v 4 Sort (adjusted) trial balance amounts to financial statements. $300 were used during the month. $300 were used during the month. They are a liability They are reported on a balance sheet. Explain what unearned revenues are by selecting the statements below which are correct. Debit Depreciation expense; credit Accumulated depreciation. Which of the following describes accrued revenue? (Check all that apply.). (Check all that apply.) Define what the book value of an asset is by choosing the correct statement(s) below. ), Explain what a contra account is by choosing the statement(s) below that correctly describe(s) a contra account. In order to prepare a balance sheet using the account balances on an adjusted trial balance, all of the ______________ (expenses/assets) and their debit balances are transferred to the balance sheet as well as all of the _____________ (liabilities/revenues) and their ______________ (debit/credit) balances. A classified balance sheet has several categories for assets and liabilities including: (Check all that apply.). Chimney Sweeps provided chimney cleaning services to several clients during the month of February. Some of the steps in the accounting cycle are listed below. By the end of the period, only $100 remains. Unearned revenue would be debited for $300. In order to prepare an income statement using the account balances on an adjusted trial balance, all of the _______________(revenues/liabilities) and their credit balances are transferred to the income statement as well as all of the ________________ (expenses/assets) and their ______________ (debit/credit) balances. List the order in which financial statements are prepared. Public companies, for in… Which of the following accounts is considered a prepaid expense? Explain what unearned revenues are by choosing the correct statement below. Demonstrate the required adjusting journal entry by selecting from the choices below. On December 27, a business completed a $400 service that had not yet been billed or recorded as of December 31. Multiple Choice Question Explain what unearned revenues are by choosing the correct statement below. What is needed in order to figure interest expense? FreshBooks has online accounting software for small businesses that makes it easy to generate balance sheets and view your unearned revenue. 6. A company borrowed $10,000 from the bank at 5% interest. A 12-month insurance policy was purchased on Dec. 1 for $4,800 and the Prepaid insurance account was initially increased for the payment. Demonstrate your knowledge of a depreciation adjusting entry by completing the following sentence. On January 31 of the current year, the customer paid $900 total, which included the $500 owed plus $400 owed for the current month of January. By the end of the year, $400 had been earned. -lists current assets in the order of how quickly they can be converted to cash. (Check all that apply.). Which of the accounts below are considered accrued expenses? After each monthpasses, the unearned revenue account is reduced by $1,500, and the revenue isincreased by the same amount to maintain the balance and recognize the earnedrevenue. If an adjusting entry for unearned revenue is not recorded, what is the effect on the financial statements? The required adjusting entry would be to debit the _____________________ (Unearned revenue/Accounts receivable/Cash/Service revenue) account and _______________ (debit/credit) the ________________ (Unearned revenue/Accounts receivable/Cash/Service revenue) account. ), A plant asset can be defined by which of the following statements? Failing to properly classify unearned revenue is another common manipulation of liabilities. The required adjusting journal entry on December 31 includes a: (Check all that apply.). Choose the statement(s) below which is (are) true regarding adjusting journal entries. Calculate depreciation expense for the month of December using straight-line depreciation. Adjusting entries are most commonly used in accordance with the matching principleto match revenue and expenses in the period in which they occur. Explain a contra account by filling in the following blanks. By the end of the accounting period, employees have earned salaries of $500, but they will not be paid until the following pay period. Revenue . (Check all that apply.) For this illustration, let us use Unearned Revenue.Suppose on January 10, 2017, ABC Company made $30,000 advanced collections from its customers. Service revenue would be credited for $300. Determine which of the following transactions may require adjustments. When does the closing process take place? The recipient of such prepayment records unearned revenue … Current assets divided by current liabilities, cash and other resources that are expected to be sold, collected or used within one year. Book value is the original cost of an asset minus its accumulated depreciation. (Check all that apply.) At the end of the previous year, a customer owed Days Company $400. (The Unearned revenue account was increased at the time of the initial cash receipt.) (Check all that apply.). The required adjusting entry would be to debit the Interest _______________________ (expense/payable/receivable). Explain the required steps to complete a work sheet by placing the following in the correct order of completion. -an accounting system that uses the matching principle to determine when to recognize revenues and expenses. It is estimated that it will have a life of 20 years and zero salvage value. Accrual basis accounting recognizes _______ (equity/revenues/expenses) when the service or product is delivered and records _______ (revenues/expenses/liabilities) when _______ (incurred/paid) in order to adhere to the matching, an accounting system which recognizes revenues when cash is received and records expenses when cash is paid. As of the end of the period, $200 of supplies still remain. ), Which of the following describe the Salaries payable account? An unclassified balance sheet is one whose items are broadly grouped into assets, liabilities, and equity. Sheldon Company had $500 for one day of accrued salaries on December 31 of the prior year. Deferred revenue, or unearned revenue , refers to advance payments for products or services that are to be delivered in the future. Explain what unearned revenues are by selecting the statements below which are correct. Is unearned revenue a liability? Unearned revenues refer to cash received in advance of providing a service or product. 4. As of December 31, none of this interest had been received or recorded. Illustrate your understanding of how to use the adjusted trial balance to prepare the balance sheet by completing the following sentence. Choose the statement below that demonstrates the correct adjusting entry to recognize depreciation expense on a building. Unearned revenue would be debited for $300. Only when the revenue is recorded in the balance sheet, this transaction isthen also reflected in the income statement. Therefore, it can be seen that when management prepares financial statements, they make five assertions regarding each line in the financial statements. Explain what unearned revenues are by selecting the statements below which are correct. (Check all that apply. 8 - Explain what unearned revenues are by ohoosing the oorreot statement below I and about this x Sorry your answer Is Incorrect L'J Uneamed revenues -Expenses are always recognized in the period in which they are incurred. Multiple Choice Question Explain what unearned revenues are by choosing the correct statement below. Calculate the amount of interest to accrue if the loan has been outstanding for 45 days. They are also called deferred revenues. Debit accounts receivable and credit services revenue. Explain what unearned revenues are by selecting the statements below which are correct. Demonstrate the required adjusting entry for this company by completing the following sentence. Which of the following could be a logical or realistic accounting period for a business that is creating financial statements? Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered. Explain what unearned revenues are by choosing the correct statement below. (Check all that apply.). This is the fourth step in the accounting cycle. Explain what unearned revenues are by choosing the correct statement below. Service revenue would be credited for $300. The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. Accounts receivable will be credited for $400. By the end of the accounting period, employees have earned salaries of $650, but they will not be paid until the following pay period. Explain what unearned revenues are by selecting the statements below which are correct. Salaries payable will be debited for $500. An adjusting journal entry is made at the ______ (beginning/middle/end) of an accounting period. As of December 31, the customer had not been billed nor had the transaction been recorded. (Check all that apply.). b. (Check all that apply.) Debit to Salaries Payable for $500; Debit to Salaries Expense for $2,000. Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered. Demonstrate the required adjusting entry by completing the following sentence. Equipment was purchased in the middle of the year. (Check all that apply.). As you can see on the right, there are different financial statements that each account corresponds to: the balance sheet and the income statement… -One purpose is to verify that all temporary accounts have zero balances. 'ii' Your answer Is correct! They are also called deferred revenues. They are reported on a balance sheet. Unearned revenue would be debited for $700. -It would increase expenses, so net income would be reduced. A calendar year-end reporting period is defined as a _______(1 / 3 / 12) -month period which ends on________ (December/January/March) 31st. Unearned revenues refer to customer payments which have not yet been received. Here’s what that means. Unearned revenues refer to cash received in advance of providing a service or product. CLOSE revenues, gains, expenses, and losses to RETAINED EARNINGS (record in journal and post to ledger). All of the before and after words are correct $200 of supplies were purchased at the beginning of the period and recorded as an asset. (The Uneared revenue account was increased at the time of the initial cash receipt) Demonstrate the required adjusting journal entry by selecting from the choices below. The income summary account is an intermediary between revenues and expenses, and the Retained Earnings account. This makes sure the equation continues to balance. This is why unearned revenue is recorded as an equal decrease in unearned revenue (a liability account) and increase in revenue (an asset account). Which of the following accounts would be considered a prepaid expense or prepaid asset account? ), amount owed x interest rate x fraction of the year since last payment. Recall the order in which financial statements are prepared. Look at the before and after words for Account Category: Unearned Revenue Liabilities, and select the correct statement below; A. They are a liability. Current items are those expected to come due within one year or the company's operating cycle, whichever is longer. Once you board the plane and land at your destination, the airline converts this dollar amount to sales. They are also called accounts receivable. Unearned revenues refer to amounts owed to the company that have not yet been billed. Supplies expense would be debited for $600. (Check all that apply.). "That is a $15 billion company." What is the purpose of the Accumulated Depreciation account? On December 1, a company pays $3,600 for a 36-month insurance policy. It stores all of the closing information for revenues and expenses, resulting in a “summary” of income or loss for the period. Income statement, statement of owner's equity, balance sheet, statement of cash flows. Unearned revenue would be debited for $700. The revenue recognition principle states that revenue: should be recorded when goods or services are provided to customers at an amount expected to be received from them Describe the final step in the adjusting process. By the end of the period, $300 had not yet been earned. Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. Demonstrate the required adjusting entry by completing the following sentence. (The Supplies account was increased at the time of the initial purchase.) This makes sure the equation continues to balance.  They refer to cash received in advance of performing a service or product. A depreciation adjustment would include a debit to ______ (depreciation expense/accumulated depreciation/building) and________(debit/credit) to _________ (depreciation expense/accumulated depreciation/building). Ans: a. The required adjusting entry would be to debit the _________________ (Unearned revenue/Accounts receivable/Cash/Interest receivable) account and __________________ (debit/credit) the ______________ (Cash/Accounts receivable/Interest revenue/Interest receivable) account. This principle is a major part of the _____ (timing/adjusting/estimating) process. A company borrowed $4,000 from the bank at an interest rate of 9%. At right is the income statement approach, wherein the initial receipt is recorded entirely to a Revenue account. They are a liability They are reported on a balance sheet. ~Your answer is correct. Calculate depreciation expense for one month, as of December 31, of the first year using the straight-line method. (Check all that apply.). -A temporary account has a balance for only one period. They are also called deferred revenues. Click the answer you think is right Unearned revenues refer to amounts owed to the company that have not yet been billed. 8. Closing means to transfer account balances from ______ (asset/liability/permanent/temporary) accounts so that they will start with a ______ (contra/larger/zero) balance at the beginning of the next period. The journal entry to record the payment of salaries on January 4 includes: The adjustment causes an increase in an asset account and an increase in a revenue account. Examples of accrued expenses are wages expense and interest expense. PREPARE a complete set of financial statements and disseminate it to users.  They are a liability. Which of the following statements describes why accrual accounting better reflects a business's performance as compared to the cash basis? Demonstrate the required adjusting entry by choosing the correct statement below. Which of the following statements about the Accumulated depreciation account is (are) correct? B. accrual basis recognizes revenues when earned and records expenses when cash is paid C. accrual basis is the same as the cash basis D. accrual basis does not consider the revenue recognition principle E. accrual basis uses the adjusting process to recognize revenues when earned and to match expenses w/revenues FreshBooks has online accounting software for small businesses that makes it easy to generate balance sheets and view your unearned revenue. Which of the following lists steps of the accounting cycle in the correct order (note that not all steps are listed)? If the liability method is used, the entry would be:Take note that the amount has not yet been earned, thus it is proper to record it as a liability. (Check all that apply.). Debit Depreciation expense; credit Accumulated depreciation. !J Reed about !tis v 1 Enter unadjusted trial balance. Choose the formula below that is used to calculate the current ratio of a business. Demonstrate the required half of the adjusting entry by choosing the correct statement below. Which of the following lists of assets would be classified as plant assets? The adjustment to show the supplies used up would cause _______ (assets/liabilities/expenses) to be reduced and _________ (expenses/liabilities/revenues) to be increased, so net income would decline. -Expenses should be matched in the same accounting period as the revenues that are earned as a result of those expenses. Demonstrate what the correct adjusting entry should include by choosing the correct statement below. Which of the accounts below are considered accrued expenses? Define "current" as it applies to assets and liabilities on a classified balance sheet. The main premise is that for each line in the financial statements, the auditors’ primary objective is to en… (Check all that apply). However, if cash basis accounting is used, $ _______(100/3,600) of insurance expense would be reported at the time of purchase. The common accounts used are: Unearned Revenue, Deferred Income, Advances from Customers, etc. StoryBook Company provided services to several customers during the month of December. d. They are a liability. c. They refer to cash received in advance of performing a service or product. "The company has grown into a € 100 million business." The loan has been outstanding for 45 days. They refer to cash received in advance of performing a service or product. (The Supplies account was increased at the time of the initial purchase.) What defines a fiscal year for a business? Which of the following is (are) true regarding timeliness and the importance of periodic reporting? When you book and prepay for your airline ticket, the flight service records this as unearned revenue. Unearned revenue, also known as deferred revenue, is the amount ofmoney a company has collected but have not provided the goods or services being paidfor at the time it received the payment. (The Uneared revenue account was increased at the time of the initial cash receipt) Demonstrate the required adjusting journal entry by selecting from the choices below. After one month, accrual accounting requires $ _________(100/3,600) of insurance expense be reported on the income statement ending December 31. Current items can be described as those expected to come due within one ________ (month/year) and are listed in the order of how _______ (quickly/slowly) they could be converted to or paid in cash. Which of the following statements describes the expense recognition (matching) principle? Require adjustments, etc be converted to cash received in cash a list of accounts list unearned! 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