Which three statements are valid reasons for making adjusting journal entries? (Choose 3.) Note: You will receive partial credit for each correct entry. To record expiration of prepaid insurance. To record payments to vendors. To ensure that Accounts Receivable matches Accounts Payable. To record depreciation. To purchase supplies. To recognize unpaid salaries for the current period. For each account type, select whether the account has a normal (natural) Debit or Credit balance. Note: You will receive partial credit for each correct selection. (Drag and drop a tile on the left under the correct category) Match each term to its corresponding definition. To answer, move each term from the list on the right to its definition on the left. Note: You will receive partial credit for each correct selection. (Drag and drop values from the "Answer Choices" area to the corresponding correct cells) The time period over which an asset is depreciated The allocation of the cost of an asset over its expected useful life A contra-asset account that summarizes the amount of depreciation that has been taken on an asset ANSWER CHOICES ANSWER CHOICES Your company is in the business of selling granola bars. The office manager purchases six cases of granola bars from a vendor. She puts five cases into inventory, and uses one case to stock the break room for employees. How should you categorize the five cases? Merchandise Inventory Cost of Goods Sold Meals and Entertainment Fixed Assets In May, a client asks a law firm whether it can prepare legal contracts. The law firm starts working on a contract for the client on June 15, delivers it on June 18, creates an invoice on June 30 , and mails the invoice on July 1 . The client pays the bill in August. Under the accrual method of accounting, when does the law firm recognize the contract revenue? June August May July The owner of the restaurant for which you are the bookkeeper is requesting information about some specific account balances and transactions. Match the request of information to the document where it can be found. Note: You will receive partial credit for each correct selection. (Drag and drop a tile on the left under the correct category) DRAG DROP VALUES The debits and credits recorded for a rental equipment expense The debits and credits posted to the company's line of credit during the last 6 months Report of all revenue and expenses for the month Which asset depreciation method records more depreciation expense in the early years of the asset's life? Market value depreciation Book value depreciation Straight-line depreciation Accelerated depreciation Which statement most accurately summarizes the end of the period, adjusting entry process? Analysis and updating of the journal entries to bring accounts up to date at the end of the accounting period. Analysis and updating of the revenues and expenses on the Income Statement during the accounting period. Analysis and updating all of the account balances at the end of the accounting period. Analysis and updating of the assets and liabilities on the Balance Sheet at the end of the accounting period. Your client is opening a flower shop. To do so, he forms a C corporation and invests $8,000 of his own savings. He also receives a $12,000 loan from his parents to assist with startup costs. How should you record the $12,000 loan from his parents? Due to Shareholder Notes Payable Additional Paid in Capital Other Income Classify each accounting characteristic as either Cash Basis or Accrual Basis accounting. Note: You will receive partial credit for each correct selection. (Drag and drop a tile on the left under the correct category) Transactions are recorded/posted when expenses are paid. Transactions are recorded/posted when expenses are incurred. Transactions are recorded/posted when revenue is earned or invoiced. Transactions are recorded/posted when monies are received for services or products sold. Classify each financial element as belonging on the Income Statement or Balance Sheet. Note: You will receive partial credit for each correct selection. (Drag and drop a tile on the left under the correct category) You are reviewing the general journal report. An entry has been made in the software that shows a debit of $50 to Accounts Payable and a credit of $50 to Cash. What occurred in the transaction? The company purchased new equipment. The company paid an invoice to their vendor. A vendor refunded the company for returns. A vendor paid their invoice to the company. What is the maximum amount of time that a business owner should wait to correct inventory errors? Monthly Semi-annually Weekly Annually Which of the following best defines a debit as it is used in double-entry accounting? A decrease in assets/expenses and a decrease in liabilities/owner's equity and revenue. An increase in assets/expenses and a decrease in liabilities/owner's equity and revenue. A decrease in assets/expenses and an increase in liabilities/owner's equity and revenue. An increase in liabilities/owner's equity and revenue and a decrease in assets/expenses. You are the bookkeeper for a small company with 10 employees. Your contact is currently the office manager and owner. You notice an invoice for $1,500 that was paid to the office manager. You questioned the manager about the invoice and the manager told you to just book the expense. In which of the four key bookkeeping ethics element does this scenario fall? Professionalism Objectivity Honesty Confidentiality Lou has a landscaping company. He received a $10,000 payment for a landscaping job that he completed for the Rose family. How would you record this transaction? Debit $5,000 to Cash and $5,000 Rose Family Account - Landscaping; Credit $10,000 to Service Revenue Debit $10,000 to Service Revenue - Landscaping; Credit $5,000 to Cash and $5,000 Rose Family Account Debit $10,000 to Cash; Credit $10,000 to Service Revenue - Landscaping Debit $10,000 to Cash; Credit $10,000 to Rose Family Account It is three days before the end of the fiscal year. It is time to prepare the financial statements, and you have just completed the unadjusted Trial Balance for the period. If there are no transactions recorded in the next three days, what would be your next step in the Accounting Cycle? Since there were no transactions you can proceed and prepare the Financial Statements. Make any adjusting entries and prepare the Adjusted Trial Balance. Confirm that your debits and credits are equal. Confirm that the Trial Balance report agrees with the budget. You are the bookkeeper for a store that resells school uniforms. You need to record the following transactions in the books: In January, the store purchased 10 uniforms for $500. In January, the store sold the 10 uniforms to a customer for $1000, payable in 30 days. In February, the customer paid the invoice of $1000 in full. For each statement, select True or False. Note: You will receive partial credit for each correct selection. (Drag and drop a tile on the left under the correct category) DRAG DROP VALUES In January, you should debit Accounts Receivable (Customer) $1000