Chapter 5
The Accounting Cycle: Adjustments
learning OBJECTIVES
LO 1
Describe the purpose of adjustments
LO 5
Prepare adjusting entries for prepaid expenses
LO 2
Prepare adjusting entries for accrued revenue
LO 6
Prepare adjusting entries for depreciation
LO 3
Prepare adjusting entries for accrued expenses
LO 7
Prepare an adjusted trial balance
LO 4
Prepare adjusting entries for unearned revenue
LO 8
escribe ethics and internal controls related to
D
adjusting entries
Access ameengage.com for integrated resources including tutorials, practice exercises, the digital textbook and
more.
Assessment Questions
AS-1
LO 1
What is an accounting period?
AS-2
LO 1
Is a fiscal year always the same as a calendar year? Explain how a natural business year is related to a fiscal year.
AS-3
LO 1
Why must adjustments be made at the end of the accounting period?
AS-4
LO 1
What does accrual-based accounting state regarding revenue and expenses?
169
Page 173
Dashed Line=Trim
Solid Line=Bleed Allowance
Output Date: Mar_08_2018
Job Number: 562735
Chapter 5
AS-5
The Accounting Cycle: Adjustments
LO 1
What are the five broad categories of adjusting entries?
AS-6
LO 2
Define accrued revenue.
AS-7
LO 2
When making an adjustment to record accrued revenue, which accounts are used and how are they affected?
AS-8
LO 3
Define accrued expenses.
AS-9
LO 3
When making an adjustment to record accrued interest on a bank loan, which accounts are used and how are
they affected?
AS-10
LO 4
When making an adjustment to record unearned revenue that is now earned, which accounts are used and how
are they affected?
AS-11
LO 5
When making an adjustment to record the used portion of prepaid insurance, which accounts are used and how
are they affected?
AS-12
LO 6
When making an adjustment to record depreciation on equipment, which accounts are used and how are they
affected?
170
Page 174
Dashed Line=Trim
Solid Line=Bleed Allowance
Output Date: Mar_08_2018
Job Number: 562735