Question

Clicker Assignment: Ch. 4 Clicker questions will be asked in class based on your completion of this preparation guide. Example in class question: What is the answer to Question 2? You will not have time to complete this guide in class! 1. The revenue recognition principle states that companies recognize revenue in the accounting period in which 2. List the two subcategories of deferral accounts and the two subcategories of accrual accounts: and Deferrals: Accruals: and 3. Smith Company received a deposit for work in advance for $3,000 in May. a. Record the transaction for this deposit received in May. Assets Liabilities Equity b. During the month of June, some work was completed and $700 can now be recorded as revenue. What adjustment should be recorded to the accounting equation to properly state the accounts at June 30 (include account and dollar amount)? Assets Liabilities Equity

Answer 1

1. The revenue recognition principle states that companies recognize revenue in the accounting period in which revenue and expenses are recognized
2. List of two subcategories of deferred accounts and the two subcategories of accrual accounts

Deferrals-Deferred Tax Assets and Deferred Tax liability

Accruals Revenue and Expenses

3. Smith Company received a deposit for work in advance for $ 3000 in May.

1. Record the transaction for this deposit received in May

Assets	Liabilities	Equity
	$ 3000

2. During the month of June, some work was completed and $ 700 can now be recorded as revenue. What adjustment should be recorded to the accounting equation to properly state the accounts at June 30 ( include account and dollar amount)

Assets	Liabilities	Equity
$ 700

3. If the above adjustment is not recorded at the end of the month, June revenue will be -deferred-liabilities will be-shown in the balance sheet and net income will be deferred tax assets( indicate understated or overstated for all three)

4. The supplies account of ABC Corp. On December 31 shows a balance of $ 4000. An actual count of the supplies shows the balance is $ 3400

1. What should be recorded to the accounting equation to adjust the balance in the supplies account to properly reflect the balance at December 31?

Assets	Liabilities	Equity
$ 600

2. If the transaction is not recorded at the end of the month, December assets will be----------expenses will be-deferred tax liabilities and net income will be deferred tax assets (indicate understated or overstated for all three)

5. At the end of the October, XYZ Corp. Owes employee wages of $ 750, but has not paid them (they will be paid in Nov.)

1. What should be recorded to the accounting equation to account for the wages that are owed?

Assets	Liabilities	Equity
	$ 750

2. If the above transaction is not recorded at the end of the month, October expenses will be---deferred tax-liabilities will be swown in the Balance sheet and net income will be deferred tax assets(indicate understated or overstated for all three)