. Module Three - Costing Methods. ACC 202 Milestone One Operational Costs Data Appendix. Accounting Notes - ACC 201. Homework Chapter 4 exercise preparing an income statement under ifrs lo p4 reports the following income statement accounts for the year ended december 31 ...
Target sends a bill in October and receives payment in October. Study with Quizlet and memorize flashcards containing terms like Cash: Purchased $120 of supplies for cash., Net income: Purchased $120 of supplies for cash., Cash: Recorded an adjusting entry to record use of $30 of the above supplies. and more.
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Step 4 of 5. Being Service fees expenses should be debited to income statement hence service fee expenses should be debited and cash balance is decreased hence cash balance would be credited by $200. Step 5 of 5. 3. Failure to record the interest revenue would cause assets and revenues to be understated by $500.
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Is prepared after a company journalizes and posts all closing entries. It is a list of all permanent accounts and their balances. It also contains only permanent balance sheets. Study with Quizlet and memorize flashcards containing terms like Revenue Recognition Principle, Expense Recognition Principle or matching principle, Accural Basis ...
CP 6 Accounting Practice Bright. CP 4 Accounting practice Bright. Questions 6 for accounting. CP 7 Financial Accounting Bright. Owners Equity Transaction Study Guide ACCT-151. Midterm 1. Chapter 4 homework problems from McGrawhill. (algo) recording seven typical adjusting entries variety store is completing the accounting process for the current.
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There are two ways of recording the accounting information. 1. Cash basis and. 2. Accrual basis of accounting. Step 4 of 6. Under the accrual basis of accounting, the revenues are recognized when revenues are actually earned and expenses are recognized when the expenditures are actually incurred. In other words, under accrual basis of accounting:
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