Accounting Wiley Plus Exam #2 Questions With Complete Solutions

Using accrual accounting, expenses are recorded and reported only: correct answer: when they are incurred whether or not cash is paid. Each of the following is a major type (or category) of adjusting entry except: correct answer: earned expenses. Prepaid expenses are: correct answer: paid and recorded in an asset account before they are used or consumed. Adjusting entries affect at least: correct answer: one income statement account and one balance sheet account. Greese Company purchased office supplies costing $4,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,500 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be: correct answer: debit Office Supplies Expense, $2,500; credit Office Supplies, $2,500 The balance in the prepaid rent account before adjustment at the end of the year is $15,000 and represents three months rent paid on December 1. The adjusting entry required on December 31 is: correct answer: debit Rent Expense, $5,000; credit Prepaid Rent, $5,000. Adjustments for unearned revenue: correct answer: decrease liabilities and increase revenues.