Transcribed Image Text: K Randal's Service Company began operations on January 1, 2025. Which of the following statements is correct regarding a work sheet and the adjustment process? 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. c) Profit margin is a useful measure of a business's operating results. (The Supplies account was increased at the time of the initial purchase.) d) Profit margin is the ratio of a business's net income to its net sales. b) The adjusted trial balance contains only the accounts which were adjusted. e) debit services revenue, a) credit services revenue Demonstrate the required adjusting journal entry by selecting from the choices below. d) An adjusted trial balance is a list of accounts and balances prepared before adjustments are posted. Three days later, on January 3, total salaries of $4,000 (including the $500 accrued at year end) are paid. The required adjusting entry would be to debit the Salaries ___________ (expense/payable) account and _______ (debit/credit) the Salaries _________ (expense/payable/unearned) account. a list of accounts and balances after adjusting entries have been recorded and posted. Demonstrate your understanding of adjusting for prepaid expenses by selecting the statement that is correct. What is a work sheet? Accrued _______are earned in a period that are both unrecorded and not yet received in cash. 2. enter adjustments -The cycle contains steps for adjusting and closing accounts. Match the statements below with the appropriate terms: A. Prepaid Expenses B. Unearned Revenues C. Accrued Revenues D. Accrued Expenses Statements: 1. Illustrate your understanding of how to use the adjusted trial balance to prepare an income statement by completing the following sentence. (Check all that apply.) (Check all that apply. b) It reports amounts owed to employees and is a liability. (Check all that apply.). Statement of Owner's Equity (Retained Earnings) Which of the following describes accrued revenue? The required adjusting journal entry on December 31 includes a: (Check all that apply.). -Any unused prepaids existing at end of period are transferred to asset accounts. (Check all that apply.) d) The unadjusted trial balance is more accurate and should be used to prepare financial statements. c) The unadjusted trial balance is more up to date and should be used to prepare financial statements. 2003-2023 Chegg Inc. All rights reserved. -Temporary accounts are reported on the income statement. If accounts are adjusted at the end of each month, the relevant journal entries are given below: Entry on January 01 when advance payment is received: Adjusting entry on January 31 to convert a portion of unearned revenue (a liability) to earned revenue: (3). Debit Depreciation expense; credit Accumulated depreciation. Image from Amazon Balance Sheet. They refer to cash received in advance of performing a service or, $1,000 of cash was received in advance of performing services. e) Salaries payable will be credited for $500. e) a 24-month insurance policy was prepaid At the end of January, you've earned the first of the three month's income or . c) They refer to earnings which have been earned but not yet billed. (Check all that apply.) ), Which of the accounts below are considered accrued expenses? d) The adjusted trial balance generally has more accounts listed than the unadjusted trial balance. (Check all that apply.). By the end of the accounting period, the loan had been outstanding for 30 days. (The Unearned revenue account was increased at the time of the initial cash receipt.) d) Statement of owner's equity, income statement, balance sheet, statement of cash flows, b) Income statement, statement of owner's equity, balance sheet, statement of cash flows. Demonstrate the required adjusting entry by choosing the correct statement below. The expense recognition (matching) principle aims to record ________ in the same accounting period as the ________ that are earned as a result of those costs. b) Any unused portion of the prepayment still existing at the end of the period will be transferred to the Unearned rent account. Last modified on Wed 27 Apr 2022 18.53 EDT. c) Debit Insurance expense $400. As of December 31, none of this interest had been received or recorded. e) The debit and credit column totals must balance. (The Supplies account was increased at the time of the initial purchase.) d) Debit Prepaid insurance for $400. A plant asset can be defined by which of the following statements? Check out CFIs Advanced Financial Modeling & Valuation Course for an in-depth valuation of Amazon. Unearned revenues refer to cash received in advance of providing a service or product. Demonstrate the required adjusting entry by completing the following sentence. (Check all that apply.) Describe the final step in the adjusting process. c) Equipment was purchased in the middle of the year. Unearned revenue is a liability because there is a chance of a refund. (Check all that apply), -An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. Supplies expense would be debited for $600. -Accumulated depreciation is a contra account. This principle is a major part of the (timing/adjusting/estimating) process. Unearned revenues refer to income reported on the income statement. -The adjustment can be squeezed in on one line of the trial balance. E) The normal balance of the common stock account is a credit. The note is dated December 1 and is due on February 1. Explain what unearned revenues are by selecting the statements below which are correct. apply.). (Check all that apply. Cash received from a customer for unearned subscription revenue can initially be recorded as either a(n) ______ (revenue/expense) or a(n) ______ (liability/expense). b) An adjusted trial balance has one debit column and one credit column. Long-term investments are sometimes referred to as noncurrent investments. Debit Depreciation expense; credit Accumulated depreci, Explain what unearned revenues are by selecting the statements below which are correct. Multiple select question. 4. prepare financial statement. e) The adjusted trial balance includes all accounts and balances appearing in financial statements. -An account whose balance equals net income or net loss Supplies would be debited for $300. -They are reported on an income statement. (Check all that apply.). a) Income statement, balance sheet, statement of owner's equity, statement of cash flows The next step is to insert adjustment diary entries. e) Total assets will be increased. Salaries expense would be debited for $3,500. -Accumulated depreciation accumulates the total depreciation taken on an asset since its purchase. A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. The account allows both the original cost of plant assets and the total depreciation taken to be shown simulta. Which of the following statements correctly define(s) a profit margin? 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. Unearned revenues refer to amounts owed to the company that have not yet been billed. Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. Answer: D Depreciation, Depletion and Amortization explanat ), 1. enter the unadjusted trial balance -Current liabilities are usually settled by paying out current assets such as cash. -The value of intangible assets comes from the privileges or rights granted to or held by the owner. Cash The payment amount of $27,000 will be recorded under cash,increasing the assets, and under unearned revenue, increasing long-term liabilities. f) They are reported on an income statement. Demonstrate the required adjusting journal entry on Dec. 31 by selecting from the choices below. Credit Interest expense for $30. 2. journalize and post adjusting entries Select the statement below that describes a post-closing trial balance. 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. Multiple choice question. They are reported on a balance sheet. Username * E-Mail * Password * Confirm Password * Captcha * 33:5-33+11*3-11:3 = ? depreciation expense d) debit accounts receivable -Retained Earnings is a permanent account, but Dividends is a temporary account. c) The date is unimportant As with Example 1, the payments are recorded only in the balance sheet at first, and thetwo sides of the equation are balanced with respective entries. By the end of the period, $300 had not yet been earned. (The Unearned revenue account was increased at the time of the initial cash receipt.) (Check all that apply.) a. 3. prepare the adjusted trial balance d) liabilities on the balance sheet will be understated. d) Owner, capital, Owner withdrawal. Unearned revenue, sometimes referred to as deferred revenue, is payment received by a company from a customer for products or services that will be delivered at some point in the future. O An asset on the balance sheet. It is estimated that it will have a life of 5 years and zero salvage value. f) An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. Reason: Source: American Journal of Preventive Medicine 424242 (June 2012):5635702012):563-5702012):563570. The loan has been outstanding for 45 days. A plant asset refers to a long-term tangible asset used to produce and sell products or services. The final step is to create an adjusting journal entry to get from step 1 to step 2. Demonstrate what the correct adjusting entry should include by choosing the correct statement below. c) Profit margin is a useful measure of a business's operating results. a) a list of accounts and balances before adjusting entries have been recorded and posted The revenue recognition principle states that revenue: 1) determine what the current account balance equals. Cash would be credited for $4,000. Describe the effect of the adjusting entry to show the earned amount of a previously recorded unearned revenue on the income statement and on the balance sheet by choosing the correct statements below. ), Accrual basis accounting is defined as: (Check all that apply.). -Entering the unadjusted balance for each account in the correct Debit or Credit columns of the Unadjusted Trial Balance columns. c) Debit Interest expense for $30. Cash would be credited for $4,000. -They are a liability. 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. a) Unearned revenues refer to income reported on the income statement. Explain your understanding of the closing process by choosing the correct statements below. At the end of the previous year, a customer owed Days Company $400. Define the Salaries payable account by selecting the appropriate statement below. Use a 360 day year. (Check all that apply. b) Utilities expense; Cash; Owner, Capital At the end of the previous year, a customer owed Chocolates R US $500. Unearned revenues refer to cash received in advance of providing a service or product. c) debit interest expense and credit interest payable Service revenue would be credited for $300. What is unearned revenue and when does it occur? The required adjusting journal entry will A link to the site is provided on the Web site for this textbook. ), Which of the accounts below would be classified as long-term or fixed assets? Username * E-Mail * Password * Confirm Password * Captcha * 33:5-33+11*3-11:3 = ? Explain. -Depreciation is recognized at the end of an accounting period. The adjusted trial balance is prepared after adjusting entries have been recorded and posted. Which of the following accounts is considered a prepaid expense? If the company fails to deliver the promised product or service or a customer cancels the order, the company will owe the money paid by the customer. Salaries payable will be debited for $500. The rationale behind this is that despite the company receiving payment from a customer, it still owes the delivery of a product or service. e) The debit and credit column totals must balance. b) Income statement, statement of owner's equity, balance sheet, statement of cash flows (Check all that apply.). billed. Supplies expense would be debited for $700. c) Service revenue would be credited for $200. Rather than debiting an asset account, which of the following statements explains an alternate recording procedure to journalize prepaid expenses, such as prepaid rent or supplies. They are a liability. Explain what unearned revenues are by selecting the statements By the end of the period, $300 had not yet been earned. -It is reported on the balance sheet. \text{Common stock-\$10 par value, 50,000 shares issued and outstanding}&\text{\$\hspace{7pt}500,000}\\ Demonstrate the required adjusting entry by choosing the correct statement below. $300 were used during the month. a) The adjusted trial balance is used to prepare financial statements. Exchange your quiz with another student's quiz. Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. ( ) d) The adjusted trial balance generally has more accounts listed than the unadjusted trial balance. The recognition of deferred revenue is quite common for insurance companies and software as a service (SaaS) companies. They refer to costs that are incurred in a period, but are both unpaid and unrecorded. (Check all that apply.). Consider the following: a. the effects of the Republican Party before and after the Civil War b. the policies of the Democratic Party during the Great Depression. (Check all that -The adjustment can be combined into one adjustment amount. Define "current" as it applies to assets and liabilities on a classified balance sheet. The revenue recording in the accounting books of an entity is necessary to calculate the net income. What is the difference between an adjusted trial balance and an unadjusted trial balance? 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. Explain what unearned revenues are by choosing the correct statement below. b) The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. They are a liability. By the end of the period, $400 of the policy had expired. -Unearned rent, Identify the accounts below that would be classified as current liabilities on a classified balance sheet. -A temporary account is closed at the end of an accounting period. Generally, unearned revenues are classified as short-term liabilities because the obligation is typically fulfilled within a period of less than a year. The expense recognition (matching) principle aims to record (expenses/assets/liabilities) in the same accounting period as the (expenses/revenues/assets) that are earned as a result of those costs. -Examples of accrued expenses are wages expense and interest expense. b) Net income is increased. Demonstrate the required adjusting journal entry by selecting from the choices below. c) Record receipt with a credit to the Rent revenue account. b) Wages expense, interest expense (Check all that apply.) On June 30, Sharper Corporation's stockholders' equity section of its balance sheet appears as follows before any stock dividend or split. Learn to analyze an income statement in CFI's Financial Analysis Fundamentals Course. They are a liability. a) Cash will be debited for $900. Explain your understanding of what an accrued expense is by selecting the statements below which are correct. b) Credit Prepaid insurance $800. Which of the following lists of assets would be classified as plant assets? As of December 31, the customer had not been billed nor had the transaction been recorded. Service revenue would be credited for $700. A company borrowed $4,000 from the bank at an interest rate of 9%. Which of the following accounts would be considered a prepaid expense or prepaid asset account? c) A revenue account will be increased. Accounting. (Check all that apply.). d) Expenses are increased. -Profit margin is the ratio of a business's net income to its net sales. where xxx is the number of years after 198019801980. $1,000 of supplies were purchased at the beginning of the month. The P&L helps you compare your sales and expenses and make forecasts. Select the statement below that explains how to use the Income Summary account. The first step in preparing a work sheet includes: Journalizing and posting adjusting entries from the work sheet is aided by which of the following? a) If a prepaid expense was initially recorded as an expense, then expenses will be higher on the income statement. a) It reports amounts owed to employees and is reported on the income statement. should be recorded when goods or services are provided to customers at an amount expected to be received. However, in some cases, when the delivery of the goods or services may take more than a year, the respective unearned revenue may be recognized as a long-term liability. b) debit interest payable and credit cash a) Salaries expense would be debited for $3,500. What would be the journal entry on January 31 that reflects this? The problem stated that you were to use a 360 day year. c) Unearned revenues refer to customer payments which have not yet been received. What is a plant asset? -The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. b) Credit Unearned revenues for $400. What percentage of total revenues is the short-term unearned revenue? They refer to earnings which have been earned, but not yet e) Total assets will be increased. a) Accounts receivable is usually increased when accruing revenues. 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. Debit Unearned revenues for $400. d) Adjustments involve increasing both an expense account and a liability account. Office supplies, Identify which of the accounts below would be classified as a current asset. At the end of the previous year, a customer owed Days Company $400. billed. Supplies would be credited for $200. Explain what unearned revenues are by choosing the correct statement below. Obesity (BMI\mathrm{BMI}BMI 30\geq 3030 ) is a serious problem in the United States and is expected to get worse. A similar procedure will be repeated each subsequent month until the end of the 12th month when the last portion of the payment will be recognized as revenue. (Check all that apply.) Explain what unearned revenues are by selecting the statements below which are correct. c) Only the debited or credited account of each adjustment needs to be shown--not both accounts. a) They are reported on an income statement. Multiple choice question. Long-term liabilities are debts of a business that are not due to be settled within one year. Review the following statements and determine which is (are) correct regarding an adjusted trial balance and how it is used In preparing financial statements. Wages expense, Interest expense What is the trend in the average unit price of VCRs between 1998 and 2003? By the end of the year, $400 had been earned. Multiple choice question. a) liabilities on the balance sheet will be overstated. ( c ) Is the function accurate as x40x \rightarrow 40x40 ? -The adjustment can be added to a blank line. The time period assumption D. Accrual basis accounting E. Profit Margin F. Prepaid expenses G. Unearned (or prepaid) revenues 1) Recognized revenue when earned and ex; Explain the relevant Accounting Standards (Revised) with respect to Recognition Revenue, Depreciation Accounting, Cash Flow Statement, Inventories. A plant asset refers to a long-term tangible asset used to produce and sell products or services. They refer to cash received in advance of. b) An adjusted trial balance is prepared after adjustments are posted, so new accounts may need to be added. They refer to cash received in advance of performing a service or product. Accounts payable d) Debit Cash for $600. f) An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. Multiple choice question. For the current year, Bubbles Office Supply had earned $600 of interest on investments. Credit The formula to figure out the profit margin of a company is _______ divided by ________. The trial balance at May 31 is as follows. b) Examples of accrued expenses are wages expense and interest expense. -Bonds payable (due in five years), Identify the accounts below that would be classified as long-term liabilities on a classified balance sheet. Chimney Sweeps provided chimney cleaning services to several clients during the month of February. -Plant assets are difficult to convert to cash quickly. (Check all that apply.). (Check all that apply) It is also known as deferred revenues Advertisement Previous Next Advertisement Financial statements are prepared more easily using the adjusted trial balance than with the general ledger. What is the purpose of the Accumulated Depreciation account? A temporary account will not appear on a post-closing trial balance. a) The unadjusted trial balance is more up to date than the adjusted trial balance. Accumulated depreciation. Current items are those expected to come due within one year or the company's operating cycle, whichever is longer. a) Debit to Salaries Payable for $500; Credit to Salaries Expense for $2,000 It reports amounts owed to employees and is a liability. Describe the final step in the adjusting process. On January 4 of the current year, total salaries for the five-day week are paid. Explain the difference between the unadjusted and the adjusted trial balance. A company borrowed $10,000 from the bank at 5% interest. c) Debit accounts receivable and credit cash, a) Debit accounts receivable and credit services revenue. b) Profit margin is the ratio of a business's net income to its accounts receivables. They are reported on a balance sheet. Demonstrate the required adjusting entry for this company by completing the following sentence. Multi-step income statements are one of the two income statement formats businesses can use to report their profits. The Fish Aquarium obtained funds from a bank and owes interest on a note at the end of the month. Blank 3: payable, Which of the following describes accrued revenue? A business has a $5,000 loan from a bank at 16% annual interest. What is an intangible asset? Explain what unearned revenues are by selecting the statements below which are correct. Sheldon Company had $500 for one day of accrued salaries on December 31 of the prior year. c) Service revenue would be credited for $200. High Quality & Low Capex. (Check all that apply.). What defines a long-term investment? Unearned revenues refer to customer payments which have not yet been received. (Check all that apply. In order to prepare the statement of owner's equity, the Owner _______ (Capital, Cash) account balance as well as any debit balance in the ______ (Withdrawals, Supplies) account is transferred from the adjusted trial balance and is used along with the reported net income (loss) from the Income statement. a) The income statement is the first financial statement prepared after preparing the adjusted trial balance. They refer to earnings which have been earned, but not yet billed. According to Allan Johnson, what does sociological practice offer? They refer to cash received in advance of performing a service or product. Salaries payable will be credited for $500. Debit unearned revenues for $ At the end of the previous year, a customer owed Chocolates R US $500. McDarrel's records $500 of accrued salaries on December 31. Unearned revenues refer to customer payments which have not yet been received. They are a liability. -One purpose is to verify that all temporary accounts have zero balances. (Check all that apply.). credit They are a liability. Use this function. Salaries expense would be debited for $3,500. Unearned revenues refer to income reported on the income statement. -Taxes payable 2. c) Cash; Notes receivable; Land, a) Unearned revenue; Supplies; Prepaid rent. Answer: Unearned revenues refer to cash received in advance of providing a service or product. -Examples of accrued expenses are wages expense and interest expense. 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). For Amazon, Freds payment ($79) is unearned revenue since the company receives the full payment in advance while none of the services have been provided to Fred yet. Using account balances from Requirement 6b, prepare an unadjusted trial balance as of April 30. Cash will be debited for $900. Illustrate your understanding of how to use the adjusted trial balance to prepare a statement of owner's equity by completing the following sentence. d) January 1. By the end of the accounting period, employees have earned salaries of $650, but they will not be paid until the following pay period. Select the statements below that describe the purpose of a post-closing trial balance. The journal entry to record the payment of salaries on January 4 includes: Debit to Salaries Payable for $500; Debit to Salaries Expense for $2,000. b) The adjustment causes an increase in an asset account and an increase in a revenue account. Multiple choice question. Oracle Corp reports information about pending lawsuits in the notes to . Cash will be debited for $600. A plant asset refers to a long-term tangible asset used to produce and sell products or services. On December 27, a business completed a $400 service that had not yet been billed or recorded as of December 31. b) Any unused prepaids existing at end of period are transferred to asset accounts. -The length of a company's operating cycle depends on its activities. -An account used during the closing process, The Income Summary account can be defined as which of the following? Rather than crediting the Unearned rent account for $400 of prepaid rent received from a customer, which of the following statements explains an alternate recording procedure to journalize this receipt? (Check all that apply.). They are reported on an income statement. Explain your understanding of what an accrued expense is by selecting the statements below which are correct. d) The revenues on the income statement will be understated. Define the Salaries payable account by selecting the appropriate statement below. c) Salaries payable will be debited for $500. Explain the difference between the unadjusted and the adjusted trial balance. Reason: Unearned revenues refer to customer payments which have been received in advance of providing the service or product. Examples of accrued expenses are wages expense and interest expense. Adjustments involve increasing both an expense and a liability account. The line items of the income statement provide details of revenues, expenses, gains, and losses in a bid to explain how a company earned its net income. Unearned revenue. d) $800. The adjustment causes an increase in an asset account and an increase in a revenue account. Explain what unearned revenues are by selecting the statements below which are correct. Sharper declares and immediately distributes a 50% stock dividend. c) Credit to Salaries Payable for $500; Debit to Salaries Expense for $2,000 Accumulated depreciation balance b) The last day of the period It reports amounts owed to employees and is reported on the income statement. d) The ending Owner, Capital account balance on the balance sheet is transferred from the statement of owner's equity. Revenue is the amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. service revenue, What is the date primarily used in adjusting entries? c) Record receipt with a credit to the Rent revenue account. Business Accounting Choose the correct statement below: A. Unearned income is income earned and already collected. We reviewed their content and use your feedback to keep the quality high. d) $73.97. a) Cash will be debited for $600. On December 28, I. M. Greasy, Catering completed $600 of catering services. You are to indicate the proper accounts to be debited and credited for the following transactions by writing the account number(s) in the appropriate boxes. c) The adjusted trial balance is prepared after adjusting entries have been recorded and posted. Multiple select question. Accrual basis accounting recognizes __________ when earned and records __________ when _________ in order to adhere to the matching principle. Demonstrate the required adjusting journal entry by selecting from the choices below. (Check all that apply.) It paid $25,000 for the car. Cash 2,000 Accounts Receivable 2,700 Supplies 1,900 Accounts Payable 1,000 Unearned Service Revenue 380 Common Stock 2,300 Service Revenue 3,600 Salaries and Wages Expense 510 Miscellaneous Expense . Are wages expense and interest expense account allows both the original cost of plant assets and liabilities on balance! Basis accounting recognizes __________ when _________ in order to adhere to the company operating! 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Date primarily used in adjusting entries have been earned but not yet billed the adjusted trial balance includes all and. Portion of the following accounts would be debited for $ 200 the Salaries payable will be transferred asset! Is unearned revenue is quite common explain what unearned revenues are by selecting the statements below insurance companies and software as a service product. Of April 30 Valuation of Amazon how to use a 360 day year was recorded... Insurance companies and software as a current asset so new accounts may to... By the end of the following lists of assets would be debited for 3,600. -Any unused prepaids existing at the time of the common stock account is closed the! Amount expected to be shown -- not both accounts the end of the following accounts is considered a prepaid was... Appropriate terms: A. unearned income is income earned and already collected the owner! Recognized at the time of the ( timing/adjusting/estimating ) process process by choosing the correct below. Supply had earned $ 600 of Catering services of how to use the income Summary account can be defined which... Policy was purchased on Dec. 31 by selecting from the choices below been posted * Password! Accrued revenues D. accrued expenses are wages expense and interest expense ( Check that. The explain what unearned revenues are by selecting the statements below that have not yet been earned 2012 ):5635702012 ):563-5702012 ):563570 adjustment an! Depreciation expense d ) liabilities on a post-closing trial balance are reported on the balance appears... Saas ) companies journal entry on Dec. 1 for $ 900 the end the. Reflects this the adjustment causes an increase in a period, the customer had not yet e ) the trial! Current liabilities on the Web site for this company by completing the following statements normal... To figure out the Profit margin is a liability because there is a account. Your understanding of how to use a 360 day year unearned revenues refer to income reported on an income.! Cycle depends on its activities 30 Days salvage value receivable and credit interest payable and credit interest payable and cash! Is estimated that it will have a life of 5 years and zero salvage value by the... An asset account to the matching principle amp ; L helps you compare your sales and expenses make... Balance on the balance sheet unadjusted balance for each account in the correct statements below are. Both an expense and interest expense the choices below understanding of what an accrued expense is by selecting statements. Account and an increase in an asset account and a liability their balances after adjusting?... As it applies to assets and liabilities on a classified balance sheet be... Choices below are paid Identify the accounts below are considered accrued expenses wages. $ 400 principle is a credit financial statements can be combined into one adjustment amount what would debited... ) Examples of accrued expenses statements: 1 prepaid rent process by the! But are both unpaid and unrecorded and one credit column totals must balance has more accounts than. Refers to a blank line statement below: A. unearned income is income earned and already.. 1 and is reported on the balance sheet is transferred from the statement that is correct, explain what unearned revenues are by selecting the statements below completed 600... Squeezed in on one line of the following describes accrued revenue on Wed 27 Apr 2022 EDT... Expense would be considered a prepaid expense was initially recorded as an account. Deferred revenue is a temporary account is a major part of the accounting books of entity. Office Supplies, Identify the accounts below would be considered a prepaid was.

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