Adjusting Entries for Deferrals Flashcards by John Waller | Brainscape

Q

make the adjustments

The purchase of insurance to protect themselves from losses due to fire, theft, and unforeseen events.
Insurance must be paid in advance, often for multiple months.

adjusting entries

A

insurance (premiums) paid in advance is recorded as an increase (debit) in the asset account Prepaid Insurance
at the financial statement date,
increase (debit) Insurance Expense
decrease (credit) Prepaid Insurance for the cost of incurance that has expired during the period

adjusting entries

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

make the adjustments

the purchase of supplies results in

adjusting entries

A

an increase (debit) to an asset account

adjusting entries

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

make the adjustments

an adjusting entry for prepaid expenses results in

adjusting entries

A

Assets: credit adjusting entry (-)
Expense: debit adjusting entry (+)

adjusting entries

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

define

depreciation

adjusting entries

A

the process of allocating the cost of an asset to expense over its useful life

defintions

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

fill in the blank

The period of service is referred to as the ___ of the asset.

adjusting entries

A

useful life

defintions

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

fill in the blank

the acquisition of ____ is/are tantamount to a long-term prepayment for the use of that asset.

adjusting entries for depreciation

A

long-lived assets

adjusting entries for depreciation

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

make the adjustments

adjusting entries for depreciation

adjusting entries for depreciation

A

recognize the cost that has been used (expense) during that period. (debit Depreciation Expense)
report the unused cost (asset) at the end of the period. (credit Accumulated Depreciation—Equipment

adjusting entries for depreciation

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

name the account type

Accumulated Depreciation

adjusting entries for depreciation

A

contra asset account

adjusting entries for depreciation

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

define

contra asset account

adjusting entries for depreciation

A

An account that offsets against an asset account on the balance sheet.

adjusting entries for depreciation

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

credit or debit

the normal balance of a contra asset account

adjusting entries for depreciation

A

credit

adjusting entries for depreciation

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

which is preferable

contra asset account / crediting the asset account

adjusting entries for depreciation

A

the contra account is preferable because it discloses both:
1. the original cost
2. the total cost that has been expensed to date

adjusting entries for depreciation

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

define

book value

adjusting entries for depreciation

A

the difference between the cost of any depreciable asset and its related accumulated depreciation

adjusting entries for depreciation

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

Fill in the blank

Depreciation is a(n) ___ concept

adjusting entries for deferrals

A

allocation

adjusting entries for deferrals

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

(understated / overstated)

Prior to adjustment, what is the typical status of liabilities

adjusting entries for deferrals

A

[liabilities are typically] overstated

adjusting entries for deferrals

How well did you know this?

1

Not at all

2

3

4

5

Perfectly

Q

(understated / overstated)

Prior to adjustment, what is the typical status of revenue

adjusting entries for deferrals

A

[revenues are typically] understated

adjusting entries for deferrals

How well did you know this?

1

Not at all

2

3

4

5

Perfectly