15) Employees of Robert Rogers, CPA, worked during the last two weeks of December. They received their paychecks on January 2. The matching principle would require that which of the following accounts appear on the income statement for the year ended December 31?
A) Salary expense
B) Prepaid expense
C) Salaries payable
D) Unearned revenue
16) Which of the following entries would be made as the result of the revenue principle?
A)
Service revenue
|
1,000
|
|
Service revenue
|
|
1,000
|
B)
Accounts receivable
|
1,000
|
|
Service revenue
|
|
1,000
|
C)
Salary expense
|
1,000
|
|
Accounts payable
|
|
1,000
|
D)
Depreciation expense
|
1,000
|
|
Accumulated depreciation
|
|
1,000
|
17) Which of the following entries would be made because of the matching principle?
A)
Salary expense
|
1,000
|
|
Accounts receivable
|
|
1,000
|
B)
Cash
|
1,000
|
|
Salary expense
|
|
1,000
|
C)
Salary expense
|
1,000
|
|
Salary payable
|
|
1,000
|
D)
Cash
|
1,000
|
|
Unearned revenue
|
|
1,000
|
18) The purposes of the adjusting process are:
A) to adjust expenses and revenues to the proper accrual basis.
B) to adjust asset and liability balances to the proper accrual basis.
C) to adjust expenses and revenues as well as asset and liability balances to the proper accrual basis.
D) none of the above.
Learning Objective 3-3
1) How do the adjusting entries differ from other journal entries?
A) Adjusting entries always include debits or credits to at least one income statement account and at least one balance sheet account.
B) Adjusting entries are made only at the end of the period.
C) Adjusting entries never affect cash.
D) All of the above are true.
2) Blum Services, Inc. has the following unadjusted balances at year-end.
Cash
|
$12,900
|
Prepaid insurance
|
2,000
|
Office supplies
|
1,300
|
Office equipment
|
10,500
|
Accumulated depreciation–office equipment
|
3,500
|
Accounts payable
|
2,900
|
Salaries payable
|
-0-
|
Unearned service revenue
|
4,500
|
Common stock
|
10,000
|
Retained earnings
|
1,750
|
Dividends paid
|
5,600
|
Service revenue
|
13,350
|
Salary expense
|
3,700
|
Depreciation expense
|
-0-
|
Supplies expense
|
-0-
|
Insurance expense
|
-0-
|
The following information is available to use in making adjusting entries.
a.Office supplies on hand at year-end: $250
b.Prepaid insurance expired during the year: $325
c.Unearned revenue remaining at year-end $2,500
d.Depreciation expense for the year $1,800
e.Accrued salaries at year-end $900
Using the work sheet below, prepare the trial balance, the adjustments and the adjusted trial balance for Blum Services, Inc.
Blum Services, Inc.
Work Sheet
December 31, 2012
Accounts
|
Trial balance
|
Adjustments
|
Adjusted trial
balance
|
|
Debit
|
Credit
|
Debit
|
Credit
|
Debit
|
Credit
|
|
Cash
|
|
|
|
|
|
|
|
Prepaid insurance
|
|
|
|
|
|
|
|
Office supplies
|
|
|
|
|
|
|
|
Office equipment
|
|
|
|
|
|
|
|
Accumulated depreciation–
office equipment
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
|
|
Salaries payable
|
|
|
|
|
|
|
|
Unearned service revenue
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
|
Retained earnings
|
|
|
|
|
|
|
|
Dividends paid
|
|
|
|
|
|
|
|
Service revenue
|
|
|
|
|
|
|
|
Salaries expense
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
|
|
|
|
|
Supplies expense
|
|
|
|
|
|
|
|
Insurance expense
|
|
|
|
|
|
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3) The adjusted trial balance for McAfee Consulting Services, Inc. is presented below. Prepare an income statement, statement of retained earnings, and balance sheet.
McAfee Consulting Services, Inc.
Adjusted Trial Balance
December 31, 2012
Accounts
|
Trial Balance
|
Adjustments
|
Adjusted Trial
Balance
|
|
Debit
|
Credit
|
|
Debit
|
|
Credit
|
Debit
|
Credit
|
Cash
|
$11,000
|
|
|
|
|
|
$11,000
|
|
Prepaid insurance
|
1,200
|
|
|
|
b
|
$400
|
800
|
|
Office supplies
|
800
|
|
|
|
a
|
600
|
200
|
|
Office equipment
|
12,000
|
|
|
|
|
|
12,000
|
|
Accumulated depreciation
|
|
$2,000
|
|
|
d
|
1,000
|
|
$3,000
|
Accounts payable
|
|
3,000
|
|
|
|
|
|
|
Salaries payable
|
|
|
|
|
e
|
900
|
|
900
|
Unearned service revenue
|
|
5,000
|
c
|
$2,000
|
|
|
|
3,000
|
Common stock
|
|
10,000
|
|
|
|
|
|
10,000
|
Retained earnings
|
|
4,000
|
|
|
|
|
|
4,000
|
Dividends paid
|
5,000
|
|
|
|
|
|
5,000
|
|
Service revenue
|
|
13,000
|
|
|
c
|
2,000
|
|
15,000
|
Salaries expense
|
7,000
|
|
e
|
900
|
|
|
7,900
|
|
Depreciation expense
|
|
|
d
|
1,000
|
|
|
1,000
|
|
Supplies expense
|
|
|
a
|
600
|
|
|
600
|
|
Insurance expense
|
|
|
b
|
400
|
|
|
400
|
|
Totals
|
$37,000
|
$37,000
|
|
$4,900
|
|
$4,900
|
$38,900
|
$38,900
|
|
|
|
|
|
|
|
|
|
|
|
|
Learning Objective 3-4
1) To accrue revenue means the cash receipt is recorded before the revenue is earned.
2) Prepaid insurance is an asset account.
3) Prepaid rent is an expense account.