Question
8 . In the space below, state whether each situation is a deferral or an accrual. Part A: ______ a. Unrecorded interest that has been
8. In the space below, state whether each situation is a deferral or an accrual.
Part A:
______ a. Unrecorded interest that has been earned on savings bonds is $765.
______ b. Property taxes that have been incurred but that have not yet been paid or
recorded amount to $1,034.
______ c. Legal fees of $2,890 were collected in advance. By year end, 70 percent
were still unearned.
______ d. Prepaid Insurance had a $900 balance prior to adjustment. By year end,
25 percent was still unexpired.
______ e. Unpaid salaries earned by year end but not yet paid or recorded amounted
to $1,655.
______ f. Services totaling $690 have been performed but not yet recorded or billed.
Part B:
______ a. Depreciation on machinery is $7,200 for the accounting period.
______ b. Interest that has been incurred on a loan but that has not yet been
paid or recorded is $675.
______ c. Office supplies of $965 were on hand at the beginning of the period.
Purchases of office supplies during the period totaled $640. At the
end of the period, $120 in office supplies remained.
______ d. Commissions amounting to $975 were earned but not yet collected
by year end.
______ e. Prepaid Rent had a $2,500 balance prior to adjustment. By year end,
50 percent had expired.
______ f. Federal income taxes for the year were estimated to be $4,680.
9. For each of the following oversights, state whether total assets will be understated, overstated, or not affected.
______ a. Failure to record revenue earned but not yet received
______ b. Failure to record expired rent
______ c. Failure to record accrued interest income in the bank
______ d. Failure to record depreciation
______ e. Failure to record accrued wages
______ f. Failure to convert unearned revenue to earned revenue
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