WorksheetsAdjusting Accounts for Financial Statements
Total questions: 25
Worksheet time: 13mins
Accrual Basis Accounting ...
Adjusting accounts for unrecorded transactions.
Record revenues when cash is received and expenses when cash is paid.
Records revenues when earned and expenses when resources are consumed.
Preparing financial statements for third party users.
Cash Basis Accounting
Is a subset of Accrual Basis Accounting.
Is Generally Accepted.
Recognizes revenues and expenses when cash is exchanged.
There is no such thing.
The Revenue Recognition principle demands that ...
Revenues are recorded when the business owner gets around to it.
Revenues are recorded when earned (a good or service is provided).
Revenues are recorded when cash is exchanged.
Revenues are recorded are summarized and recorded at the end of the business cycle.
The expense recognition (matching principle) requires that ...
Expenses are documented by receipts.
Expenses are recorded at the end of every month.
Expenses are recorded when cash is paid.
Expenses be recorded in the same accounting period as the revenues that are recognized as a result of those expenses.
A deferral of expense includes the following
Prepaids, Supplies, Depreciation
Unearned Revenues
Accrued expenses
Accrued Revenues
The purpose of the worksheet is to ...
Give me a headache
Analyze source documents
Record transactions
See the effects of adjusting entries on the accounts and the financial statements, and to calculate net income.
Adjusting entries ...
Always affect one permanent (balance sheet) account and one temporary (income statement) account.
Are like bigfoot. They don't exist.
Are recorded on a daily basis through the accounting period.
Adjust the profit or loss to meet shareholder expectations.
The four categories of adjusting entries are ... (Select all that apply)
Prepaid expenses and Unearned revenues
Accumulated Depreciation and Depreciation Expense
Accounts receivable and Accounts payable
Accrued expenses and Accrued revenues
Supplies are
Recorded in the Supplies asset account. The amount used during the year is adjusted to Supplies expense at the end of the period.
Recorded to Supplies expense.
Recorded to Retained Earnings
Recorded once time per year.
Prepaid Insurance is insurance paid for in advance and expensed
At the beginning of the period.
Directly to retained earnings.
to Insurance expense over time as the policy expires.
On the General Ledger.
Accumulated depreciation is an asset contra account that
Accumulates the lifetime depreciation expense of an asset.
The annual depreciation expense of an asset.
Reduces net income.
Adds to net income.
Depreciation expense is ... (Choose all that apply)
The lifetime expense of an asset.
Reduces net income
Increases net income.
The current period's asset cost that is reallocated to expense.
Unearned Revenue is a(n)
Asset account
Revenue account
Liability account
Expense account
Unearned revenues occur when
Anytime the business receives cash.
The business receives cash after performing a service.
The business receives cash in advance of performing a service.
The business pays cash before receiving the service.
A synonym for the word accrued is
Unrecorded
Recorded
Revenue
Asset
An example of an accrued expense would be ...
I buy a product, receive an invoice, and record the invoice in the accounting system.
I sell a product, issue an invoice, and record the invoice in the accounting system.
I have tax planning done on December 15th, but I receive my bill for the service on January 10. Assume a 12/31 year end.
I plow my neighbors driveway on December 31, and send him a bill on January 5. Assume a 12/31 year end.
An example of an accrued revenue would be ...
I buy a product, receive an invoice, and record the invoice in the accounting system.
I sell a product, issue an invoice, and record the invoice in the accounting system.
I have tax planning done on December 15th, but I receive my bill for the service on January 10. Assume a 12/31 year end.
I plow my neighbors driveway on December 31, and send him a bill on January 5. Assume a 12/31 year end.
An example of an Unearned Revenue would be ... (Select all that apply)
I receive cash for a two year subscription to Spotify that a customer paid me for in advance.
Cash I received to provide snow shoveling services to my neighbor for this winter.
Cash I received for season tickets I sold to Buffalo Bills fans.
Tax planning services I sold, provided, and billed to my client prior to December 31.
An unclassified balance sheet
Lists assets and liabilities.
Lists revenues and expenses
Lists the makeup of retained earnings
Includes revenues
A classified balance sheet
Lists assets and liabilities
Lists revenues and expenses
Separates assets and liabilities into important categories
Shows the makeup of retained earnings
The important categories of assets on a classified balance sheet are ...
Current Assets
Long-term assets
Plant Assets
Intangible Assets
Current Assets
Long-term investments
Plant Assets
Intangible Assets
Current Assets
Short-term assets
Plant Assets
Intangible Assets
Current Assets
Long-term assets
Notes payable
Intangible Assets
Liabilities on a classified balance sheet are split between ...
Cash and accounts receivable
Revenues and expenses
Retained earning and common stock
Current and Long-term
The current ratio is computed as
Net income/Net Sales
Current Liabilities/Current Assets
Current Assets/Current Liabilities
Assets/Liabilities
A "real" account is
An account that carries its balance to the next accounting period
An account that is closed at the end of the accounting period
Consulting services revenue
Rent expense
The purpose of the closing entry is to
Calculate net income
Reset temporary accounts to 0 and close their balances to retained earnings
