6.1 - Adjusting Entries

Question 1

An adjusting entry

Answer 1

It assigns amounts of revenue or expense to the appropriate

Question 2

Accounting period

Answer 2

before finalizing the books for the fiscal period

Question 3

Supplies are both

Answer 3

asset and expense

It is allowed to become inexact during the accounting period

Question 4

When purchased, supplies are recorded as

Answer 4

assets

BUT as they are used up, there are no accounting entries made to record the usage (expense)

Question 5

How to calculate the worth of the supplies USED

Answer 5

• starting supplies
• add purchased supplies
• subtract inventory of supplies currently (end of month)
• the difference is the adjusting entry

Question 6

A prepaid expense

Answer 6

is when you’ve paid for something in advance

ex: prepaid insurance or rent

Question 7

Prepaid stuff are

Answer 7

assets

Question 8

RECALL – The “Matching Principle” (GAAP)

Answer 8

We must MATCH expenses with the revenues that they earn

Question 9

If you receive a late cell phone bill and utilities bill

Answer 9

then you must record them as adjusting entries

Question 10

Type of adjusting entry for Supplies Expense
Supplies

Answer 10

supplies

Question 11

Type of adjusting entry for
Insurance Expense
Prepaid Insurance

Answer 11

Prepaid expense

Question 12

Type of adjusting entry for
Phone Expense
A/P

Answer 12

Late bill