Balance day adjustments

Question 1

Balance day adjustments

Answer 1

Adjustments made to revenue and expense accounts at the end of a period so that they equal revenue earned and expenses incurred for a period
- Done to satisfy going concern, period, accrual basis assumptions

Question 2

Prepaid expenses

Answer 2

Expenses paid during the period, but not yet used

• Current asset

Question 3

Accrued expenses

Answer 3

An expense that has been used but hasn’t been paid for
- Current liability

Question 4

Accrued revenue

Answer 4

Revenue that has been earned, but not yet received (not accounts receivable)
- Current asset

Question 5

Unearned (prepaid) revenue

Answer 5

The business has received money from a customer, but has not yet given the customer any inventory/service
- Current liability

Question 6

Trial balance

Answer 6

A list of all general ledger accounts and their balances

Question 7

Post adjustment trial balance

Answer 7

A list of all ledger accounts and their balances once all balance day adjustments have been recorded

Question 8

Errors that won’t be identified in post-adjustment trial balance

Answer 8

• Reversal of debits and credit entries
• Omission of transaction all together

Question 9

Errors that will be identified in post-adjustment trial balance

Answer 9

• Double debit/credit entry
• Different dollar amounts recorded on each side
• Only recording the debit or credit