Question 1. 1. (TCO 3) Explain why Adjusting Entries are required at the end of each accounting period (15 points) and provide an example of a required journal entry for either the consumption of supplies or insurance (10 points). (Points : 25) Spellchecker In order to see how well a company is doing financially, companies need to accurately reflect the financial position of the company at a specific point in time. Adjusting entries are needed to reflect Deferrals, Depreciation, and Accruals. Deferrals is an adjustment for payment of an item or receipt of cash in advance (Harrison, Horngren, Thomas p.141). Depreciation is the adjustments made to allocate the cost of an asset to expense it over its useful life. (Harrison, Horngren, Thomas p.141) Accrual is the opposite of deferrals, it is an expense or revenue that occurs before the company pays or receives cash.(Harrison, Horngren, Thomas p.142) For example, a company pays for its Insurance every January 1. We would need make an adjustment to expense the insurance used each month. Question 2. 2. (TCO 2) Explain how accounts are listed in the trial balance and the importance of the trial balance in preparing financial statements (10 points) and (2) Prepare a trial balance form the following accounts. List the accounts in the proper order.(10 points) Accrued liabilities $10 Revenue $190 Accounts receivable $40 Building $100 Rent expense $140 Wages payable $30 Stockholders equity $50 (Points : 25) Spellchecker Question 3. 3. (TCO 5) Internal Control Procedures are required to safeguard company assets and to ensure ethical operation of the business. (1) Explain how limited access can satisfy the purpose of internal control (15 points) and (2) provide an example of how this control could be implemented. (10 points) (Points : 25)