Question

1. Classify each of the following accounts and name the statement it appears on.

State if it is a real account or a nominal account.

1. Unearned Service Revenue

2. Salaries and Wages Expense

            c.    Inventory

            d.   Retained Earnings

2. The journal entry to record a payment on account is:

5.    An adjusting entry should neverinclude

a.   a debit to an expense account and a credit to a liability account.

b.   a debit to an expense account and a credit to a revenue account.

c.    a debit to a liability account and a credit to revenue account.

d.   a debit to a revenue account and a credit to a liability account.

WHY????                                                                      Page number from notes or text _________

6.   Write the adjusting entry to accrue an expense:

Show how the failure to properly record an adjusting entry to accrue an expense would affect the baby formulas:

7.    At the time a company prepays a cost

            a.   it debits an asset account to show the service or benefit it will receive in the future.

            b.   it debits an expense account to match the expense against revenues recognized.

            c.    its credits a liability account to show the obligation to pay for the service in the future.

            d.   it credits an asset account and debits an expense account.

WHY?                                                               And what page number did you find this on? ________

8.    Why are certain costs of doing business capitalized (recorded as assets) when incurred and then depreciated or amortized over subsequent accounting cycles?

                                                                        And what page number did you find this on? ________

9.    Moye Company recorded journal entries for the declaration of $250,000 of dividends, the $160,000 increase in accounts receivable for services rendered, and the purchase of equipment for $105,000.

Write out the three journal entries:

What impact do these entries have shareholders’ equity? (always think of the baby formulas)

10.  Write out the closing entries for                                                      page number____________

            a.   Dividends

            b.   Expense

            c.    Revenue

            d.   Retained earnings

11. When converting from cash-basis to accrual-basis accounting, and converting from cash paid for operating expenses to determine accrual-basis operating expenses, show how the beginning and ending balances of the two related accounts would be added or subtracted:

                                                                        And what page number did you find this on? ________

Answer 1

First 3 questions are being answered here:

1. (a) Unearned service revenue: Personal account. It appears in Balance sheet.

(b) Salaries & wages expense: Nominal account. It appears in Income statement.

(c) Inventory: Real account. It appears in Balance sheet.

(d) Retained earnings: Personal account. It appears in Balance sheet.

2. Option (a) is correct

Adjusting entry to accrue an expense is:

Debit Expense

Credit Liability

3. Option (a) is correct

At the time a company prepays a cost, it debits an asset account to show the service or benefit it will receive in the future.