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Chapter 3: Q7(6)PSA (page 154)

In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank.

A. Current assets

B. Long-term investments

C. Plant assets

D. Intangible assets

E. Current liabilities

F. Long-term liabilities

G. Equity

6. Automobiles

Short Answer

Expert verified

The correct answer is C, Plant assets.

Step by step solution

01

Definition of assets

The resources of any individual or organization that provides monitory benefits to the owners are known as the assets of the organization.

02

Reason of choice

Automobiles are used by the organizations for supporting the production process and it should also be depreciated using the appropriate method of depreciation, hence it should be disclosed under plant asset section.

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Most popular questions from this chapter

Adjusting entries affect at least one balance sheet account and at least one income statement account.

For the entries below, identify the account to be debited and the account to be credited from the following

accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated

Depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense;

Depreciation Expense. Indicate which of the accounts is the income statement account and which is

the balance sheet account.

a. Entry to record revenue earned that was previously received as cash in advance.

b. Entry to record wage expenses incurred but not yet paid (nor recorded).

c. Entry to record revenue earned but not yet billed (nor recorded).

d. Entry to record expiration of prepaid insurance.

e. Entry to record annual depreciation expense.

In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank.

A. Current assets E. Current liabilities

B. Long-term investments F. Long-term liabilities

C. Plant assets G. Equity

D. Intangible assets

12. Salaries payable

Choose from the following list of terms/phrases to best complete the statements below.

a. Fiscal year d. Accounting period g. Natural business year

b. Timeliness e. Annual financial statements h. Time period assumption

c. Calendar year f. Interim financial statements i. Quarterly statements

1. presumes that an organization’s activities can be divided into specific time periods.

2. Financial reports covering a one-year period are known as .

3. A(n) consists of any 12 consecutive months.

4. A(n) consists of 12 consecutive months ending on December 31.

5. The value of information is often linked to its .

Adjusting entries affect at least one balance sheet account and at least one income statement account.

For the entries below, identify the account to be debited and the account to be credited from the following

accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated

Depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense;

Depreciation Expense. Indicate which of the accounts is the income statement account and which is

the balance sheet account.

a. Entry to record revenue earned that was previously received as cash in advance.

b. Entry to record wage expenses incurred but not yet paid (nor recorded).

c. Entry to record revenue earned but not yet billed (nor recorded).

d. Entry to record expiration of prepaid insurance.

e. Entry to record annual depreciation expense.

Question: For each case below, follow the three-step process for adjusting the unearned revenue liability

account on December 31. Step 1: Determine what the current account balance equals. Step 2: Determine

what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get

from step 1 to step 2. Assume no other adjusting entries are made during the year.

a. Unearned Rent Revenue. The Krug Company collected \(6,000 rent in advance on November 1, debiting

Cash and crediting Unearned Rent Revenue. The tenant was paying 12 months’ rent in advance

and occupancy began November 1.

b. Unearned Services Revenue. The company charges \)75 per month to spray a house for insects. A

customer paid \(300 on October 1 in advance for four treatments, which was recorded with a debit to

Cash and a credit to Unearned Services Revenue. At year-end, the company has applied three treatments

for the customer.

c. Unearned Rent Revenue. On September 1, a client paid the company \)24,000 cash for six months of

rent in advance (the client leased a building and took occupancy immediately). The company recorded

the cash as Unearned Rent Revenue.
See all solutions

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