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Adjusting entries are made to ensure that:
Adjusting entries are made to ensure that:
Unearned revenue is classified as a(n):
Unearned revenue is classified as a(n):
liability
As prepaid expenses expire with the passage of time, the correct adjusting entry will be a:
As prepaid expenses expire with the passage of time, the correct adjusting entry will be a:
Debit to an expense account and a credit to an asset account
Which of the following would not result in unearned revenue?
Which of the following would not result in unearned revenue?
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Which principle dictates that efforts (expenses) be recorded with accomplishments (revenues)?
Which principle dictates that efforts (expenses) be recorded with accomplishments (revenues)?
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Adjusting entries can be classified as:
Adjusting entries can be classified as:
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If financial statements are prepared on July 31, the adjusting entry for Fisher Shoe Store will be:
If financial statements are prepared on July 31, the adjusting entry for Fisher Shoe Store will be:
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If a purchaser using a perpetual inventory system pays the transportation costs for goods purchased, then the:
If a purchaser using a perpetual inventory system pays the transportation costs for goods purchased, then the:
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Indicate which one of the following would not appear on both a single-step income statement and a multiple-step income statement:
Indicate which one of the following would not appear on both a single-step income statement and a multiple-step income statement:
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The Sales Returns and Allowances account is classified as a(n):
The Sales Returns and Allowances account is classified as a(n):
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After gross profit is calculated, operating expenses are deducted to determine:
After gross profit is calculated, operating expenses are deducted to determine:
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Sales revenue less cost of goods sold is called:
Sales revenue less cost of goods sold is called:
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The entry to record the return of goods from a customer would include a:
The entry to record the return of goods from a customer would include a:
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The entry to record the receipt of payment within the discount period on a sale of $900 with terms of 2/10, n/30 will include a:
The entry to record the receipt of payment within the discount period on a sale of $900 with terms of 2/10, n/30 will include a:
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The amount of net sales on the income statement would be:
The amount of net sales on the income statement would be:
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What amount will be received as payment in full if collected on May 4 for a credit sale of $3800 with a return of $200?
What amount will be received as payment in full if collected on May 4 for a credit sale of $3800 with a return of $200?
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Study Notes
Adjusting Entries
- Ensures expenses are recognized in the period incurred and revenues match performance obligations.
- Corrects balance sheet and income statement accounts at the accounting period's end.
Unearned Revenue
- Classified as a liability on financial statements.
Prepaid Expenses
- Adjusting entry for expired prepaid expenses includes debiting an expense account and crediting an asset account.
Services and Unearned Revenue
- Services performed on account do not result in unearned revenue.
Expense Recognition Principle
- Dictates recording expenses in conjunction with associated revenues.
Types of Adjusting Entries
- Can be classified into accruals and deferrals.
Rent Expense Adjustment
- For prepaid rent of $24,000 over 6 months, adjusting entry on July 31 is a debit of $4,000 to Rent Expense and a credit of $4,000 to Prepaid Rent.
Perpetual Inventory Costs
- When a purchaser pays transportation costs, it results in an increase in the Inventory account.
Income Statement Formats
- Gross profit does not appear on a single-step income statement but is included in multiple-step income statements.
Sales Returns and Allowances
- Classified as a contra revenue account, affecting total revenue reported.
Calculating Net Income
- Net income is determined by deducting operating expenses from gross profit.
Gross Profit Definition
- Defined as sales revenue minus the cost of goods sold.
Recording Returns
- The entry for customer returns includes a debit to Sales Returns and Allowances.
Payment Receipt with Discount
- For a sale of $900 with terms 2/10, n/30, the entry includes crediting Accounts Receivable for the full $900.
Calculating Net Sales
- Net sales are derived from total sales revenue of $160,000, subtracting sales returns and allowances ($3,000) and sales discounts ($7,000), resulting in $150,000.
Final Payment Calculation
- A credit sale of $3,800 with a $200 return results in a payment received of $3,528 if collected on the due date after discount consideration.
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Description
Prepare for the ACC 200 Exam 2 with these flashcards that cover key concepts in accounting, including adjusting entries and classification of unearned revenue. Test your knowledge and ensure you understand how to apply these principles effectively.
