Adjusting Entries and Reconciliations Flashcards

Which reconciling item requires a journal entry in the company's books?

Answer: NSF check charged by the bank

An NSF check appears on the bank statement but not yet in the books, so the bookkeeper must record a journal entry to reduce cash.

A company accrues $1,200 of salaries at year-end. When the salaries are paid in January, which entry is recorded?

Answer: Debit Salaries Payable $1,200; Credit Cash $1,200

When accrued salaries are paid, the liability (Salaries Payable) is debited and Cash is credited; the expense was already recognized in the prior period.

Book value of an asset is best defined as:

Answer: Cost minus accumulated depreciation

Book value equals original cost less all accumulated depreciation recorded to date.

At year-end, supplies on hand total $300. The beginning balance was $800 and $1,000 in supplies were purchased during the year. What is the supplies expense for the period?

Answer: $1,500

Supplies available = $800 + $1,000 = $1,800; ending balance = $300; supplies used = $1,800 − $300 = $1,500.

Which account appears on the balance sheet as a result of recording depreciation?

Answer: Accumulated Depreciation

Accumulated Depreciation is a contra-asset account shown on the balance sheet, offsetting the related asset's cost.

If ending Accounts Receivable on the bank reconciliation exceeds the book balance, the most likely cause is:

Answer: An NSF check not yet recorded in the books

An NSF check reduces the bank balance below the book balance because the book has not yet reversed the original deposit.

Under the accrual basis, revenue from a December service billed in January should be recognized in:

Answer: December, when the service was performed

Accrual accounting requires revenue to be recognized when earned (service performed), not when invoiced or collected.