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Adjusting Entries
Determine which two accounting principles form the basis for depreciation. Match the correct accounting principles to the correct location.
Accounting Principles:
- Cost Principle
- Depreciation Expense
- Disclosure Principle
- Supplies Expense
- Matching Principle
- Business Entity
- Accumulated Depreciation
- Insurance Expense
- Supplies
- Prepaid Insurance
- The amount originally paid for the asset remains in the fixed asset ledger account and a seperate account is for accumulated depreciation.
Answer: cost principle
- As a fixed asset is used, some portions are allocated to expense accounts; this allocation is called Depreciation.
Answer: matching principle
- Your books show Supplies at $1,000.00, but when you counted what you have left, the value of what remains in supplies in $200.00. How much has been used or expensed? $800
Complete the adjusting journal entry:
Account Debit Credit $800 $800 Answer:
Account Debit Credit Supplies Expense $800 Supplies $800 - You have some sales that have not been recorded in your books. A total of $1,700 of sales have not been billed to the customers. What two accounts do we need to update?Accounts Receivable and Sales
Complete the adjusting journal entry:
Account Debit Credit $1,700 $1,700 Answer:
Account Debit Credit Depreciation Expense $1,700 Accumulated Depreciation $1,700 - You purchased an annual insurance account on October 1st for $1,200. It is now December 31st and you are checking your books and Prepaid Insurance still shows $1,200.
How much should it show? $900.00 remain because three months have expired.
Complete the adjusting journal entry:
Account Debit Credit $300 $300 Answer:
Account Debit Credit Insurance Expense $300 Prepaid Insurance $300