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Unformatted text preview: The net amount at whic h an as s et is c arried in the ac c ounting rec ords as dis tinguis hed
from its mark et value.
b. An ac c ounting c onc ept that may jus tify departure from other ac c ounting princ iples for
purpos es of c onvenienc e and ec onomy .
c . The offs etting of revenue with ex pens es inc urred in generating that revenue.
d. Revenue earned during the c urrent ac c ounting period but not y et rec orded or billed, whic h
requires an adjus ting entry at the end of the period.
e. Entries made at the end of the period to ac hieve the goals of ac c rual ac c ounting by
rec ording revenue when it is earned and by rec ording ex pens es when the related goods
and s ervic es are us ed.
f. A ty pe of ac c ount c redited when c us tomers pay in advanc e for s ervic es to be rendered in
g. A balanc e s heet c ategory us ed for reporting advanc e pay ments of s uc h items as
ins uranc e, rent, and offic e s upplies .
h. An ex pens e repres enting the s y s tematic alloc ation of an as s et's c os t over its us eful life. http://ezto.mhecloud.mcg r aw- hill.com/hm_accounting .tpx?todo= pr intview Book value
Matc hing princ iple
Unrec orded revenue
Adjus ting entries
Prepaid ex pens es
None 1/16 1/23/2014 2. Assig nment Pr int View
aw ar d: 1 out of
Sec urity Servic e Company adjus ts its ac c ounts at the end of the month. On November 30, adjus ting entries
are prepared to rec ord:
a . Deprec iation ex pens e for November.
b. Interes t ex pens e that has ac c rued during November.
c. Revenue earned during November that has not y et been billed to c us tomers .
d. Salaries , pay able to c ompany employ ees , that have ac c rued s inc e the las t pay day in November.
e . The portion of the c ompany 's prepaid ins uranc e that has ex pired during November.
f. Earning a portion of the amount c ollec ted in advanc e from a c us tomer, Harbor Res taurant.
Indic ate the effec t of eac h of thes e adjus ting entries on the major elements of the c ompany 's inc ome
s tatement and balanc e s heet—that is , on revenue, ex pens es , net inc ome, as s ets , liabilities , and owners '
equity . Organiz e y our ans wer in tabular form, us ing the c olumn headings s hown and the s y mbols I for
inc reas e, D for dec reas e, and NE for no effec t. The ans wer for adjus ting entry a is provided as an ex ample.
Inc ome Statement
Adjus ting Entry
f Revenue – NE
I Ex pens es Balanc e Sheet
NE Net Inc ome
I As s ets = D
NE Liabilities + NE
D Owners ' Equity
I W orksheet Learning Objective: 04-03 Prepare adjus ting entries
to convert as s ets to expens es . Learning Objective: 04-06 Prepare adjus ting entries
to accrue uncollected revenue. Learning Objective: 04-01 Explain the purpos e of
adjus ting entries . Learning Objective: 04-04 Prepare adjus ting entries
to convert liabilities to revenue. Learning Objective: 04-09 Prepare an adjus ted trial
balance and des cribe its purpos e. Learning Objective: 04-0...
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