Term
Which of the following accounts typically receives an adjustment at the end of the accounting cycle:
1. Office Supplies
2. Merchandise Inventory
3. Prepaid Automobile Insurance
4. Unearned Revenue
5. All typically need adjusting. |
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Definition
| #5. All typically need adjusting. |
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Term
The accounting cycle ends on Tuesday, December 31st. The pay cycle ends on Friday, January 3rd. The year-end adjusting entry to accrue December 30th & 31st wages involves:
Dr. __________
Cr. __________ |
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Definition
The year-end adjusting entry to accrue December 30th & 31st wages involves:
Dr. Wage Expense (increase expense)
Cr. Wages Payable (increase liability) |
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Term
The year-end adjusting entry to accrue Interest on outstanding bank loans involves:
Dr. __________
Cr. __________ |
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Definition
The year-end adjusting entry to accrue Interest on outstanding bank loans involves:
Dr. Interest Expense (increase expense)
Cr. Interest Payable (increase liability) |
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Term
Office Supplies has a $2,000 balance on the books, but a physical count reveals only $300 remains on hand.
The year-end Journal Entry to adjust this account to recognize items used involves:
Dr. __________
Cr. __________ |
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Definition
The year-end Journal Entry to adjust the Office Supplies account to recognize items used involves:
Dr. Office Supplies Expense $1,700 (increase expense)
Cr. Office Supplies $1,700 (reduce asset) |
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Term
Merchandise Inventory has a $50,000 balance on the books, but a physical count reveals only $12,000 remains on hand.
The year-end Journal Entry to adjust this account to recognize items sold involves:
Dr. __________
Cr. __________ |
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Definition
The year-end Journal Entry to adjust the Merchandise Inventory account to recognize items sold involves:
Dr. Cost of Goods Sold $38,000 (increase expense)
Cr. Merchandise Inventory $38,000 (decrease expense) |
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Term
Prepaid Auto Insurance has a $12,000 balance on the books from a 1-year policy purchased on September 1st.
The year-end Journal Entry to adjust this account to recognize the months of expired coverage involves:
Dr. __________
Cr. __________ |
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Definition
The year-end Journal Entry to adjust the Prepaid Auto Insurance account to recognize the months of expired coverage involves:
Dr. Auto Insurance Expense $4,000 (increase expense)
Cr. Prepaid Auto Insurance $4,000 (decrease asset) |
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Term
Unearned Revenue has a $30,000 balance. Of this amount, services for 1/3 have been fully rendered.
The year-end Journal Entry to adjust the Unearned Revenue account to reclassify appropriate funds involves:
Dr. __________
Cr. __________ |
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Definition
The year-end Journal Entry to adjust the Unearned Revenue account to reclassify appropriate funds involves:
Dr. Unearned Revenue $10,000 (reduce liability)
Cr. Revenues Earned $10,000 (increase revenue) |
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Term
The Journal Entry to book Fixed Asset depreciation involves:
Dr. __________
Cr. __________ |
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Definition
The Journal Entry to book Fixed Asset depreciation involves:
Dr. Depreciation Expense (increase expense)
Cr. Accumulated Depreciation (increase contra-asset) |
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Term
The Journal Entry to book Natural Resource depletion involves:
Dr. __________
Cr. __________ |
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Definition
The Journal Entry to book Natural Resource depletion involves:
Dr. Depletion Expense (increase expense)
Cr. Accumulated Depletion (increase contra-asset) |
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Term
In October, you prepaid $3,000 worth of Radio Advertising to air during the holiday season. At the end of the year, $500 worth of ads had not taken place.
The Journal Entry to adjust Prepaid Radio Advertising for the remaining ads involves:
Dr. __________
Cr. __________ |
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Definition
The Journal Entry to adjust Prepaid Radio Advertising for the remaining ads involves:
Dr. Radio Advertising Expense $2,700 (increase expense)
Cr. Prepaid Radio Advertising $2,700 (decrease asset) |
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Term
At the end of December 2013, a wage accrual of $2,000 was booked for the last two days of December. The pay period ends on January 3rd and contains $3,000 in wages.
The compound Journal Entry for this week's payroll includes:
Dr. __________
Dr. __________
Cr. __________ |
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Definition
At the end of December 2013, a wage accrual of $2,000 was booked for the last two days of December. The weekly pay period ends on January 3rd and contains $3,000 in wages for the new year.
The compound Journal Entry for this week's payroll includes:
Dr. Wage Expense $3,000 (increase expense)
Dr. Wages Payable $2,000 (reduce liability)
Cr. Cash $5,000 (reduce asset) |
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Term
At the end of December 2013, an interest accrual of $6,000 was booked. When the loan is paid off in 2014, the current year's interest is $3,000 and the loan's principle due is $200,000.
The compound Journal Entry for payment includes:
Dr. __________
Dr. __________
Dr. __________
Cr. __________ |
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Definition
At the end of December 2013, an interest accrual of $6,000 was booked. When the loan is paid off in 2014, the current year's interest is $3,000 and the loan's principle due is $200,000.
The compound Journal Entry for payment includes:
Dr. Interest Expense $3,000 (increase expense)
Dr. Interest Payable $6,000 (reduce liability)
Dr. Loan Payable $200,000 (reduce liability)
Cr. Cash $209,000 (reduce asset) |
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Term
Which depreciation method results in the same amount per month--regardless of the asset's actual use?
1. Units of Production (or Use)
2. Straight Line
3. Double-Declining Balance |
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Definition
Straight Line Depreciation results in the same amount per month--regardless of the asset's actual use.
This method is used when the asset's use is predictable and a gradual decline in overall value is expected. Examples of these types of assets include Office Furniture (tables, chairs, desks), Office Fixtures (lighting, ceiling fans), filing cabinets, etc.
Because this method is the easiest to calculate, it is the most common. |
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Term
Which depreciation method results in higher expenses in the earlier years and lower expenses at the end of the asset's useful life?
1. Units of Production (or Use)
2. Straight Line
3. Double-Declining Balance |
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Definition
Double-Declining Balance Depreciation results in higher expenses in the earlier years and lower expenses at the end of the asset's useful life.
This method is used when the asset looses the greatest portion of its value during the initial years of use. |
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Term
Which depreciation method results in varying expenses each accounting cycle based on the asset's usage?
1. Units of Production (or Use)
2. Straight Line
3. Double-Declining Balance |
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Definition
Units of Production (or Use) Depreciation results in varying expenses each accounting cycle based on the asset's usage.
When the asset produces a high quantity of products (i.e., manufacturing equipment) or is used a great deal (i.e., miles driven with the company vehicles), that period's depreciation expense will increase. |
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Term
Goodwill has a current balance of $125,000.
A test of its value has determined that a 10% decrease has taken place.
What is the year-end adjusting Journal Entry to record this event? |
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Definition
Dr. Goodwill Impairment (increase expense)
Cr. Goodwill (decrease asset)
NOTE: Goodwill is one of the assets that does not use a contra-asset account to separately track declines in value. Other intangible assets that do not use contra accounts include: Patents, Trademarks, Franchises, & Copyrights.
Instead, these accounts themselves take the "hit" directly (credit entry) as they decline in value or gradually expire. |
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Term
You paid $100,000 for the exclusive rights to use a particular Patent.
You estimate that this patent has a useful life of 10 years.
What is the year-end adjusting Journal Entry to amortize this asset? |
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Definition
The year-end Journal Entry to amortize Patents is:
Dr. Amortization Expense- Patents (increase expense)
Cr. Patents (decrease asset)
NOTE: Patents is an asset that does not use a contra-asset account to separately track its amortization over its useful life.
Other amortizing assets that do not use contra accounts include: Trademarks, Franchises, & Copyrights.
Instead, these accounts themselves take the "hit" directly (credit entry) as they decline in value or gradually expire. |
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Term
On November 1st, you accepted a 120-Day Note Receivable on one of your customers. By December 31st, $75 in interest has accrued.
What is the Journal Entry to recognize this accrual? |
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Definition
Dr. Accounts Receivable- Interest (increase asset)
Cr. Interest Income (increase revenue) |
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