For each of the following independent situations, determine the effect of ignoring the required 12/31 year-end adjusting entry. Would assets, liabilities, and equity be understated (U) or overstated (O) if the entry is not made? If there would be no effect, leave the cell blank.
| Assets | Liability | Equity | |
|---|---|---|---|
| Cash was received on Dec. 1 when a 2-year lease was signed. Rent revenue was credited on that date. | — | + | |
| Interest is incurred but not yet paid on a long-term note payable | — | + | |
| Equipment with a 5-year life has been used 1 year | — | + | |
| One-half of a prepaid insurance policy has expired | + | + |
| Click Here to View All Chapter 3 Problems at Once | View | ||
| 1 | Adjusting Entry Identification | Easy | |
| 2 | Revenue Recognition | Easy | |
| 3 | Closing Journal Accounts | Easy | |
| 4 | Revenue Recognition | Easy | |
| 5 | Revenue Journal Entry | Easy | |
| 6 | Adjusting Entry - Salaries Payable | Moderate | |
| 7 | Adjusting Entry - Wage Expense | Moderate | |
| 8 | Revenue Recognition | Moderate | |
| 9 | Prepaid Rent | Moderate | |
| 10 | Determining Net Income From Transactions | Moderate | |
| 11 | Determining Net Income From Journal Entries | Moderate | |
| 12 | Closing Process | Moderate | |
| 13 | Adjusting Journal Entries | Hard | |
| 14 | Adjusting Journal Entries | Hard | |
| 15 | Revenue and Expense Recognition | Hard | |
| 16 | The Effect of Transactions | Hard | |
| 17 |
When You Forget to do Adjusting Entries
You are here. |
Hard | |
| 18 | Year End Closing & Account Classification | Hard |
| 1 | Cash vs. Accrual Accounting | 7:21 | |
| 2 | Expense Recognition | 8:07 | |
| 3 | Accruals and Deferrals | 15:07 | |
| 4 | What is an Adjusting Entry? | 4:11 | |
| 5 | Adjusting Entry: Supplies | 1:54 | |
| 6 | Adjusting Entry: Wages | 4:52 | |
| 7 | Adjusting Entry: Unearned Revenue | 2:11 | |
| 8 | Adjusting Entry: Interest | 2:03 | |
| 9 | Contra-accounts | 4:40 | |
| 10 | Depreciation | 7:10 | |
| 11 | The Closing Process | 10:37 |