We are using 19th edition 1. Listed as follows are nine technical accounting terms used in this chapter. Unrecorded revenue Adjusting entries Accrued expenses Book value Matching principle Accumulated depreciation Unearned revenue Materiality Prepaid expenses Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms. a. The net amount at which an asset is carried in the accounting records as distinguished from its market value. b. An accounting concept that may justify departure from other accounting principles for purposes of convenience and economy. c. The offsetting of revenue with expenses incurred in generating that revenue. d. Revenue earned during the current accounting period but not yet recorded or billed, which requires an adjusting entry at the end of the period. e. Entries made at the end of the period to achieve the goals of accrual accounting by recording revenue when it is earned and by recording expenses when the related goods and services are used. f. A type of account credited when customers pay in advance for services to be rendered in the future. g. A balance sheet category used for reporting advance payments of such items as insurance, rent, and office supplies. h. An expense representing the systematic allocation of an asset's cost over its useful life 2. Security Service Company adjusts its accounts at the end of the month. On November 30, adjusting entries are prepared to record the following. a. Depreciation expense for November. b. Interest expense that has accrued during November. c. Revenue earned during November that has not yet been billed to customers. d. Salaries, payable to company employees, that have accrued since the last payday in November. e. The portion of the company's prepaid insurance that has expired during November. f. Earning a portion of the amount collected in advance from a customer, Harbor Restaurant. Indicate the effect of each of these adjusting entries on the major elements of the company's income statement and balance sheetthat is, on revenue, expenses, net income, assets, liabilities, and owners' equity. Organize your answer in tabular form, using the column headings shown and the symbols I for increase, D for decrease, and NE for no effect. The answer for adjusting entry a is provided as an example. Income Statement Balance Sheet Adjusting Entry = a Revenue Expenses = Income Assets = Liabilities + Equity NE I D NE D 3. Sweeney & Allen, a large marketing firm, adjusts its accounts at the end of each month. The following information is available for the year ending December 31. 1. A bank loan had been obtained on December 1. Accrued interest on the loan at December 31 amounts to $1,500. No interest expense has yet been recorded. 2. Depreciation of the firm's office building is based on an estimated life of 30 years. The building was purchased four years ago for $450,000. 3. Accrued, but unbilled, revenue during December amounts to $75,000. 4. On March 1, the firm paid $2,400 to renew a 12-month insurance policy. The entire amount was recorded as Prepaid Insurance. 5. The firm received $15,000 from King Biscuit Company in advance of developing a six-month marketing campaign. The entire amount was initially recorded as Unearned Revenue. At December 31, $9,000 had actually been earned by the firm. 6. The company's policy is to pay its employees every Friday. Since December 31 fell on a Wednesday, there was an accrued liability for salaries amounting to $1,900. a. Record the necessary adjusting journal entries on December 31. a. Record the necessary adjusting journal entries on December 31. b. By how much did Sweeney & Allen's net income increase or decrease as a result of the adjusting entries performed in part a? (Ignore income taxes.) 4. Among the ledger accounts used by Rapid Speedway are the following: Prepaid Rent, Rent Expense, Unearned Admissions Revenue, Admissions Revenue, Prepaid Printing, Printing Expense, Concessions Receivable, and Concessions Revenue. For each of the following items, provide the journal entry (if one is needed) to record the initial transaction and provide the adjusting entry, if any, required on May 31, assuming the company makes adjusting entries monthly. a. On May 1, borrowed $600,000 cash from National Bank by issuing a 9 percent note payable due in three months. b. On May 1, paid rent for six months beginning May 1 at $14,400 per month. c. On May 2, sold season tickets for a total of $720,000 cash. The season includes 60 racing days: 15 in May 20 in June, and 25 in July. d. On May 4, an agreement was reached with Snack-Bars, Inc., allowing that company to sell refreshments at the track in return for 10 percent of the gross receipts from refreshment sales 5. The following information was reported in a recent balance sheet issued by Microsoft Corporation. 1. The book value of property and equipment is listed at $23.8 billion (net of depreciation). Related notes to the financial statements reveal that accumulated depreciation on property and equipment totals $24.2 billion. 2. Accrued compensation of $5.9 billion is listed as a liability. 3. Short-term unearned revenue is reported at $34.1 billion, whereas long-term unearned revenue is reported at $10.4 billion. The short-term figure will be converted to revenue within a year. The long-term figure will be converted to revenue over several years. a. Determine the original historical cost of the property and equipment reported in Microsoft Corporation's balance sheet. b. Four types of adjusting entries are illustrated in Exhibit 4-1. Explain which type of adjusting entry resulted in the company's accrued compensation figure. c. Explain why Microsoft Corporation reports unearned revenue in its balance sheet. Why might the company report short-term unearned revenue separately from long-term unearned revenue