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Nombre:_____________________________ Nmero de Estudiante_________________ Fecha de Entrega: 9/18/17 Contabilidad Bsica (ACCO 111) Prof. Carlos lvarez Programa Ahora /UMET ASIGNACIN #3 - Adjusting the Accounts Resultado: _________________ puntos (mximo 25) ________Cierto y Falso (10) ________Preguntas de Mltiples Respuestas (10 ) con BONOS ________ Ejercicio #1 (16) TOTAL______________= % _____________de 25 Puntos (36) =__________ ACCO 111 (Asignacin #3- Prof. Carlos Alvarez) 1-1 Assignment 3 - Adjusting the Accounts Chapter #3 I. TRUE-FALSE STATEMENTS _____ 1. The cash basis of accounting is not in accordance with generally accepted accounting principles. _____ 2. An adjusting entry always involves two balance sheet accounts. _____ 3. Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger. _____ 4. Revenue received before it is earned and expenses paid before being used or consumed are both initially recorded as liabilities. _____ 5. Accrued revenues are revenues which have been received but not yet earned. _____ 6. The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique. _____ 7. Accumulated Depreciation is a liability account and has a credit normal account balance. _____ 8. The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same. _____ 9. Financial statements can be prepared from the information provided by an adjusted trial balance. _____ 10. The matching principle requires that expenses be matched with revenues. 1-2 II. MULTIPLE CHOICE QUESTIONS _____ 1. Adjustments would not be necessary if financial statements were prepared to reflect net income from a. b. c. d. monthly operations. fiscal year operations. interim operations. lifetime operations. _____ 2. Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns. a. b. c. d. _____ 3. a. b. c. d. annual, annual monthly, annual quarterly, monthly monthly, monthly The fiscal year of a business is usually determined by the IRS. a lottery. the business. the SEC. _____ 4. The revenue recognition principle dictates that revenue should be recognized in the accounting records a. b. c. d. _____ 5. a. b. c. d. when cash is received. when it is earned. at the end of the month. in the period that income taxes are paid. In a service-type business, revenue is considered earned at the end of the month. at the end of the year. when the service is performed. when cash is received. ACCO 111 (Asignacin #3- Prof. Carlos Alvarez) 1-3 _____ 6. Under accrual-basis accounting a. cash must be received before revenue is recognized. b. net income is calculated by matching cash outflows against cash inflows. c. events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. d. the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles. _____ 7. a. b. c. d. _____ 8. a. b. c. d. _____ 9. a. b. c. d. An adjusting entry affects two balance sheet accounts. affects two income statement accounts. affects a balance sheet account and an income statement account. is always a compound entry. Prepaid expenses are paid and recorded in an asset account before they are used or consumed. paid and recorded in an asset account after they are used or consumed. incurred but not yet paid or recorded. incurred and already paid or recorded. Accrued expenses are paid and recorded in an asset account before they are used or consumed. paid and recorded in an asset account after they are used or consumed. incurred but not yet paid or recorded. incurred and already paid or recorded. _____ 10. Unearned revenues are a. b. c. d. 1-4 received and recorded as liabilities before they are earned. earned and recorded as liabilities before they are received. earned but not yet received or recorded. earned and already received and recorded. BONO's: _____ 11. Depreciation expense for a period is computed by taking the a. b. c. d. original cost of an asset - accumulated depreciation. depreciable cost depreciation rate. cost of the asset useful life. market value of the asset useful life. _____ 12. Nance Realty Company received a check for $15,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent was credited for the full $15,000. Financial statements will be prepared on July 31. Nance Realty should make the following adjusting entry on July 31: a. b. c. d. Debit Unearned Rent, $2,500; Credit Rental Revenue, $2,500. Debit Rental Revenue, $2,500; Credit Unearned Rent, $2,500. Debit Unearned Rent, $15,000; Credit Rental Revenue, $15,000. Debit Cash, $15,000; Credit Rental Revenue, $15,000. _____ 13. Kim Roberts has performed $500 of CPA services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Kim make? a. b. c. d. Debit Cash and credit Unearned Revenue Debit Accounts Receivable and credit Unearned Revenue Debit Accounts Receivable and credit Service Revenue Debit Unearned Revenue and credit Service Revenue _____ 14. On January 2, 2016, Federal Savings and Loan purchased a general liability insurance policy for $3,600 for coverage for the calendar year. The entire $3,600 was charged to Insurance Expense on January 2, 2016. If the firm prepares monthly financial statements, the proper adjusting entry on January 31, 2016, will be: a. Insurance Expense ................................................................ Prepaid Insurance ........................................................ b. Prepaid Insurance ................................................................. Insurance Expense ....................................................... c. Insurance Expense ................................................................ Prepaid Insurance ........................................................ d. Prepaid Insurance ................................................................. Insurance Expense ....................................................... 3,300 3,300 3,300 3,300 300 300 300 300 ACCO 111 (Asignacin #3- Prof. Carlos Alvarez) 1-5 III. EXCERSICE Ex. 1 UMET Company prepares monthly financial statements. Below are listed some selected accounts and their balances in the September 30 trial balance before any adjustments have been made for the month of September. UNE COMPANY Trial Balance (Selected Accounts) September 30, 2016 ____________________________________________________________________________ Office Supplies ....................................................................................... Prepaid Insurance ................................................................................... Office Equipment ................................................................................... Accumulated DepreciationOffice Equipment .................................... Unearned Rent Revenue ......................................................................... Debit $ 2,700 5,000 16,200 Credit $ 400 1,200 (Note: Debit column does not equal credit column because this is a partial listing of selected account balances) An analysis of the account balances by the company's accountant provided the following additional information: 1. A physical count of office supplies revealed $1,500 on hand on September 30. 2. A two-year life insurance policy was purchased on June 1 for $6,000. 3. Office equipment depreciated $2,400 per year. 4. The amount of rent received in advance that remains unearned at September 30 is $300. Instructions Using the above additional information, prepare the adjusting entries that should be made by UNE Company on September 30. 1-6