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Questions and Answers
Which account is debited when supplies are purchased?
Which account is debited when supplies are purchased?
- Cash
- Expenses
- Supplies (correct)
- Accounts Payable
Supplies are considered a liability and increase with a debit.
Supplies are considered a liability and increase with a debit.
False (B)
If a purchase is made partially with cash and partially on credit, which accounts are credited?
If a purchase is made partially with cash and partially on credit, which accounts are credited?
cash and accounts payable
When expenses are incurred but not yet paid, the expense account is ______ and a liability account is credited.
When expenses are incurred but not yet paid, the expense account is ______ and a liability account is credited.
What type of account is a note issued to purchase equipment?
What type of account is a note issued to purchase equipment?
When interest on a note is recorded but not yet paid, the cash account is affected.
When interest on a note is recorded but not yet paid, the cash account is affected.
State the formula to calculate interest.
State the formula to calculate interest.
If interest is calculated for 6 months out of a year, the time elapsed is expressed as ______.
If interest is calculated for 6 months out of a year, the time elapsed is expressed as ______.
How is prepaid rent classified in accounting?
How is prepaid rent classified in accounting?
When rent is paid in advance, the initial entry is a debit to rent expense and a credit to cash.
When rent is paid in advance, the initial entry is a debit to rent expense and a credit to cash.
After a portion of prepaid rent has been used, which account is debited in the adjusting entry?
After a portion of prepaid rent has been used, which account is debited in the adjusting entry?
To find the monthly rent expense, divide the total prepaid rent by the number of ______ it covers.
To find the monthly rent expense, divide the total prepaid rent by the number of ______ it covers.
When are adjusting entries typically recorded?
When are adjusting entries typically recorded?
When cash is collected from a customer for an outstanding accounts receivable, the accounts receivable account is debited.
When cash is collected from a customer for an outstanding accounts receivable, the accounts receivable account is debited.
What happens to the accounts receivable balance when cash is collected from a customer on account?
What happens to the accounts receivable balance when cash is collected from a customer on account?
Collecting cash from a customer who previously had an outstanding accounts receivable results in a debit to cash and a ______ to accounts receivable.
Collecting cash from a customer who previously had an outstanding accounts receivable results in a debit to cash and a ______ to accounts receivable.
Which of the following journal entries correctly records the purchase of supplies with cash?
Which of the following journal entries correctly records the purchase of supplies with cash?
If a company fails to make an adjusting entry for accrued expenses, both liabilities and expenses will be understated.
If a company fails to make an adjusting entry for accrued expenses, both liabilities and expenses will be understated.
If the principal amount of a note is $10,000, the annual interest rate is 5%, and the term is 2 years, what is the total interest due at the end of the term?
If the principal amount of a note is $10,000, the annual interest rate is 5%, and the term is 2 years, what is the total interest due at the end of the term?
Paying for insurance coverage that extends beyond the current accounting period results in a debit to ______.
Paying for insurance coverage that extends beyond the current accounting period results in a debit to ______.
What effect does collecting an account receivable have on the accounting equation?
What effect does collecting an account receivable have on the accounting equation?
An adjusting entry is required when a company receives cash for services that will be provided in the future.
An adjusting entry is required when a company receives cash for services that will be provided in the future.
A company purchased equipment for $50,000 with a down payment of $10,000 and financed the rest with a note payable. Provide the journal entry for this purchase.
A company purchased equipment for $50,000 with a down payment of $10,000 and financed the rest with a note payable. Provide the journal entry for this purchase.
The journal entry to record depreciation expense includes a debit to depreciation expense and a credit to ______.
The journal entry to record depreciation expense includes a debit to depreciation expense and a credit to ______.
A company initially recorded a $1,200 purchase of supplies with a debit to supplies and a credit to cash. At the end of the accounting period, $300 of supplies are still on hand. What adjusting entry should be made?
A company initially recorded a $1,200 purchase of supplies with a debit to supplies and a credit to cash. At the end of the accounting period, $300 of supplies are still on hand. What adjusting entry should be made?
Recording depreciation expense reduces the book value of an asset.
Recording depreciation expense reduces the book value of an asset.
If a company receives $5,000 in advance for services to be performed later, what type of account is credited?
If a company receives $5,000 in advance for services to be performed later, what type of account is credited?
When a business pays rent in advance for three months, it should debit the ______ account.
When a business pays rent in advance for three months, it should debit the ______ account.
How does an accrued revenue adjusting entry affect a company's assets and revenues?
How does an accrued revenue adjusting entry affect a company's assets and revenues?
Making an adjusting entry to accrue salaries expense increases both expenses and liabilities.
Making an adjusting entry to accrue salaries expense increases both expenses and liabilities.
Explain the purpose of making adjusting entries at the end of an accounting period.
Explain the purpose of making adjusting entries at the end of an accounting period.
If a company uses $500 worth of previously purchased supplies, it should debit the ______ account.
If a company uses $500 worth of previously purchased supplies, it should debit the ______ account.
Match the following terms with their descriptions:
Match the following terms with their descriptions:
A company borrows $20,000 on January 1, signing a 6-month note payable with an annual interest rate of 8%. How much interest expense will be recorded on June 30 when the note is due?
A company borrows $20,000 on January 1, signing a 6-month note payable with an annual interest rate of 8%. How much interest expense will be recorded on June 30 when the note is due?
A contra-asset account has a normal debit balance.
A contra-asset account has a normal debit balance.
A company purchased software on January 1 for $3,600 and expects to use it for three years. Assuming straight-line amortization, what is the amortization expense for the first year?
A company purchased software on January 1 for $3,600 and expects to use it for three years. Assuming straight-line amortization, what is the amortization expense for the first year?
Failure to adjust for unearned revenue at the end of an accounting period overstates ______ and understates ______.
Failure to adjust for unearned revenue at the end of an accounting period overstates ______ and understates ______.
Which of the following errors would not be detected by a trial balance?
Which of the following errors would not be detected by a trial balance?
The matching principle dictates that expenses should be recorded in the same period as when cash is disbursed.
The matching principle dictates that expenses should be recorded in the same period as when cash is disbursed.
If a company prepays its insurance for one year on March 1 for $6,000, what is the insurance expense recognized on December 31?
If a company prepays its insurance for one year on March 1 for $6,000, what is the insurance expense recognized on December 31?
A ______ is an accounting report that lists all the balances of all accounts in the general ledger at a specific point in time.
A ______ is an accounting report that lists all the balances of all accounts in the general ledger at a specific point in time.
A business provides a service for $500 for a customer on credit, which of the following describes the correct journal entry?
A business provides a service for $500 for a customer on credit, which of the following describes the correct journal entry?
Flashcards
Supplies in accounting
Supplies in accounting
Assets that increase with a debit entry.
Journal entry for supply purchase
Journal entry for supply purchase
Debit supplies and credit cash or accounts payable.
Recording unpaid expenses
Recording unpaid expenses
Debit the expense and credit the corresponding payable liability.
Formula for calculating interest
Formula for calculating interest
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Time elapsed (interest calculation)
Time elapsed (interest calculation)
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Prepaid rent
Prepaid rent
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Initial entry for prepaid rent
Initial entry for prepaid rent
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Adjusting entry for used rent
Adjusting entry for used rent
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Cash collection from customer
Cash collection from customer
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Journal entry for accrued payroll
Journal entry for accrued payroll
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Study Notes
Journal Entries Practice Problems
- Assets like supplies increase with a debit.
- Purchasing supplies involves debiting the supplies account.
- For purchases made partly with cash and partly on credit, credit the cash account for the cash portion and the accounts payable for the credit portion.
- Unpaid expenses are recorded by debiting the expense account (e.g., payroll expense) and crediting a liability account (e.g., payroll payable).
Interest on Notes
- A note used to buy equipment is a liability.
- Recording accrued but unpaid interest on a note does not involve cash.
- Interest is calculated using: Principal x Interest Rate x Time.
- "Time" is the fraction of the year for which interest is calculated (e.g., 4/12 for 4 months).
Prepaid Expenses
- Prepaid rent is an asset.
- Paying rent in advance requires debiting the prepaid rent account and crediting cash.
- Each month, adjust by debiting rent expense and crediting prepaid rent as the rent is used.
- Monthly rent expense is the total prepaid rent divided by the number of months covered.
Adjusting Entries for Cash Collection
- Adjusting entries are needed as time passes, something is used, or something is received.
- When a customer pays on their account, debit cash and credit accounts receivable.
- Collecting cash lowers the accounts receivable balance.
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