The Adjusting Process

Which of the following statements is incorrect concerning an adjusted trial balance?

• An adjusted trial balance lists account balances and their locations in the ledger

• An adjusted trial balance shows proper balance sheet and income statement amount

• An adjusted trial balance is prepared before the adjusting entries have been journalized and posted.

• An adjusted trial balance can be used to prepare the financial statements

A store purchased a one-year insurance policy for $1,800 on September 1. Its fiscal period ended December 31. What is the amount of the adjustment and what accounts are debited and credited on December 31?

• $1,800; insurance expense and prepaid insurance

• $600; insurance expense and prepaid insurance

• $1,200; insurance expense and prepaid insurance

• $600; prepaid insurance and insurance expense

The ending balance of the Supplies account appears

• in the Trial Balance columns of the work sheet

• in the Balance Sheet columns of the work sheet.

• in the Income Statement columns of the work sheet

• on the statement of changes in owner’s equity

Which of the following items represents a deferral?

• Prepaid insurance

• Wages payable

• Fees earned

• Accumulated depreciation

Which of the following items represents an accrual?

• Prepaid insurance

• Wages payable

• Fees earned

• Accumulated depreciation

If the supplies account, before adjustment on May 31,indicated a balance of $2,250, and supplies on hand at May 31 totaled $950, the adjusting entry would be

• debit Supplies,$950;

  credit Supplies Expense, $950.

• debit Supplies,$1,300;

  credit Supplies Expense, $1,300.

• debit Supplies expense,$950;

  credit Supplies, $950

• debit Supplies expense,$1,300;

  credit Supplies, $1,300

The balance in the unearned rent account for Jones

Co. as of December 31 is $1,200. If Jones Co. failed

to record the adjusting entry for $600 of rent earned during December, the effect on the balance sheet and income statement for December would be:

• assets understated $600; net income overstated $600.

• liabilities understated $600; net income understated $600

• liabilities overstated $600; net income understated $600

• liabilities overstated $600; net income overstated $600.

If the estimated amount of depreciation on equipment

for a period is $2,000, the adjusting entry to record depreciation would be

• debit Depreciation Expense, $2,000; credit Equipment, $2,000

• debit Equipment, $2,000; credit Depreciation Expense, $2,000

• debit Depreciation Expense, $2,000; credit Accumulated Depreciation, $2,000.

• debit Accumulated Depreciation, $2,000; credit Depreciation Expense, $2,000

If the equipment account has a balance of $22,500 and its accumulated depreciation account has a balance of $14,000, the book value of the equipment would be:

• $36,500

• $14,000.

• $22,500.

• $8,500.

What entries are recorded at the end of the fiscal period to update general ledger accounts?

• Closing

• Adjusting

• Post-closing

• Reversing