Commonstock-$10parvalue,50,000sharesissuedandoutstandingPaid-incapitalinexcessofparvalue,commonstockRetainedearningsTotalstockholdersequity$500,000200,000660,000$1,360,000. -One purpose is to verify that all temporary accounts have zero balances. A business has a $5,000 loan from a bank at 16% annual interest. -Permanent accounts will appear on a post-closing trial balance. (Check all that apply.). The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. 4. sort the adjusted trial balance amounts to the financial statements Chimney Sweeps provided chimney cleaning services to several clients during the month of February. a) An adjusted trial balance is prepared after adjustments have been posted. The time span from when cash is used to purchase goods until cash is received from the sale of goods is called the _______ cycle, Accounts receivable They refer to cash received in advance of performing a service or product. The loan has been outstanding for 45 days. b) Credit Prepaid insurance $800. Calculate the first month's depreciation expense as of December 31 using the straight-line method. The P&L helps you compare your sales and expenses and make forecasts. 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. Provide an example as well of an accrued revenue. 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. The required adjusting journal entry will -Profit margin is the ratio of a business's net income to its net sales. -Entering the titles of all accounts and their account number. Demonstrate the required adjusting entry by completing the following sentence. ), Which of the accounts below are considered accrued expenses? On June 30, Sharper Corporation's stockholders' equity section of its balance sheet appears as follows before any stock dividend or split. By the end of the accounting period, employees have earned salaries of $650, but they will not be paid until the following pay period. A plant asset can be defined by which of the following statements? Multiple select question. By the end of the year, $400 had been earned. (Check all that apply. c) They refer to earnings which have been earned but not yet billed. d) No matter how a prepaid expense was initially recorded, after adjustment, the financial statements will be identical. -Reduces the risk of errors when working with many accounts and adjustments, What are the benefits of using a work sheet? a) Credit Interest receivable for $600. c) Service revenue would be credited for $200. Multi-step income statements are one of the two income statement formats businesses can use to report their profits. Demonstrate the required adjusting journal entry on Dec. 31 by selecting from the choices below. a) Accounts receivable is usually increased when accruing revenues. Cash will be debited for $900. a) Record all prepaid expenses with credits to liability accounts. d) An adjusted trial balance is a list of accounts and balances prepared before adjustments are posted. (Check all that apply. Check out CFIs Advanced Financial Modeling & Valuation Course for an in-depth valuation of Amazon. They are reported on a balance sheet. c) A revenue account will be increased. A Real Example of an Income Statement. f) The ending Owner, Capital account balance on the balance sheet is taken directly from the adjusted trial balance. -The accounting cycle contains 10 steps. Check each other's answers when you are finished. The statement of cash flow is similar to the P&L, but it doesn't include any non-cash items such as depreciation. (Check all that apply.). -Examples of accrued expenses are wages expense and interest expense. b) The adjusted balance is computed by taking that account's amount from the Unadjusted Trial Balance column and adding or subtracting adjustments. c) Profit margin is a useful measure of a business's operating results. It is increased with a debit and is considered an asset account. 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. a) December 1 Salaries payable will be debited for $500. (Check all that apply.). Yahoo! a 24-month insurance policy was prepaid An advance payment of $1,000 for services was received on December 1 and was recorded as a liability. Closing means to bring an account balance to zero. a) They refer to costs that are incurred in a period, but are both unpaid and unrecorded. (Check all that apply.). Illustrate your understanding of how to use the adjusted trial balance to prepare an income statement by completing the following sentence. Some examples of unearned revenue include advance rent payments, annual subscriptions for a software license, and prepaid insurance. They refer to costs that are incurred in a period, but are both unpaid and 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. ( c ) Is the function accurate as x40x \rightarrow 40x40 ? b) January 15 (Check all that apply.) b. Salaries expense would be debited for $3,500. 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: a. d) Cash would be credited for $4,000. A company borrowed $10,000 from the bank at 5% interest. Prepare the income statement for the month of April 30. (Check all that apply.). You'll get a detailed solution from a subject matter expert that helps you learn core concepts. An unclassified balance sheet is one whose items are broadly grouped into assets, liabilities, and equity. c) The adjusted trial balance is prepared after adjusting entries have been recorded and posted. c) Debit Unearned revenues for $600. d) The revenues on the income statement will be understated. a) Credit Unearned revenues for $30. (Check all that apply.). A revenue not yet recognized; collected in advance. As of December 31, none of this interest had been received or recorded. Multiple choice question. e) They refer to revenues that are earned in a period, but have not been received and are unrecorded. Define plant assets by selecting the correct statements below. a) The adjusted trial balance is used to prepare financial statements. Supplies expense would be debited for $200. They are also called deferred revenues. d) Adjustments are entered in a middle column titled Adjustments. b) Debit cash and credit services revenue Cash received from a customer for unearned subscription revenue can initially be recorded as either a(n) ______ or a(n). They refer to cash received in advance of performing a service or product. Which of the following statements are true regarding depreciation? b) credit accounts payable 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. e) The adjusted trial balance includes all accounts and balances appearing in financial statements. 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. The revenue recording in the accounting books of an entity is necessary to calculate the net income. (Check all that apply.). Review the key term below. Thank you for reading CFIs guide to Unearned Revenue. (Check all that apply.) b) remove the unearned amount to a liability account Define "current" as it applies to assets and liabilities on a classified balance sheet. The formula to figure out the profit margin of a company is ______ (Net income/Accounts receivable/Net sales) divided by _______ (Net income/Cash/Net sales). Which of the following accounts would be considered a prepaid expense or prepaid asset account? a) They refer to costs that are incurred in a period, but are both unpaid and unrecorded. Trustee Program Web site. d) The ending Owner, Capital account balance on the balance sheet is transferred from the statement of owner's equity. McDarrel's records $500 of accrued salaries on December 31. f) An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. Demonstrate what the correct adjusting entry should include by choosing the correct statement below. Norfolk Southern Corp. reports revenue in its income statement when the performance obligation is satisfied instead of when cash is received. In this free session, the client explains her or his situation, and the attorney evaluates the options. Which of the following describes accrued revenue? Any Date Prepaid Insurance (Costof insurance policy) Cash a) An adjusted trial balance is a list of accounts and balances prepared before adjustments are posted. Some common unearned revenue situations include subscription services, gift cards, advance ticket sales, lawyer retainer fees, and deposits for services. Which of the following statements is correct regarding a work sheet and the adjustment process? The adjustment causes an increase in an asset account and an increase in a revenue account. Demonstrate the required adjusting entry by choosing the correct statement below. c) expenses on the income statement will be understated. The formula to figure out the profit margin of a company is _______ divided by ________. b) Profit margin is the ratio of a business's net income to its accounts receivables. c) Debit accounts receivable and credit cash, a) Debit accounts receivable and credit services revenue. Long-term investments are sometimes referred to as noncurrent investments. A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. 1) determine what the current account balance equals 2) determine what the current account balance should equal 3) record an adjusting entry Place the steps in the adjusting process in the correct order in which they would be performed. Which of the following statements correctly define(s) a profit margin? -Entering the unadjusted balance for each account in the correct Debit or Credit columns of the Unadjusted Trial Balance columns. Three days later, on January 3, total salaries of $4,000 (including the $500 accrued at year end) are paid. Unearned revenues refer to cash received in advance of providing a service or product. (The Supplies account was increased at the time of the initial purchase.) a) Cash will be debited for $900. They refer to cash received in advance of performing a service or product. Journalize the adjusting entries for the month and prepare the adjusted trial balance. ( ) Demonstrate the required adjusting entry by choosing the correct statement below. Illustrate your understanding of how to use the adjusted trial balance to prepare a statement of owner's equity by completing the following sentence. ), Which of the accounts below would be classified as long-term or fixed assets? ( ) Sheldon Company had $500 for one day of accrued salaries on December 31 of the prior year. (Check all that apply.) -Notes receivable and stock and bond investments are assets that are expected to be held for more than one year. Exchange your quiz with another student's quiz. Multiple select question. Accounting for a refund differs from a reversal. $300 were used during the month. e) Service revenue would be credited for $400. -The accounting cycle refers to steps followed by a company to prepare its financial statements. Review the statements below and select the items that are correct regarding the operating cycle for a business. When does the closing process take place? O An unearned revenue on the income statement. c) Unearned revenues refer to customer payments which have not yet been received. Unearned revenues refer to income reported on the income statement O Unearned revenues This problem has been solved! -Record all prepaid expenses with debits to expense accounts. 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. is optional. B. Contra asset is an account shown as an addition to the asset. Unearned revenues refer to customer payments which have not yet been received. a) They are reported on an income statement. As of December 31, none of this interest had been received or recorded. 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 Which of the following is (are) true regarding timeliness and the importance of periodic reporting? Depreciation expense -Investments in bonds, Identify the accounts below that would be classified as a long-term investment. -It is reported on the balance sheet. e) The debit and credit column totals must balance. Commonstock-$10parvalue,50,000sharesissuedandoutstanding$500,000Paid-incapitalinexcessofparvalue,commonstock200,000Retainedearnings660,000Totalstockholdersequity$1,360,000\begin{array}{lr} Multiple choice question. 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 . They are also called accounts receivable. A post-closing trial balance is a list of _______ accounts and their balances from the ________ all _________ entries have been journalized and posted. d) accounts receivable being understated. below which are correct. Register Now. 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. Supplies Debit Unearned revenues for $400. -Notes receivable due in 2 years (The Unearned revenue, account was increased at the time of the initial cash receipt.) 2. enter adjustments (The unearned revenue account was increased at the time of the initial cash receipt.) Demonstrate the required adjusting journal entry by selecting from the choices below. Supplies expense would be credited for $300. Illustrate your understanding of how to use the adjusted trial balance to prepare the balance sheet by completing the following sentence. 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? Demonstrate your knowledge of a depreciation adjusting entry by completing the following sentence. (Check all that apply.). 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