By the end of the year, $400 had been earned. d) Adjustments involve increasing both an expense and a liability account. accrued ______ are earned in a period that are both unrecorded and not yet received in cash. Indicate each account affected, whether the account is increased of the amount of the increase or decrease. Define the Salaries payable account by selecting the appropriate statement below. Register Now. Salaries payable will be debited for $500. Determine which of the following transactions may require adjustments. Match the statements below with the appropriate terms by entering the appropriate letter code in the spaces provided. By the end of the accounting period, employees have earned salaries of, $500, but they will not be paid until the following pay period. By the end of the period, $300 had not yet been earned. The adjustment causes an increase in an asset account and an increase in a revenue account. C) The normal balance of unearned revenues is a credit. Choose the statement below that demonstrates the correct adjusting entry to recognize depreciation expense on a building. 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? c) Service revenue would be credited for $300. When preparing an income statement, revenues will always come before expenses in the presentation. Demonstrate the required adjusting entry by choosing the correct statement below. Multiple select question. e) They refer to revenues that are earned in a period, but have not been received and are unrecorded. Visit the U.S. Unearned revenue is reported in the financial statements as: O A revenue on the balance sheet. Sharper declares and immediately distributes a 50% stock dividend. (Check all that apply. -Any unused prepaids existing at end of period are transferred to asset accounts. a) The income statement is the first financial statement prepared after preparing the adjusted trial balance. Assume that Microsoft recognized $2000 million of unearned revenue as revenue during the year, what entry for unearned revenue did Microsoft make during the year? (Check all that apply.). McDarrel's records $500 of accrued salaries on December 31. After the distribution is made, (1) prepare the updated stockholders' equity section and (2) compute the number of shares outstanding. collected in advance prior a service or the product is to be delivered. -Six months of rent were paid in advance. Choose the statement below that demonstrates the correct adjusting entry to recognize depreciation expense on a building. Illustrate your understanding of how to use the adjusted trial balance to prepare a statement of owner's equity by completing the following sentence. (Check all that apply. O An unearned revenue on the income statement. December 21, 2022. Long-term investments are sometimes referred to as noncurrent investments. Unearned revenue, also known as deferred revenue, is a customer's advance payment for a product or service that has yet to be provided by the company. Use this function. Accumulated depreciation is a contra account. Business Accounting Choose the correct statement below: A. Unearned income is income earned and already collected. -Most operating cycles are less than one year. A company using a calendar year-end will record an adjusting entry for a bill received on January 15 for services received during the month of December on: Unearned revenues refer to customer payments which have not yet been received. You can also search the Web using the term approved credit counseling agencies. ( ) Unearned revenue is a term in which the transactions that are related to the receiving of money could be considered for the service or product to be provided or delivered. a) Rent was paid for the month. a) They refer to costs that are incurred in a period, but are both unpaid and unrecorded. Salaries payable will be debited for $500. b) An adjusted trial balance is prepared after adjustments are posted, so new accounts may need to be added. Demonstrate the required journal entry on January 3 by selecting from the choices below. -The accounting cycle is a series of steps repeated each reporting period. 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. Multiple select question. c) increase the cash account at period-end, b) remove the unearned amount to a liability account, Chapter 8 Accounting for Long-Term Assets, Fundamentals of Financial Management, Concise Edition, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, James F. Sepe, J. David Spiceland, Mark W. Nelson, Wayne Thomas. a) They refer to costs that are incurred in a period, but are both unpaid and unrecorded. Supplies would be debited for $300. The following Trial Balance was prepared on December 31, 2025. A plant asset refers to the stock purchased by a business held for future investment. Multiple select question. A plant asset refers to a long-term tangible asset used to produce and sell products or services. (Check all that apply.) Unearned revenue refers to the money small businesses collect from customers for a or service that has not yet been provided. They are also called accounts receivable. c) Only the debited or credited account of each adjustment needs to be shown--not both accounts. credit b) a list of accounts and balances after adjusting entries have been recorded but before they have been posted Remember revenue is only recognized if a service or product is delivered, a refund nulls recognition. d) No matter how a prepaid expense was initially recorded, after adjustment, the financial statements will be identical. Reason: Credit At the end of January, you've earned the first of the three month's income or . Unearned revenues refer to cash received in advance of providing a service or product. b) Examples of accrued expenses are wages expense and interest expense. b) Accounts receivable will be debited for $500. A prepaid expense (such as supplies or prepaid rent) can initially be recorded as either an expense or as an asset. b) expenses on the income statement will be overstated. a) Unearned revenue; Supplies; Prepaid rent At the end of the previous year, a customer owed Days Company $400. Which of the statements below describe(s) a temporary account? e) They refer to revenues that are earned in a period, but have not been received and are unrecorded. b) Credit Unearned revenues for $400. An advance payment of $1,000 for services was received on December 1 and was recorded as a liability. d) debit accounts receivable. Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. What is the trend in the average unit price of VCRs between 1998 and 2003? It is a more detailed alternative to the single-step income . Supplies The note is dated December 1 and is due on February 1. d) Debit Service revenue for $400. deforestation. ), Machinery 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.). b) It reports amounts owed to employees and is a liability. -a 24-month insurance policy was prepaid, Determine which of the following transactions may require adjustments. What is unearned revenue and when does it occur? (Check all that apply.) B) The normal balance of dividends is a debit. C. Prepaid expenses are expenses paid and already incurred. Debit Interest expense for $30. b) January 15 $300 were used during the month. a) The adjusted trial balance is used to prepare financial statements. Unearned revenues refer to customer payments which have not yet been received. -Its original cost (minus any salvage value) is expensed over its useful life. Before receiving payment, the seller may post these revenues in an asset account, such as Accounts Receivable. a) Cash will be debited for $600. f) The ending Owner, Capital account balance on the balance sheet is taken directly from the adjusted trial balance. An advance payment of $1,000 for services was received on December 1 and was recorded as a liability. The adjusted trial balance is prepared after adjusting entries have been recorded and posted. Describe the final step in the adjusting process. a) Record the receipt of $400 with a debit to the Unearned rent account. Exchange your quiz with another student's quiz. By the end of the year, $400 had been earned. Accounts receivable is usually increased when accruing revenues. Adjustments involve increasing both an expense and a liability account. a) Accounts receivable would be debited for $700. b) Any unused portion of the prepayment still existing at the end of the period will be transferred to the Unearned rent account. a list of accounts and balances after adjusting entries have been recorded and posted. $1,000 of cash was received in advance of performing services. (Check all that apply.). 4. (Check all that apply.) Which of the following statements are true regarding depreciation? Which of the following is the proper adjusting entry? f) An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. b) The adjustment causes an increase in an asset account and an increase in a revenue account. (Check all that apply.). Copyrights (Check all that apply.) By the end of the accounting period, the loan had been outstanding for 30 days. The trial balance columns of the worksheet for Riverbed Company at June 30, 2019, are as follows. High Quality Low Capex w ROE ROC min. Explain your understanding of what an accrued expense is by selecting the statements below which are correct. Some common unearned revenue situations include subscription services, gift cards, advance ticket sales, lawyer retainer fees, and deposits for services. Cash c) Debit Interest expense for $30. -Intangible assets are long-term resources that benefit business operations, but lack physical form. apply.). Cash will be debited for $600. Which of the accounts below are considered accrued expenses? -Examples of accrued expenses are wages expense and interest expense. (The Unearned revenue account was increased at the time of the initial cash receipt.) Unearned revenues refer to income reported on the income statement. The required adjusting entry would be to debit the Salaries _____expense/payable) account and____debit/credit) the Salaries ____expense/payable/unearned) account. Dazzle expects to drive the car 60,000 miles during 2015, 65,000 miles during 2016, 40,000 miles in 2017, and 35,000 miles in 2018, for total expected miles of 200,000. Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. (Check all that apply. They are reported on an income statement. -Current liabilities are usually settled by paying out current assets such as cash. S(x)=0.00850x2+1.25x+0.8540.264x2+10.7x66.9. is used to simplify record keeping They are also called accounts receivable. Learn to analyze an income statement in CFI's Financial Analysis Fundamentals Course. -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. a) Service revenue would be credited for $700. Cash would be credited for $4,000. b) The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. g) Six months of rent were paid in advance. At the end of the previous year, a customer owed Days Company $400. Determine which of the following transactions may require adjustments. Supplies would be debited for $200. c) expenses on the income statement will be understated. b) The adjusted balance is computed by taking that account's amount from the Unadjusted Trial Balance column and adding or subtracting adjustments. Which of the statements below is correct regarding the difference between a temporary account and a permanent account? Multiple choice question. The required adjusting entry would be to debit the Interest ________ (expense/payable/receivable) account and _______ (debit/credit) the Interest ______ (expense/payable/receivable) account. -It has a life within the business greater than one year. Supplies expense would be debited for $700. Which of the following refers to the preparation of an adjusted trial balance? $1,000 of cash was received in advance of performing services. (Check all that apply. -Helps in the preparation of financial statements \text{Total stockholders' equity}&\underline{\underline{\text{\$1,360,000}}}\\ Demonstrate what the correct adjusting entry should include by choosing the correct statement below. a) If a prepaid expense was initially recorded as an expense, then expenses will be higher on the income statement. Service revenue would be credited for $400. Which of the following statements correctly define(s) a profit margin? Wages expense, Interest expense 3. prepare an adjusted trial balance As of December 31, the customer had not been billed nor had the transaction been recorded. 1. Amazon refers to its revenue as "sales," which is equally as common as a term. b) The last day of the period Select the statement below that describes a post-closing trial balance. d) Credit Accounts receivable for $600. By the end of the accounting period, employees have earned salaries of $500, but they will not be paid until the following pay period. Using the double-declining-balance method of depreciation, calculate the following amounts for the car for each of the four years of its expected life: a. 46. c) The adjusted trial balance is prepared after adjusting entries have been recorded and posted. a) Record all prepaid expenses with credits to liability accounts. Demonstrate the required adjusting entry by choosing the correct statement below. c) Debit Unearned revenues for $600. b) Examples of accrued expenses are wages expense and interest expense. Generally, unearned revenues are classified as short-term liabilities because the obligation is typically fulfilled within a period of less than a year. The difference between income and revenues is self-explanatory. A Real Example of an Income Statement. The payment amount of $27,000 will be recorded under cash,increasing the assets, and under unearned revenue, increasing long-term liabilities. Accounts receivable is not involved. 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. a) revenue being understated Explain what unearned revenues are by selecting the statements credit $1,000 of cash was received in advance of performing services. b) Unearned revenues refer to cash received in advance of providing a service or product. They are reported on a balance sheet. Adjustments involve increasing both an expense and a liability account. They are reported on a balance sheet. (Check all that apply.) Supplies expense would be debited for $300. Salaries expense would be debited for $3,500. -The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods or services. Salaries expense would be debited for $3,500. The loan has been outstanding for 45 days. ), -They refer to costs that are incurred in a period, but are both unpaid and unrecorded. Credit Unearned revenues for $400. The revenues of a company are the net sales proceeds. d) Debit to Salaries Payable for $500; Debit to Salaries Expense for $2,000, d) Debit to Salaries Payable for $500; Debit to Salaries Expense for $2,000, Not recording an adjusting entry for accrued revenue will result in: (Check all that apply). Which of the following describes accrued revenue? The statement of cash flow is similar to the P&L, but it doesn't include any non-cash items such as depreciation. It is a temporary account used during the closing process to summarize revenues and expenses. The adjusted trial balance is prepared after adjusting entries have been recorded and posted. -They are reported on an income statement. Using account balances from Requirement 6b, prepare an unadjusted trial balance as of April 30. Demonstrate. A link to the site is provided on the Web site for this textbook. Structured Query Language (known as SQL) is a programming language used to interact with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, CFIs Advanced Financial Modeling & Valuation Course, Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM). Initially, the full amount will be recognized as unearned revenue on Amazons balance sheet. Thank you for reading CFIs guide to Unearned Revenue. Blank 3: payable, Which of the following describes accrued revenue? b) Debit Interest receivable for $600. 5a. Since $300 has not been earned, it means that $700 has been earned. In this free session, the client explains her or his situation, and the attorney evaluates the options. Indicate whether each account would be reported in the (a) current asset; (b) property, plant, and equipment; (c) current liability; (d) long-term liability; or (e) owners equity section of the December 31, 2015, balance sheet of Kangaroo Consulting. a) Cash will be debited for $900. -Depreciation is recorded through an adjusting entry. -The adjustment can be squeezed in on one line of the trial balance. b) $100 d) liabilities on the balance sheet will be understated. Which of the, An advance payment of $1,000 for services was received on December 1 and. Property, Plant and Equipment explanation, calcul d) Accounts receivable will be debited for $400. (Check all that apply.). a) December 1 to February 1 Explain your understanding of what an accrued expense is by selecting the statements below which are correct. -The accounting cycle refers to steps followed by a company to prepare its financial statements. Statement of Owner's Equity (Retained Earnings) Demonstrate the required adjusting entry by completing the following sentence. Salaries payable will be credited for $500. a) credit services revenue Record the closing entries on Page 27 of the journal. Which of the following lists of assets would be classified as plant assets? (Check all that apply.) Which of the following statements about the Accumulated depreciation account is (are) correct? Explain what unearned revenues are by choosing the correct statement below. -The adjustment can be added to a blank line. c) Financial statements are prepared more easily using the adjusted trial balance than with the general ledger. What is a plant asset? At the end of the previous year, a customer owed Chocolates R US $500. $800 of supplies were purchased at the beginning of the month and the Supplies account was increased. (The Unearned revenue account was increased at the time of the initial cash receipt.) (Check all that apply.). Prepare the income statement for the month of April 30. (Check all that apply.) They are reported on a balance sheet. -The accounting cycle contains 10 steps. d) $800. Place the steps in the adjusting process in the correct order in which they would be performed. d) Debit Prepaid insurance for $400. The journal entry on February 1 is? These services have not yet been paid by the customers. (Check all that apply.). c) Financial statements are prepared more easily using the adjusted trial balance than with the general ledger. or product. The account allows both the original cost of plant assets and the total depreciation taken to be shown simulta. They refer to earnings which have been earned, but not yet 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. The Fish Aquarium obtained funds from a bank and owes interest on a note at the end of the month. An advance payment of $1,000 for services was received on December 1 and was recorded as a liability. The journal entry to close all of a company's expense accounts would include a ________ to each of the expense accounts and a corresponding __________ to the Income ________ account. a) Each adjustment is identified by a letter in parentheses that serves as a cross-reference to the debit and credit side of the adjustment. They are a liability. Enter the unadjusted trial balance. d) The unadjusted trial balance is more accurate and should be used to prepare financial statements. They refer to earnings which have been earned but not yet billed. 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