Adjusting Entries and Reconciliations Flashcards

Which of the following errors would be revealed by a trial balance?

Answer: A debit posted as $540 instead of $450 with no matching credit correction

A transposition error where debit and credit totals differ will cause the trial balance to be out of balance.

The adjusting entry to record earned revenue that was previously classified as unearned will:

Answer: Decrease liabilities and increase revenue

Converting unearned revenue to earned revenue reduces the liability (Unearned Revenue) and increases revenue.

A bank statement shows a credit memo for $750 representing a note collected by the bank. What entry does the company record?

Answer: Debit Cash $750; Credit Notes Receivable $750

The bank collected the note and deposited the funds, increasing cash and eliminating the receivable.

Reversing entries are typically made on:

Answer: The first day of the next accounting period

Reversing entries are dated the first day of the new period to simplify recording of the subsequent cash transaction.

Which of the following best describes the matching principle as it applies to adjusting entries?

Answer: Expenses should be recognized in the same period as the revenue they help generate

The matching principle requires expenses to be recorded in the period that the associated revenue is recognized.

A bookkeeper records a $200 utility bill payment twice by mistake. What is the effect on the trial balance?

Answer: The trial balance remains in balance

Recording a complete transaction twice (debit and credit each doubled) keeps the trial balance in balance, making the error hard to detect.

A petty cash fund is replenished when the custodian submits receipts. Which account is debited during replenishment?

Answer: The appropriate expense accounts per receipts

Replenishment expenses the individual items supported by receipts; the Petty Cash account balance is not changed unless the fund is being increased or decreased.