Adjusting Accounts

Question 1

Revenue recognized in the accounting period in which it is earned

Answer 1

Revenue recognition principle

Question 2

Efforts or expenses be matched with accomplishments (revenue)

(Expenses may not be the same period as revenues)

Answer 2

Matching principle

Question 3

Types of adjusting entries

Answer 3

• prepayments
• accruals
• estimates

Question 4

Pre paid expenses

Answer 4

Asset expense relationship

Assets overstated
Expenses understated

Adjustment
Dr expense
Cr asset

Question 5

Asset expense relationship

Assets overstated
Expenses understated

Adjust
Dr expense
Cr asset

Answer 5

Pre paid expenses

Question 6

Unearned revenue

Answer 6

Prepayment

Liability revenue relationship

Liability overstated
Revenue understated

Adjust
Dr liability
Cr revenue

Question 7

Prepayment

Liability revenue relationship

Liability overstated
Revenue understated

Adjust
Dr liability
Cr revenue

Answer 7

Unearned revenue

Question 8

Accrued revenue

Answer 8

Asset revenue relationship

Assets understated
Revenue understated

Adjust
Dr asset
Cr revenue

Question 9

Asset revenue relationship

Assets understated
Revenue understated

Adjust
Dr asset
Cr revenue

Answer 9

Accrued revenue

Question 10

Accrued expenses

Answer 10

Expense liability relationship

Expenses understated
Liability understated

Adjust
Dr expense
Cr liability

Question 11

Amortization

Answer 11

Expense contra asset relationship

Expenses understated
Assets overstated

Adjust
Dr amortization expense
Cr accumulated amortization

Question 12

Expense contra asset relationship

Expenses understated
Assets overstated

Adjust
Dr amortization expense
Cr accumulated amortization

Answer 12

Amortization