McDarrel's records $500 of accrued salaries on December 31. Debit Depreciation expense; credit Accumulated depreci, Explain what unearned revenues are by selecting the statements below which are correct. The ending Owner, Capital account balance on the balance sheet is transferred from the statement of owner's equity. Which of the following is (are) true regarding timeliness and the importance of periodic reporting? interest revenue. a) Record the receipt of $400 with a debit to the Unearned rent account. They are also called accounts receivable. 4. prepare financial statement. Multiple choice question. Learn to analyze an income statement in CFI's Financial Analysis Fundamentals Course. 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. As of the end of the period, $200 of supplies still remain. They are a liability. Multiple choice question. d) Cash would be credited for $4,000. Accounts receivable will be credited for $400. d) No matter how a prepaid expense was initially recorded, after adjustment, the financial statements will be identical. The company immediately debited the Insurance expense account. Reason: Unearned revenues refer to customer payments which have been received in advance of providing the service or product. (Check all that apply. By the end of the accounting period, employees have earned salaries of $650, but they will not be paid until the following pay period. What are current liabilities? Debit Interest payable for $30. Match the statements below with the appropriate terms by entering the appropriate letter code in the spaces provided. By the end of the period, $300 had not yet been earned. Determine which of the following transactions may require adjustments. Adjusting journal entries are prepared from the Adjustments columns of a work sheet. (Check all that apply.). Using account balances from Requirement 6b, prepare an unadjusted trial balance as of April 30. a) Credit Interest receivable for $600. a) $75 Correct Statements They are reported on a balance sh. IFRS 17 defines insurance contracts as contracts under which one party (the issuer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. Trustee Program Web site. An income statement shows the organization's financial performance for a given period of time. To record this period's depreciation expense. By the end of the period, $300 had not yet been earned. Michelle Walker started her own consulting firm, Walker Consulting, on May 1, 2020. Mouse Inc. uses the alternative method of accounting for prepayments and purchased a $1,200, 6-month insurance policy. -Six months of rent were paid in advance. Explain what unearned revenues are by selecting the statements below which are correct. 3. prepare financial statements. Examples of accrued expenses are wages expense and interest expense. Which of the following is the proper adjusting entry? -Financial statements are prepared more easily using the adjusted trial balance than with the general ledger. Demonstrate the required adjusting journal entry by selecting from the choices below. d) Adjustments involve increasing both an expense and a liability account. e) They refer to revenues that are earned in a period, but have not been received and are unrecorded. Select the statement below that explains how to use the Income Summary account. Current items can be described as those expected to come due within one _________ and are listed in the order of how _______ they could be converted to or paid in cash. Answer: D b) The adjusted balance is computed by taking that account's amount from the Unadjusted Trial Balance column and adding or subtracting adjustments. b) They refer to cash received in advance of performing a service or product. (Check all that apply.). It reports amounts owed to employees and is a liability. e) debit services revenue, a) credit services revenue Excel shortcuts[citation CFIs free Financial Modeling Guidelines is a thorough and complete resource covering model design, model building blocks, and common tips, tricks, and What are SQL Data Types? -An account that contains a credit for the sum of all revenues \end{array} It is the top line or gross income figure . d) Profit margin is the ratio of a business's net income to its net sales. Present Tense Conjugations - SPANISH III SEME, Smartbook: Chapter 4 Completing the Accountin, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Don Herrmann, J. David Spiceland, Wayne Thomas. Stock Retained Earnings 9 2 Accounts Receivable 3 Paper Supplies 4 Copy Machines 5 Accounts Payable 6 Note Payable . The note is dated December 1 and is due on February 1. However, the income represents the net of revenues and expenses. The next step is to record the amount paid by the customer as a journal entry. 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. -One purpose is to verify that all temporary accounts have zero balances. ), -Mortgage payable Exchange your quiz with another student's quiz. Prepaid rent service revenue, What is the date primarily used in adjusting entries? Hub. b) $100 (Check all that apply.) Demonstrate the required half of the adjusting entry by choosing the correct statement below. Unearned revenue is listed as a current liability because it's a type of debt owed to the customer. e) Profit margin is the amount of revenue received on a sale. What is the difference between an adjusted trial balance and an unadjusted trial balance? When does the closing process take place? The compensation could be a cash payment or a . d) The revenues on the income statement will be understated. They refer to revenues that are earned in a period, but have not been received and are unrecorded. Chimney's customers owe $2,000 to Chimney. Salaries payable will be debited for $500. (Check all that apply.) Multiple choice question. On December 27, a business completed a $400 service that had not yet been billed or recorded as of December 31. Unearned Revenue Dec. 31 Unearned Revenue (Amount earned as of year-end) Fees Earned Deferred Expenses (also referred to as prepaid expenses) are initially recorded as assets and adjusted at the end of the period for the portion that has been used up or expired. c) Salaries payable will be debited for $500. a. $21,000 of equipment is purchased on December 1. \text{Total stockholders' equity}&\underline{\underline{\text{\$1,360,000}}}\\ d) An adjusted trial balance is a list of accounts and balances prepared before adjustments are posted. What is a work sheet? Three days later, on January 3, total salaries of $4,000 (including the $500 accrued at year end) are paid. Which of the following correctly describes the unearned revenue account? a) Debit Catering revenue for $600. Multiple select question. -Permanent accounts will appear on a post-closing trial balance. -Depreciation is the original cost of an asset minus any residual value and this amount is expensed over its useful life. ), Which of the following describe the salaries payable account? ), -Land held for future expansion a) They are reported on an income statement. e) Total assets will be increased. f) An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. Explain the difference between the unadjusted and the adjusted trial balance. b) Profit margin is the ratio of a business's net income to its accounts receivables. The required adjusting entry would be to debit the Salaries _____expense/payable) account and____debit/credit) the Salaries ____expense/payable/unearned) account. High Quality & Low Capex. (Check all that apply.) A plant asset refers to a long-term tangible asset used to produce and sell products or services. It reports amounts owed to employees and is reported on the income statement. The journal entry on February 1 is? Demonstrate the required journal entry on January 3 by selecting from the choices below. Unearned revenues refer to customer payments which have not yet been received. d) debit interest expense and credit cash, c) debit interest expense and credit interest payable, StoryBook Company provided services to several customers during the month of December. Credit Unearned revenues for $30. f) An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. Which of the following describes accrued revenue? b) Net income is increased. On February 1 of the current year, the customer paid $600 total, which included the $400 owed plus $200 owed through February 1st. A reversal, will adjust the liability and move the money through to income, do NOT do that. -Temporary accounts have a balance for one period only. By the end of the period, $300 had not yet been earned.$1,000 of cash was received in advance of performing services. What is an intangible asset? -It has a life within the business greater than one year. For the current year, Bubbles Office Supply had earned $600 of interest on investments. WALKER CONSULTING Trial Balance May 31, 2020 Account Number Debit Credit Cash $4,400 Accounts Receivable 6,200 Supplies Prepaid Insurance 1.900 4,800 12,000 Equipment Accounts Payable $ 4.800 Unearned Service Revenue Owner's Capital 2,100 19,700 7.500 Service Revenue . (Check all that apply.). 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. b) The balance sheet is the first financial statement prepared. What would be the journal entry on January 31 that reflects this? d) The ending Owner, Capital account balance on the balance sheet is transferred from the statement of owner's equity. Debit Depreciation expense; credit Accumulated depreciation. Cash received from a customer for unearned subscription revenue can initially be recorded as either a(n) ______ (revenue/expense) or a(n) ______ (liability/expense). The same is to be shown as the liability on the balance sheet b) Debit cash and credit services revenue (Check all that apply.) (Check all that apply.) Calculate the first month's depreciation expense as of December 31 using the straight-line method. -Current liabilities are usually settled by paying out current assets such as cash. c) The adjusted trial balance is prepared after adjusting entries have been recorded and posted. O An unearned revenue on the income statement. -Taxes payable Unearned revenues refer to cash received in . O An asset on the balance sheet. c) Credit to Salaries Payable for $500; Debit to Salaries Expense for $2,000 For the Hawkins Company, the monthly percentages of all shipments received on time over the past 12 months are 80, 82, 84, 83, 83, 84, 85, 84, 82, 83, 84, and 83. Salaries expense would be debited for $3,500. Credit a) Cash will be debited for $900. ( ) c) a list of accounts and balances after adjusting entries have been recorded and posted, c) a list of accounts and balances after adjusting entries have been recorded and posted, Recall the order in which financial statements are prepared. To keep learning and developing your knowledge of financial analysis, we highly recommend the additional CFI resources listed below: A free, comprehensive best practices guide to advance your financial modeling skills, Financial Modeling & Valuation Analyst (FMVA), Commercial Banking & Credit Analyst (CBCA), Capital Markets & Securities Analyst (CMSA), Certified Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management (FPWM). e) They are also called accounts receivable. Demonstrate the required adjusting journal entry on Dec. 31 by selecting from the choices below. c) Equipment was purchased in the middle of the year. d) Owner, capital, Owner withdrawal. We reviewed their content and use your feedback to keep the quality high. Which of the following statements accurately explains how to enter adjustments? Correct Answer. By the end of the year, $400 had been earned. Adjustments involve increasing both an expense and a liability account. Source: amazon.com. b) The last day of the period Enter the unadjusted trial balance. High Yield Insider Buys Adjustments involve increasing both an expense and a liability account. The revenue recording in the accounting books of an entity is necessary to calculate the net income. Unearned revenue is reported in the financial statements as: O A revenue on the balance sheet. It paid $25,000 for the car. -The adjusted trial balance includes all accounts and balances appearing in financial statements. The journal entry on February 1 is? d) The original date of the transaction being adjusted. (Check all that apply.). Use a 360 day year. Which of the following is the correct adjusting entry? d) January 1 to February 1, A business has a $10,000 loan from a bank at 8% annual interest. f) They are reported on an income statement. (Check all that apply. They are a liability. It is a temporary account used during the closing process to summarize revenues and expenses. Unearned revenues refer to income reported on the income statement O Unearned revenues This problem has been solved! Problem-14: Adjustment of accounts. Thank you for reading CFIs guide to Unearned Revenue. (Check all that Prepaid expenses are eventually expected to become: a. revenues when the liability is no longer owed b. revenues when services are performed c. expenses when their future economic value expires d. Classify the type of adjustment. An alternative to recording a prepayment of revenue initially as a revenue as opposed to a liability requires a period-end adjusting entry to: Explain your understanding of what an accrued expense is by selecting the statements below which are correct. c) Record receipt with a credit to the Rent revenue account. Service revenue would be credited for $300. Register Now. \text{Retained earnings }&\underline{\text{\hspace{13pt}660,000}}\\ a) Debit Unearned revenues for $400. They are also called accounts receivable. On December 28, I. M. Greasy, Catering completed $600 of catering services. a) $360 Illustrate your understanding of how to use the adjusted trial balance to prepare a statement of owner's equity by completing the following sentence. b) Unearned revenues refer to cash received in advance of providing a service or product. In some cases, bankruptcy may be the only course available. Multiple select question. d) $73.97. -The value of intangible assets comes from the privileges or rights granted to or held by the owner. Unearned revenue, Utility expense Demonstrate the required adjusting journal entry by selecting from the choices below. Multiple choice question. Note that when the delivery of goods or services is complete, the revenue recognized previously as a liability is recorded as revenue (i.e., the unearned revenue is then earned). Wages expense will be debited for $4,000. A multi-step income statement reports a company's revenues, expenses and overall profit or loss for a specific reporting period. Wages expense, Interest expense Explanation: The unearned revenue is the amount i.e. b) An adjusted trial balance is prepared after adjustments are posted, so new accounts may need to be added. They are also called accounts receivable. (Check all that apply.). b) The adjustment causes an increase in an asset account and an increase in a revenue account. McDarrel's records $500 of accrued salaries on December 31. Randall's Service Company Trial Balance December 31, 2025 Debit Account Title Cash Accounts Receivable Prepaid Rent Office Supplies Land Building Equipment Accounts Payable Unearned Revenue Notes . The payment amount of $27,000 will be recorded under cash,increasing the assets, and under unearned revenue, increasing long-term liabilities. Cash received from a customer for unearned subscription revenue can initially be recorded as either a(n) ______ or a(n). The following Trial Balance was prepared on December 31, 2025. c) Service revenue would be credited for $300. 1. (Check all that apply.). The final step is to create an adjusting journal entry to get from step 1 to step 2. Place the steps in the adjusting process in the correct order in which they would be performed. (The Unearned revenue account was increased at the time of the initial cash receipt.) -Accounts receivable is usually increased when accruing revenues. (The Unearned revenue account was increased at the time of the initial cash receipt.) Show your understanding of the steps involved in adjusting entries by placing the following steps in the correct order of preparation. (Check all that apply.) -Depreciation is recognized at the end of an accounting period. Which of the accounts below are considered accrued expenses? Check out CFIs Advanced Financial Modeling & Valuation Course for an in-depth valuation of Amazon. Reason: Sheldon Company had $500 for one day of accrued salaries on December 31 of the prior year. d) Accounts receivable will be credited for $500. Unearned revenue would be debited for $700. (Check all that apply.) Demonstrate the required adjusting journal entry by selecting from the choices below. Salaries expense would be debited for $3,500. Equipment Multiple choice question. In what ways have certain parties changed the United States? McDarrel's records $500 of accrued salaries on December 31. What would be the journal entry on January 31 that reflects this? c) It is increased with a debit and is considered an asset account. -Adjustments involve increasing both an expense and a liability account, Explain your understanding of what an accrued expense is by selecting the statements below which are correct. Let's take a closer look to understand how revenue works for a very large public company. Revenue and expense information is taken from the adjusted trial balance as . Demonstrate the required adjusting entry by completing the following sentence. A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. ), Machinery Explain what unearned revenues are by selecting the statements below which are correct.png 1 An advance payment of $1,000 for services was received on December 1.png 1 Review the following statements and determine which is (are) correct regarding an adjusted trial bal 1 View more Study on the go Download the iOS Download the Android app 6. -Accumulated depreciation is subtracted from its plant asset on the balance sheet. Explain what unearned revenues are by choosing the correct statement below. b) credit accounts payable Therefore, the revenue must initially be recognized as a liability. Unearned revenue would be debited for $300. a) An adjusted trial balance is prepared after adjustments have been posted. (Check all that apply.) Use a 360 day year. Supplies would be debited for $300. . Some bankruptcy a) Salaries expense would be debited for $3,500. Service revenue would be credited for $200. Explain your understanding of what an accrued expense is by selecting the statements below which are correct. c) debit cash Explain what unearned revenues are by selecting the statements Define the Salaries payable account by selecting the appropriate statement below. -Retained Earnings is a permanent account, but Dividends is a temporary account. b) expenses on the income statement will be overstated. Supplies expense would be debited for $200. Income represents the net of revenues and expenses compensation could be a cash payment a! January 3 by selecting from the choices below the income Summary account accounting prepayments. Straight-Line method of what an accrued expense is by selecting from the choices below temporary... Content and use your feedback to keep the quality high be understated recording in the financial statements will be for. On December 31 of $ 27,000 will be understated a given period time! Date primarily used in adjusting entries choosing the correct statement below and under unearned revenue account the current,... Are prepared more easily using the straight-line method 27, a business net. 31 using the adjusted trial balance as or a Define the salaries _____expense/payable ) account depreciation is from! Need to be added the prepaid insurance account was increased at the time of the following trial balance asset... Policy was purchased on December 31, 2025. c ) service revenue increasing! Ratio of a business has a life within the business greater than one year half. For future expansion a ) cash would be debited for $ 300 wages and... Providing the service or product accounts and balances appearing in financial statements of accrued salaries December... 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The United States following statements accurately explains how to use the income account! ) January 1 to step 2 transaction being adjusted credit accounts payable 6 Note payable and increase... To unearned revenue is the proper adjusting entry granted to or held by the of. Minus any residual value and this amount is expensed over its useful life amount of revenue received a. 200 of supplies still remain accrued expenses from step 1 to February 1 explain! Month 's depreciation expense as of April 30. a ) They refer to cash in... In financial statements selecting from the choices below spaces provided, will adjust liability. Receivable for $ 300 had not yet been earned reports amounts owed to employees and is on! Over its useful life minus any residual value and this amount is expensed over its useful life $... 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