Adjusting entries are often classified as accruals, deferrals, and other. When the cash is received or paid is not relevant for reporting revenues and expenses. Adjusting entries are made so that the financial statements reflect the accrual basis of accounting. The accrual basis of accounting requires that revenues be reported on the income statement when they are earned, and expenses are reported on the income statement when they best match the revenues or expire.

Reinforce your accounting and bookkeeping knowledge with these free crossword puzzles with answers. If you have any difficulty answering the questions, learn more about this topic by reading our mini-lectures covering introductory to Adjusting Entries.

Sample Adjusting Entries Questions:

1)  Customer deposits for future services will be listed under which financial statement category? (assets, liabilities, expenses, etc.)

2)  The accounting principle that requires expenses to be reported on the income statement when they occur rather than when they are paid.

3)  A prepaid expense is reported as which type of account? (asset, liability, expense, etc.)

4)  Depreciation is the systematic ________________ of the cost of an asset (used in a business) to expense over the useful life of the asset. (It is not a valuation technique.)

5)  The time _________ assumption is also known as the periodicity assumption. It means that an ongoing business can be divided into years, quarters, months, etc.

6)  On December 1 a company purchased $700 of supplies—approximately a three-month supply. On December 1 the asset Supplies was debited for $700. On December 31 the company needs to prepare a prepayment-type ___________ entry.

7)  Adjusting entries are used to convert accounting information from the cash basis of accounting to the ______________ basis of accounting.

8)  The typical number of accounts involved in an adjusting entry.

9)  An adjusting entry to recognize that part of a customer's prepayment has been earned will include a __________ to a liability account.

10)  The accrued interest that the bank has earned but has not yet ______________ is reported as a debit balance in the account Interest Receivable.

Go Top