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Principles of Accounting, Volume 1: Financial Accounting

Questions

Principles of Accounting, Volume 1: Financial AccountingQuestions

Questions

1.

LO 4.1Describe the revenue recognition principle. Give specifics.

2.

LO 4.1Describe the expense recognition principle (matching principle). Give specifics.

3.

LO 4.2What parts of the accounting cycle require analytical processes, rather than methodical processes? Explain.

4.

LO 4.2Why is the adjusting process needed?

5.

LO 4.2Name two types of adjusting journal entries that are commonly made before preparing financial statements? Explain, with examples.

6.

LO 4.2Are there any accounts that would never have an adjusting entry? Explain.

7.

LO 4.2Why do adjusting entries always include both balance sheet and income statement accounts?

8.

LO 4.2Why are adjusting journal entries needed?

9.

LO 4.3If the Supplies account had an ending balance of $1,200 and the actual count for the remaining supplies was $400 at the end of the period, what adjustment would be needed?

10.

LO 4.3When a company collects cash from customers before performing the contracted service, what is the impact, and how should it be recorded?

11.

LO 4.3If the Prepaid Insurance account had a balance of $12,000, representing one year’s policy premium, which was paid on July 1, what entry would be needed to adjust the Prepaid Insurance account at the end of December, before preparing the financial statements?

12.

LO 4.3If adjusting entries include these listed accounts, what other account must be in that entry as well? (A) Depreciation expense; (B) Unearned Service Revenue; (C) Prepaid Insurance; (D) Interest Payable.

13.

LO 4.4What is the difference between the trial balance and the adjusted trial balance?

14.

LO 4.4Why is the adjusted trial balance trusted as a reliable source for building the financial statements?

15.

LO 4.5Indicate on which financial statement the following accounts (from the adjusted trial balance) would appear: (A) Sales Revenue; (B) Unearned Rent Revenue; (C) Prepaid Advertising; (D) Advertising Expense; (E) Dividends; (F) Cash.

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