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Exam 3: The Adjusting Process

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Question 31

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Given the following account balances for Garry's Tree Service, prepare a trial balance.

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Question 32

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Which one of the accounts below would likely be included in an accrual adjusting entry?

A) Insurance Expense
B) Prepaid Rent
C) Interest Expense
D) Unearned Rent

E) C) and D)
F) A) and D)

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Question 33

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Which of the following is considered to be unearned revenue?

Adjusting entries affect only expense and asset accounts.

An adjusting entry to accrue an incurred expense will affect total liabilities.

If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry?

Indicate whether the following error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much.

The unexpired insurance at the end of the fiscal period represents

The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is

At the end of the fiscal year, the following adjusting entries were omitted: Assuming that financial statements are prepared before the errors are discovered, indicate the effect of each error, considered individually, by inserting the dollar amount in the appropriate spaces. Insert "0" if the error does not affect the item.

A company pays $360 for a yearly trade magazine on August 1. The adjusting entry on December 31 is debit Unearned Subscription Revenue, $150 and credit Subscription Revenue, $150.

If the adjustment of the unearned rent account at the end of the period to recognize the amount of rent earned is inadvertently omitted, the net income for the period will be understated.

The matching concept supports matching expenses with the related revenues.

Which of the following is not true regarding depreciation?

If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the assets at the end of the period will be understated.

The unearned rent account has a balance of $72,000. If $18,000 of the $72,000 is unearned at the end of the accounting period, the amount of the adjusting entry is

Which account would normally not require an adjusting entry?

The balance in the office supplies account on June 1 was $7,500, supplies purchased during June were $3,100, and the supplies on hand at June 30 were $2,300. The amount to be used for the appropriate adjusting entry is

Depreciation on Office Equipment is $3,300. The adjusting entry on December 31, 2011 would be:

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry.