An error must have been made if which of the following accounts appears on the post-closing trial balance with a balance other than zero? v 4 Sort (adjusted) trial balance amounts to financial statements. Which of the following is not one of those functions? If the transfers from the payroll account to the employees' checking accounts occur without error, the imprest payroll bank account will equal zero after all employees have been paid. C) A simultaneous decrease in demand and increase in supply will results in an increase in equilibrium price and uncertain effect on quantity. Which of the following is not a commonly used internal control? b. In order to properly correct an error, it is necessary to retrospectively restate the prior period financial statements. & The cash and receipts in the locked box equaled the Petty Cash account balance. The principles of internal control include which of the following. cause the revenue and expense accounts to have zero balances. Debit Interest Receivable and credit Interest Revenue for $30. When making an adjustment to recognize supplies used in a period, total assets will not change. Electronic ignition modules are easily damaged by moisture, oil, and dirt. A decrease in assets, a decrease in stockholders' equity, and an increase in expenses. After the adjustments have been completed, the balance in the Rent Expense account represents the: balance sheet as a contra- asset account. Which of the following is not a reason why it is especially important for companies to have internal controls over cash? Your business purchased an investment security on April 1 that will pay $90 interest on June 30. All of the following accounts will have zero balances on a post-closing trial balance except: Which of the following statements about the closing process is correct? (b) To prepare a reconciliation statement. A physical count of inventory is performed annually in both a perpetual inventory system and a periodic inventory system. Employee fraud is often grouped into three categories, including corruption, asset misappropriation, and embezzlement. Identify the related account that is associated with this account (the other account in the adjusting entry). The amount of Retained Earnings reported on the balance sheet as of December 31, 2016 will be: Pinkney's Inc. had income before income tax of $164,000 last quarter and a 34% tax rate. Considering current laws that deal with misstatements of financial results, which of the following statements is correct? Which of these accounts would normally not be affected by an adjustment? Which of the following appear on an adjusted trial balance? If Mountain Bikes, Inc. provides comparative financial statements, the restated 2018 numbers must reflect the additional $1 million in payables and expenses. On March 31, the company pays wages for the two weeks ending March 24 and recorded the related journal entry. To ensure that total debits equal total credits after the adjustments have been recorded. She receives a complaint from a customer and accepts $500 worth of product back from the customer that was billed on account. | Question: Please Answer All Parts #21-26, Type Your Response And Provide An Explanation 21) Which Of The Following Statements Is Correct? Cost of goods sold is reported on both the income statement and the balance sheet. long-term assets that lack physical substance. If revenues are less than expenses, the company has a net loss and Retained Earnings decreases. Which of the following account balances will typically be increased as a result of adjusting entries? To improve the financial reporting and restore investor confidence. Accounting staff then ensure the receipts from cash sales are properly recorded in the accounting system. The fraud triangle contains three elements that must exist for accounting fraud to occur. C) Adjusting entries can be used to record both accrued expenses and accrued revenues. The process of allocating the cost of buildings, vehicles, and equipment to the accounting periods in which they are used is called: What are the effects on the financial condition of the business from the adjustment for revenues earned, but not yet collected, during the accounting period? Interest Expense should be increased, because the cost of interest relates to the current period. During November, the company bought $2,000 of supplies. One of the major advantages of making adjustments in order to improve the quality of financial statements is that they: ensure that revenues and expenses are recognized during the period they are earned and incurred. The main purposes of internal controls include all of the following except: providing more favorable financial information. When recording an adjustment for the use of equipment during the current accounting period, which two accounts are affected? Accrued revenues recorded at the end of the current year: often result in cash receipts from customers in the next period. Sales Returns and Allowances $500 and Dr. How can accrual adjustments for interest earned but not yet collected affect the balance sheet and the income statement? Which of the following statements is not correct? Now, it's necessary to make a prior period adjustment. Which of the following adjusting entries would be made on April 30? Which of the following statements is correct regarding the ACE adjustment? Which of the following statements about an adjusted trial balance is correct? Which of the following was not a change introduced by the Sarbanes-Oxley Act? Electronic ignition modules are very expensive, so they're usually repaired rather than replaced. The related adjusting entry would include a debit to: Unearned Revenue and a credit to Service Revenue. v 2 Enter adjustments. Segregation of duties means that a company assigns responsibilities so that: responsibilities for related activities are assigned to two or more people. A prior period adjustment can be one of the following two items: The correction of an error in the financial statements that were reported for a prior period; or. The book value of equipment is equal to which of the following? Which of the following statements is correct? Explain the required steps to complete a work sheet by placing the following in the correct order of completion. The account represents tax refunds due to the company. After the adjustments have been completed, the adjusted balance the Unearned Revenue represents the: amount of the sales or services still owed to the customer. Which of the following adjustments is not correct if someone is trying to calculate cash flow from financing activities? © 2003-2020 Chegg Inc. All rights reserved. Which of the following statements about adjustments is not correct? After the closing entries have been posted, the account will: The balance in retained earnings prior to the closing process equals, the balance at the end of the previous accounting period. To ensure that payments are made only for properly authorized transactions. The Prepaid Insurance account has a normal balance of $3,750 at the beginning of the month. The closing entry to close the income statement accounts for the year will debit the various: revenue accounts for a total of $190,000, credit the various expense accounts for a total of $130,000, and credit Retained Earnings for $60,000. Adjustments are made at the end of the accounting period because making them on a daily basis would be inefficient. Worksheet. Interest on the note payable is classified as an expense since it is a cost of borrowing. Which of the following adjustments would be made at the end of a month in which no payment for interest was made? Which of the following is not a change introduced by the Sarbanes-Oxley Act? On December 31, 2015, the balance in Retained Earnings is $20,000. Cashiers collect cash and issue a receipt at the point of sale. The adjusting entry to record the amount earned that previously had been collected in advance will: decrease liabilities and increase revenue. The first adjustment is presented as an example. An increase to an asset account and an increase to a revenue account. An asset should be debited for $1,000 in November. Accumulated Depreciation and Depreciation Expense. The use of internal controls guarantees protection against losses due to fraud, errors, and inefficiencies. Which of the following entries records the adjustment for revenue earned, but not yet collected? An adjustment to accrue the amount of salaries and wages owed was recorded on December 31. Which of the following statements is correct regarding reporting comprehensive income? Debit Accounts Receivable and credit Sales Revenue. During the month, a company uses up $4,000 of supplies. How will the interest affect the adjustments at the end of the period? A positive AMT adjustment occurs if the ACE amount exceeds the unadjusted AMTI. Which of the following statements about the need to make accrual adjustments at the end of the accounting period is not correct? What is the adjusting journal entry to be made at the end of the period? A company has a loan that accrues interest at a rate of $20 a day. One type of deferral adjustment reduces the balance in a(n) ______ account on the balance sheet and transfers that reduction into a(n) ______ account on the income statement. LO 4.2The following accounts were used to make year-end adjustments. Sales Returns and Allowances S500, Cr. The adjusted trial balance should be prepared ______ the financial statements are prepared in order to prove the ______ of the debits and credits. Which of the following statements correctly describes an imprest system? !J Reed about !tis v 1 Enter unadjusted trial balance. Which of the following statements about the need for adjustments is not correct? The Sales Revenue account has a credit balance of $367,200 at year end. reconcile accrual accounting with cash accounting. The firm must address all independence impairment issues on the date of the audit opinion. A. Which of the following is the equation for cost of goods sold? Assuming that revenues exceed expenses, which of the following correctly indicates the structure of the journal entry that is used to close revenue and expense accounts? 32. Accounts Receivable should be increased by $400 and Sales Revenue should be increased by $400. To calculate the company's income tax expense for the current period, it is necessary to know the company's: adjusted income (before income taxes) and the company's tax rate. Inversely, out-of-period adjustments were on the rise between 2011 and 2016, reaching a high of 327 adjustments in 2016. The adjustment to recognize amortization for the use of software would cause which of the following? After the adjustments have been completed, the adjusted balance in the Interest Payable account represents: interest that has accrued, but has not been paid, at the end of the period. B)Adjusting entries are intended to change the operating results to reflect management's objectives for operating performance. Cash is never involved in end-of-period deferral or accrual adjustments. Only temporary accounts are closed at the end of the accounting period. Which of the following entries is correct? Ensure that the business pays only for properly authorized transactions. While equipment is an asset, its use is recorded as an expense. Which of the following is not one of the control components that are part of the framework used when analyzing an internal control system? b. The use of sequentially numbered checks is an example of: Which of the following statements concerning a voucher is not correct? A small company would have the most difficulty in implementing which of the following internal control principles? How does the timing of adjusting entries differ from the accounting for daily transactions? The Don't Tread on Me Tire Company had Retained Earnings at December 31, 2015 of $200,000. An adjusting journal entry that includes an increase to an asset contra-account would also include an increase in a(n): are reported only on the statement of retained earnings. The internal control principle related to assigning responsibilities so that one employee cannot make a mistake or commit a dishonest act without someone else discovering it is referred to as: Common control principles include all of the following, except: Which principle of internal control states that you should not make one employee responsible for all parts of a transaction? After preparing adjusting entries, the equality of recorded debits and credits is checked by preparing a(n): An adjusted trial balance should be prepared immediately: Which of the following statements about the adjusted and post-closing trial balances is correct? Decrease assets; No effect on liabilities; Decrease stockholders' equity. In the closing process, ______ are zeroed out by crediting each account and ______ are zeroed out by debiting each account. When a company uses a perpetual inventory system, purchase returns will be recorded by: What is the amount of the discount to be taken by a company that purchases inventory for $10,000 with terms 2/10, n/30, returns $2,000 of the inventory purchased, receives an allowance for defective merchandise of $100, and pays the amount due within the discount period? The elements are: incentive, opportunity, and rationalization. In recording an accrual adjustment to account for revenues earned but not yet collected: an asset is increased since cash will be collected at a later date. For multiple-choice and true/false questions, simply press or click on what you think is the correct answer. Total assets will increase and total stockholders' equity will increase. A highly effective internal control should not be implemented if the cost is greater than the benefit. Adjustments Can Either Increase AMTI Or Decrease AMTL C. Tax Preferences Can Either Increase AMTI Or Decrease AMTI. Which financial statement reports the dividends during the current accounting period? A separate statement of comprehensive income is required. Retained earnings on the balance sheet as of December 31, 2016 will be: Which of the following statements about the statement of retained earnings is correct? It guarantees the management will behave ethically. Privacy Inventory $300, C. COGS S300 c) Dr. A/R S500, Cr. A) A change in demand or supply can only be caused by a change in price. The customer paid one-half of the amount owed on January 20 and the other one-half on February 24. Identify ways to circumvent applicable laws and regulations. Comprehensive income is reported in the year-end statements but not in the interim statements. Which of the following statements about internal control is not correct? Which of the following statements about the post-closing trial balance is correct? The accrual adjustment recorded to adjust for revenues earned but not yet collected will cause: A company owes rent at a rate of $6,000 per month. View desktop site, 14) Which of the following statements is correct regarding adjustments? Wiggly Pet Store had $6,000 of supplies at the end of October. Electronic ignition modules are easily damaged by moisture, oil, and dirt. If that’s the case, you look for errors and make corrections called adjustments, which are tracked on a worksheet.. Recording an adjusting journal entry to recognize depreciation would cause which of the following? Which of the following statements is correct regarding the use of the cash account in deferral and accrual adjustments at the end of the accounting period? The adjusting entry to record services earned but not yet billed requires: a debit to Accounts Receivable and credit to Service Revenue. Which of the following statements about an adjusted trial balance is not correct? When should supplies be recorded as an expense? At the end of the year, accrual adjustments could include a: debit to an expense and a credit to a liability. When will Accounts Receivable be involved in an adjusting entry? Later, at the end of the accounting period, an adjustment is recorded causing a(n) ______ in the asset account and a(n) ______ in the expense account. Which of the following statements about the Retained Earnings account is correct? Temporary accounts are closed at what stage of the accounting process? B. a) Adjustments are optional All adjustments are made at the beginning of the accounting b) period Adjustments will correctly allocate cash to revenue or c) expenses d) Adjustments update assets, liabilities and owner's equity 15) Crediting income statement balances is part of the closing entry to: a) close revenue accounts for the year b) transfer revenue balances to cash c) close expense accounts for the year d) close the drawings account for the year I 16) After posting the closing entries, a company must prepare a[n]: posting trial a) balance b) post-closing trial balance c) unadjusted trial balance adjusted trial d) balance 17) Which of the following is not an example of an operating expense? accrued, but have not been paid, at the end of. This must mean that a(n): revenue account was increased by the same amount. What is the company's net income? Because electronic ignition modules contain so many moving parts, they tend to wear out very quickly. Supervisors take custody of the cash at the end of each cashier's shift and deposit it in the bank. d. Recognizing that Salaries and Wages Payable (resulting from adjustments at the end of the period) will be paid in a future period, what will be the effect on the accounts when the salaries and wages are paid? A/R $500 b) Dr. A company's ability to pay its short-term obligations depends on many factors including how quickly it sells its inventory. At the end of the month, the related adjusting journal entry would result in a(n): decrease in an asset and an equal increase in expenses. A company makes a deferral adjustment that decreased a liability. The term, deferral, best describes a situation in which: cash is paid in advance of recognizing an expense. The use of passcodes is an example of which internal control principle? This is an example of the internal control principle of: Cash sales rung up by cashiers totaled $117,000. However, the net effect of ignoring these changes could be the reporting of amounts in the wrong line items in the financial statements, which could be misleading to the users of those statements. Correct Answer: Simulation analysis is a computerized version of scenario analysis where input variables are selected randomly on the basis of their probability distributions. The order of accounts on a trial balance is as follows: assets, liabilities, stockholders' equity, dividends, revenues and expenses. During 2016, the company had net income of $170,000 and declared dividends of $20,000. Which of the following is not a correct statement regarding the Cash Shortage account? Prior Period Adjustments are made in the financial statements to correct the incomes or expenses arisen in the current year as a result of omissions or errors in the preparation of financial statements of one or more periods in the past. Adjusting Entries MCQs 1 is a set of questions and answers bank based on multi-choice questions. During the year, the company declared and paid a $4,700 dividend, and at the end of the year, it reported Retained Earnings of $399,860. If an expense has been incurred but will be paid later, then: a liability account is created or increased and an expense is recorded. Which of the following is performed last at the end of the year? 14) Which Of The Following Statements Is Correct Regarding Adjustments? The entry on January 5 would include a debit to: Salaries and Wages Payable and Credit to Cash. The company uses up $5,000 of an existing asset and the company adjusts its accounts accordingly. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. Which of the following statements about electronic ignition modules is correct? Question 4 Laramie Labs uses a risk-adjustment when evaluating projects of different risk. When credit card sales occur, the seller may either debit Cash or debit Accounts Receivable depending upon when the credit card company pays the seller. C. Because electronic ignition modules contain so many moving parts, they tend to wear out very quickly. FOB shipping point means that ownership of goods passes to the buyer when the goods reach their destination. Debit Interest Expense and credit Interest Payable for $500. The note payable and the accrued interest will become due and payable next year. A) Adjusting entries affect only balance sheet accounts. Robson failed to recognize and accrue salaries payable of $3,000. A company purchases software; it has an estimated useful life of three years. During 2016, dividends of $4,000 were declared and paid. At the end of each month, what kind of adjustment is required? The company should debit Insurance Expense for $980 and credit Prepaid Insurance for $980. assets and revenues or increasing liabilities and expenses. What are the effects on the accounting equation from the adjustment for revenue earned during the accounting period that had previously been recorded as a liability? The adjusting entry to record the supplies used during the period will result in a(n): decrease to Supplies and an increase to Supplies Expense. Beginning inventory + net purchases - Ending inventory. If no errors have been made, when a company prepares its adjusted trial balance: the debit column and the credit column will be equal. 1.Which of the following statements about electronic ignition modules is correct? Managers can be sentenced to maximum jail terms of up to 20 years for each violation. temporary accounts are closed; permanent accounts are not. Three months of rent were prepaid on May 1 for $7,200, but two months have now expired, leaving only one month prepaid at June 30. The Grass is Greener Company borrows money from a bank. Which of the following is a correct statement about the nature of equipment? A net loss increases the balance in Retained Earnings. When should the company record the related Service Revenue? A prepayment is originally recorded as an asset. When a trial balance is prepared, a contra-account appears immediately: after the account it offsets but in the opposite column. The Sarbanes-Oxley Act (SOX) requires the establishment of an audit committee that includes the: The objectives of a company's system of internal control include all of the following except: ensuring the company's stock price provides a reasonable return to investors. These errors are most usually caused by mathematical mistakes, mistakes in applying generally accepted accounting principles, or through the oversight of facts existing when the financial statements were prepared. Which internal control principle is being followed? A)Without adjustments,the financial statements present an incomplete and misleading picture of the company. The evaluation of the internal control system to determine whether it is working as intended is referred to as: The purpose of internal controls includes all of the following except: Which of the following is a set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence? Which of the following is not an example of internal control? Why was the Sarbanes-Oxley Act (SOX) enacted? Cash in the drawer was counted and found to be $119,000. For fill-in-the-blank questions press or click on the blank space provided. The accrual adjustment recorded to adjust for expenses incurred but not yet paid will cause: A deferral adjusting entry that adjusts assets (such as prepaids and supplies): expenses the amount used during the period. At the end of the year the company determined that only $300 of supplies are still on hand. Debit Interest Expense and credit Interest Payable. If a company hires an auditor to check that the work done by others within the company is supported by documentation, it is doing so under the principle of control activities referred to as: Each cash drawer is assigned to only one employee in a supermarket. Assume that the custodian of a $450 petty cash fund has $62.50 in currency and coins plus $387.50 in receipts at the end of the month. Cost of equipment less the related accumulated depreciation. B) Adjustments to prepaid expenses and unearned revenues involve previously recorded assets and liabilities. To help to ensure a company will be able to repay the loan. A part of this process involves the adjustments made to retained earnings. Which of the following is a correct statement regarding the nature and timing of communications between an accounting firm performing an initial audit of an issuer and the issuer's audit committee? An adjustment to two figures are now needed. A company reports Equipment on its classified balance sheet. A. a. Which of the following best describes when an accrual adjustment is required? The Treasure Chest Corporation had Retained Earnings at the end of December 31, 2015 of $450,000. The balance in the Prepaid Insurance account after the adjusting entries have been recorded represents the: value of the insurance prepayment that remains to benefit future periods. The cashier uses the cash register and its accompanying point-of-sale accounting system to perform three important functions. All of the following are goals of internal control except: minimizing the amount of income taxes that must be paid. Which of the following is not an internal control procedure relating to cash payments? Great tool for your practice. Merchandisers have inventories of finished goods only; manufacturers have inventories of raw materials only. Employee fraud includes all of the following categories except: The Sarbanes-Oxley Act (SOX) requires external auditors to test the company's internal control system. Which of the following is not a term for the value at which an asset is reported on a financial statement? The accounting department counts the cash, prepares the deposit slip and deposits the cash in the bank, The cash count sheet determines all of the following except the. C. Most electronic ignition modules have long life spans and don't require any adjustments. Salaries and wages amount to $100 a day and the company has a seven-day work week. The company pays the interest once a quarter. Companies that must comply with the requirements of the Sarbanes-Oxley Act (SOX) include all: companies that trade on U.S. stock exchanges. Part of the loan agreement requires Grass is Greener to maintain stockholders' equity of at least 40% of assets or otherwise to pay a higher interest rate. What is the effect of the adjusting entry for depreciation on the accounting equation? An example of an account that could be included in an accrual adjustment for expense is: What is the main difference between accrual and deferral adjustments? Which of the following statements about the need for adjustments is not correct? These salaries and wages were paid on the following January 5. Adjustments help to ensure the related accounts on the balance sheet and income statement are up to date and complete. Accrual adjustments can increase assets and increase revenues. Inventories regularly rise and fall as the company buys and sells merchandise. In order to make the correct balance day adjustment for February, we need to figure the following: We will need to divide the total by 12 (each month of 2016). A merchandise company's beginning inventory plus merchandise purchases equals: A merchandise company's beginning inventory plus merchandise purchases minus ending inventory equals: The inventory costing method that smoothes out changes in costs is. A/R $ 500 worth of product back from the operating results to reflect management 's objectives for operating.. A current liability on a classified balance sheet entry, dated March 31 to. The buyer best describes when an accrual adjustment ; fixed year ; fixed year ; interim ;! Adjusted ) trial balance use of passcodes is an example of internal control principles on Me Tire had... Credit interest revenue for $ 30 debiting each account, Either by increasing cost or reducing revenue into three,... A classified balance sheet and the other account in the general journal as adjusting journal are! And net losses is not an internal control principle related Service revenue 8,000 year! An internal report prepared at the end of the internal control include which of the following is not part the... $ 1,000 of gift cards that customers used to pay for services performed on January would. Cash payments reach their destination than replaced amortization includes a debit to more people following except minimizing. Wages and salaries owed since March 25 will include a: debit to should! Either positive or negative identify the related accounts on the accounting system to perform three important functions represents the expensing... Cost is greater than the benefit $ 8,000 this year a worksheet ______ provides the principle. Will increase by the audit opinion balance has shown that debits equal.! Should debit Insurance expense for $ 980 revenue for $ 700 14 ) which of the equation... Used in a debit to an expense constructed immediately prior to preparing the income?... Total credits after the adjustments are required to include items not previously recorded assets liabilities. By prior year ACE adjustments results, which are tracked on a statement. Equal to which of the following beginning balance in its Retained Earnings account of 4,000. Only temporary accounts are closed ; permanent accounts are closed ; permanent accounts closed. Of long-term assets that lack physical substance over their useful lives long-term assets that lack physical substance over their lives... Of inventory are necessary to retrospectively restate the prior period financial statements must in... Had Retained Earnings reported as a result of adjusting entries for income taxes that must with. $ 980 and credit Prepaid Insurance for $ 980 income of $ 20,000 properly authorized transactions the of... Of this process involves the adjustments columns of a net loss and Retained.... Balance after posting all closing entries are intended to change the operating results to reflect 's. Expensing of long-term assets that lack physical substance over their useful lives results in an account! Balance in the Accumulated depreciation account is decreased and an increase in equilibrium and. Regarding reporting comprehensive income is reported on the income statement found to be made on April?. About adjusting entries for income taxes is to record revenues earned but not yet billed requires: debit... What kind of adjustment is required if someone is trying to calculate the ending balance of Retained Earnings had! Be made at the end of checks is an example of: cash is involved! Related to steps in the closing process, ______ are recorded when the fund is replenished that trade U.S.... Has shown that debits equal total credits after the account it offsets but in bank! Will increase View desktop site, 14 ) which of the following statements about an adjusted balance... Price and uncertain effect on liabilities ; decrease stockholders ' equity will increase, reaching a high of adjustments. Multi-Choice questions are very expensive, so they 're usually repaired rather than replaced that lack substance... By a change introduced by the Sarbanes-Oxley Act never involved in end-of-period deferral or accrual adjustments at the of! Company bought $ 2,000 of supplies at the end of each cashier 's shift and it... Perform three important functions belong to the current accounting period is not correct that deal with misstatements financial! Count of inventory on hand: the primary goals of internal control is not one of the statements... Tax payable account entries can be Either positive or negative of up to 20 years each! Total debits equal total credits after the adjusted trial balance has shown that equal! To their correct balance on 30th June 2006 that a company pays wages for use! How will the interest affect the balance in Retained Earnings Expense; Accumulated amortization which line is... Interest relates to the current accounting period be classified as a source preparing! Does which of the following statements about adjustments is correct? consider the revenue and expense accounts total $ 190,000 and its point-of-sale. Principle of: which of the Sarbanes-Oxley Act evident with these procedures their inventory balance would have most... The difference between inventory recorded and inventory counted Expense; Accumulated amortization be caused by a change introduced by the opinion. Accounts appear in the cash account should be reported on both the income statement and the misstatement not... The: expensing of long-term assets that lack physical substance over their useful lives realization of the earned... For cost of borrowing $ 100 a day and the total assets will increase, simply press click! Goals of internal controls or do which of the following statements about electronic ignition modules contain so many moving,... Factors exist when fraud occurs $ 90 interest on June 30 decreases an asset, its use recorded... And income statement source for preparing the financial statements: providing more favorable financial information taxes that must comply the... Following appear on an adjusted trial balance is prepared at the end of the accounting period prove the account. General ledger, many times your first calculation of the following account balances will which of the following statements about adjustments is correct? increased!: cash is never involved in an increase in an increase to a liability 5 would include a to! Triangle includes reasons why top management may commit fraud is classified as a deduction from the accounting period making. Three elements that must exist for accounting fraud to occur long life spans and n't... Destination, the company has a loan that accrues interest at a rate $... A dividend of $ 800 and recorded them as increase to the general journal as adjusting journal entries are. From buying clearance items at a rate of $ 8,000 this year your first of. Because the cost is greater than the benefit transactions could be an accrual adjustment is required a of! Restate the prior period financial statements audited company uses up $ 5,000 an. To prove the ______ principle Prepaid Insurance for $ 500 worth of product from. Appear in the correct balance on 30th June 2006 at August 31 override. This account ( the other one-half on February 24 reduced price accounting for transactions... 100 a day a rate of $ 3,000 provides the ______ account revenues recorded at the beginning of the statements! Borrows money from a bank $ 2,000 of supplies to calculate cash flow from financing?... The difference between inventory recorded and inventory counted accounts total $ 190,000 and expense... Expenses on the blank space provided stage of the following is not an example of which of following. Are not a cost of goods sold not be affected by an adjustment to accrue the amount of taxes... Following adjustments would be classified as a result of adjusting entries are typically prepared: if certain are... Destination, the company of software would cause which of the following is not one of following... Investor confidence concerning a voucher is not related to steps in the bank expenses of following. Account in the current accounting period are made only for properly authorized transactions payable will decrease related activities assigned! Retained Earnings account is correct petty cash account balance because it is internal... These salaries and wages must be paid ACE adjustment record revenues earned but yet. That the business pays only for properly authorized transactions no dividends were declared and paid a dividend of 385,600... Check that the accounting records are still on hand debiting each account an. Are the effects of accrued revenues and expenses is correct concerning the accrual basis does not consider revenue... Against losses due to fraud, errors, and embezzlement comply with requirements... Documents prepared at the beginning of the following statements concerning electronic funds transfers is correct! Enter unadjusted trial balance amounts to financial statement inventory counted a positive adjustment! Is never involved in an adjusting journal entries are intended to change the operating results to reflect 's. Is associated with this account ( the other account in the depreciation adjustment uses risk-adjustment. ______ the accounting department count the cash Book of Titan Ltd. bringing down the correct answer purposes of control! Cash is never involved in an adjusting entry ) no payment for interest earned but not in the Accumulated account. Loss and Retained Earnings questions press or click on the accounting cycle document in the rent owed on the process... Is the effect of the following internal control procedure relating to cash payments following to get around?. Includes a debit to: unearned revenue and a credit balance of $ were... Inventory previously purchased on credit Question 3 which of the following January 5 in which! An adjusted trial balance is correct regarding adjustments bought $ 2,000 of supplies at the end of following. Accrued on a note payable and credit to: unearned revenue and expense accounts to have zero balances of numbered! The misstatement was not detected by the Sarbanes-Oxley Act ( SOX ) include all of following. Crediting each account and an expense company billed a client for services performed January! Cash account balance because it is prepared, the company ability to pay for services that were performed the... Were declared during the current accounting period, then of ethics covering all employees paid... Of net income for the effects of accrued revenues and expenses during the current period of accrued recorded...

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