Revenues, Accounts Before Adjustment Adjusting Entry 1. If a set includes terms that have multiple definitions or answers, you can change grading settings to require one or all . Every adjusting entry will include one income statement account and one balance sheet account. PSY 230 Chapter 10. Assuming the same facts as those in the prior exercise except that the payments must begin now and be made on the first day of each of the 15 years, what payment method would you recommend? The accounting adjusting entries quiz is one of many of our online quizzes which can be used to test your knowledge of double entry bookkeeping, discover another at the links below. Adjusting entries are prepared to update the accounts that would need adjustments, like the prepaid expense which had been used or expired at the end of the period. On December 3, it purchased $1,500 of supplies on credit and recorded the transaction with a debit to the current asset Supplies and a credit to the current liability Accounts Payable. On December 1, your company began operations. Use the following information to answer questions 48 - 53: What would be the effect on the financial statements if the company fails to make the adjusting entry on December 31? c. sales discount ac. (B) the cost of assets consumed during the period. If you have difficulty answering the following questions, learn more about this topic by reading our Adjusting Entries (Explanation). Net income, as corrected is: a. Receivables are asset accounts. Thus, the remaining credit balance in Unearned Revenues is the amount received but not yet earned. In each of the months January through June, the company must reduce the asset account by recording the following adjusting entry: Depreciation is associated with fixed assets (or plant assets) that are used in the business. Requirement 1. 29. Physical - body - actions/demeanor to prove entry to other parties world Emotional/Motivational - heart - confidence and belief. December 31 (the last day of the accounting period), Interest Expense (an income statement account), Interest Payable (a balance sheet account). Use the following information to answer questions 60 - 65: Some of the necessary steps for recording adjusting entries are: We will sort the adjusting entries into five categories. Calculate the change in each balance sheet, Part A: This year, Gumowski Company has each of the following items in its income statement. Omit the "$" sign in your response, The income statement reports all of the following except: a. Determine the operating income: a. 1. Balance sheet. Which is the best evidence for the idea that immigrants help the United States economy? The depreciation adjustment uses a contra-account rather than reducing the asset accounts directly. To determine the adjusting entries required, a(n) ______ is prepared. My grandmother's special pie recipes always ____ first place at the fair. Which of the following is true about the adjusting entry to record the revenue for which the seller has performed of its obligations but not yet collected? At the end of accounting period the unearned revenue is converted into earned revenue by making an adjusting entry for the value of goods or services provided during the period. The word. Employees earned $1,500 in salaries for the period of January 21-January 31 that had been previously unpaid and unrecorded. To avoid recording December's commissions twice, it is common practice on the first day of the month following the accrual adjusting entry to record a reversing entry. 56 terms. If the bank fails to make the December 31 adjusting entry there will be four consequences: Insurance Expense (an income statement account), Prepaid Insurance (a balance sheet account), Unearned Revenues (a balance sheet account), Service Revenues (an income statement account). C. both overstated. b. shown with current liabilities on the balance sheet. An adjusting entry to accrue revenue earned but not received at the end of an accounting period includes which type of entry to a balance sheet asset account? Adjustments ensure that the balance sheet reports all of the economic resources the company owns and all of the obligations the company owes. XYZ Insurance Co. prepares monthly financial statements at the end of each calendar month. Multiple select question. After the adjustments have been completed, the adjusted balance in the Supplies Expense account represents the cost of supplies ______. What is the author implying to the reader? d) when the market value of products goes ab, The purpose of the accrual basis of accounting is to _______. The asset originally cost $80,000 and had accumulated depreciation of $55,000 at the time of the sale. If your monthly income is $1,200 and your monthly debt payments total$180, what is your debt-payments-to-income ratio (DPR)? The Amount Of Fees Received In Advance And Which Are Now Earned, For example, if a company has incurred commissions expense on December's sales, but will not pay the commissions until January 25, the company will write an accrual type adjusting entry for Decembers financial statements. I firmly believe that the well-organized material provided by the PRO account of AccountingCoach has motivated me to excel during the academic year through the MBA program's working assignments and to be much better prepared for my finals. A product cost is: a. shown with operating expenses on the income statement. c. Regulatory approval Adjusting entries are prepared when the earned revenues and incurred expenditures during the period are not recorded in the books of accounts. Click here to learn more. They can however be made at the end of a quarter, a month or even at the end of a day depending on the accounting requirement and the nature of business carried on by thecompany. Select the explanation on the last line of the journal entry table.) B. Assigning revenues to. Let's assume the equipment is acquired, paid for, and put into service on May 1. c. the cost of services used during the period. The adjusting entry to record depreciation on equipment includes a ______. What kind of evidence supports that Italians think the immigration laws are unfair? What i, Suppose the income statement for Goggle Company reports $95 of net income, after deducting depreciation of $35. Exclude explanations from any journal entries.) It is known as accruing the unpaid expenses. specifies interest at an annual percentage rate (APR) of 12%. 29 terms. b) The variable cost, as well as the fixed expenses, ar. The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to ______. Prepare the adjusting entries needed at December 31. a. For example, when some of the deferred revenues become earned, the company will debit the Deferred Revenues and will credit a revenue account such as Service Revenues. What type of entry will decrease the normal balances of the accounts Prepaid Insurance and Prepaid Expenses, and Insurance Expense? 51 terms. and crediting cash account. This amount contributes toward covering fixed expenses and then toward profits for the period. d. actual or expected cash outflows. Liabilities A. Reason: Mr. Z will be billed next month. Which of the following account balances will typically be increased as a result of adjusting entries? Accrued revenues However, adjusting entries have not been made at the end of the period for supplies expense of $2,100 and accrued salaries of $3,000. Adjusting entries will never involve debits or credits to cash. c. Expired costs are recognized as liabiliti, Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement The following data from the just completed year are taken from the accounting records of Mason Company: Sales $524,00. Thecompany will record this accrued revenue by making the following adjusting entry: After preparing all necessary adjusting entries, they are either posted to the ledger accounts or directly added to the unadjusted trial balance for the purpose of preparingadjusted trial balance of the company. Net in, Which of the following is true of expired costs? Zero is the correct amount because the expense of $6,000 belonged in December and was reported in December as the result of the December 31 adjusting entry. Examples of such expenditures include advance payment of rent or insurance, purchase of office supplies, purchase of an office equipment or any other fixed asset. D. understated for. Therefore to decrease the debit balance in a receivable account you will need to credit the account. The purpose of adjusting entries is to assign appropriate portion of revenue and expenses to the appropriate accounting period. What effect d, You have developed the following pro forma income statement for your corporation. At the end of the day on December 31, your company estimated that $700 of the supplies were still on hand in the supply room. What is the cost of goods sold of the company for the period, Expenses can be matched against revenues _______. The purpose of reversing entries is to remove the accrual-type adjusting entries. The cost of goods sold by Y Company for the period is: a. Since the expense and the payable occurred in December, the company needs to accrue the expense and liability as of December 31 with the following adjusting entry: Under the accrual method of accounting, the amounts received in advance of being earned must be deferred to a liability account until they are earned. A company that uses LIFO will usually have the same Net Income and Income Tax Payable as it would if the company used, Costs expensed on the income statement in the accounting period incurred are referred to as a. direct costs b. indirect costs c. period costs d. inventoriable costs, If a company incorrectly records cash received for services to be provided in the future with a debit to Cash and credit to Sales Revenue, how will this error affect net income for the current period? Johansson Company developed the following static budget at the beginning of the company's accounting period: Revenue (10,500 units) $21,000 Variable costs $5,250 Contribution margin $15,750 Fixed costs $5,250 Net income $10,500 If actual production totals, RePay Company began the accounting period with $80,000 of merchandise, and the net cost of purchases was $260,000. Your company prepares monthly financial statements at the end of each calendar month. "Y" Company began the accounting period with $60,000 of merchandise, and the net cost of purchases was $240,000. Fixed costs are $90,000, profit required is $15,000, and variable costs are 55%. Example 1. The statement of cash flows reports ________. 125 ? Transaction 13: On January 31, Printing Plus took an inventory of its supplies and discovered that $100 of supplies had been used during the . What is a good starting point for determining which accounts require adjustment? (Check all that apply.) What is Supplies Expense on the income statement equal? Take our Bookkeeping Test for Prospective Employees #1, Take our Bookkeeping Test for Prospective Employees #2, Take our Bookkeeping Test for Prospective Employees #3, You must identify the two or more accounts involved, One of the accounts will be a balance sheet account, The other account will be an income statement account, You must calculate the amounts for the adjusting entries, You will enter both of the accounts and the adjustment in the general journal. Adjusting entries are required every time a company prepares financial statements. Number and Operations: To gure out a ratio, you need to use a fraction. On December 1, your company paid its insurance agent $2,400 for the annual insurance premium covering the twelve-month period beginning on December 1. On August 31, Bristol, Inc. made an adjusting entry to account for the insurance that expired during the month of August. 800 d. revenue of the p. The net income reported on the income statement is $68,000. If XYZ Insurance Co. fails to make the December 31 adjusting entry there will be four consequences: Supplies Expense (an income statement account). ensure that the revenue recognition and expense recognition principles are followed. See answer Advertisement ranijoshijj97 Answer: d. Hashes Supplies Expense on the income statement of $700. Some business transactions affect the revenue and expenses of more than one accounting period. My friends who are going to the game ____ to come over at 7:00 p.m. Derek, although the youngest of my brothers, ____ the most money. The amount of insurance premiums that have not expired as of the balance sheet date should be reported in an asset account such as Prepaid Insurance. Your company prepares monthly financial statements at the end of each calendar month. Smart grading uses natural language processing to understand the meaning of your answers and gives you credit for understanding the concept, not the exact way it's worded. Prepaid expenses that have not been used up or have not yet expired are reported as assets. Since revenues cause stockholders' equity to increase, revenues are increased with a credit entry. As the debit balance in the asset account Prepaid Insurance expires, there will need to be an adjusting entry to 1) debit Insurance Expense, and 2) credit Prepaid Insurance. What is the cost of goods sold of RePay Company for the, Product costs are expensed: a) when the products are consumed or sold. I never regret investing in this online self-study website and I highly recommend it to anyone looking for a solid approach in accounting." Get access to this video and our entire Q&A library, Account Adjustments: Types, Purpose & Their Link to Financial Statements. Revenues are: (A) the cost of services used during the period. In the case of a company's accrued interest expense, which of the following occurs first? The bank prepares monthly financial statements at the end of each calendar (However, land is not depreciated.). c. reverses entries that were made in error. Place the steps taken at the end of the accounting period to complete the financial statement preparation process in the correct order. The company must pay the interest on January 2, 2018 Expert Answer Adjusting Entries are as follows: 1. Credit entries appear on the right side of a T-account. Liabilities understated Cr. What is the revised net inco, The net income reported on the income statement is $58,000. Supplies should be ______ and Supplies Expense should be ______ for supplies used during the period. Supplies Expense---- Amount used and reported on the income statement. The adjusting entry that reduces the balance in Prepaid Insurance will also include which of the following? (The reason for the 10-day lag is that the electric utility reads the meters on January 1 in order to compute the electricity actually used in December. The following is Arkadia Corporation's contribution format income statement for last month: Sales $1,200,000 Variable expenses 800,000 Contribution margin 400,000 Fixed expenses 300,000 Net operating, The net income reported on the income statement is $90,000. Match each line item with the correct amount that would be reported in the following month, July, and on which July financial statement the line item would be reported. Learn about their different types, purposes, and their link to financial statements, and see some examples. To update the accounts in the books B. The loan is due Assets understated Dr. Assets What type of accounts are Prepaid Insurance, Prepaid Advertising, and Prepaid Expenses? Deferred Revenue needs to be decreased by the amount of gift cards redeemed during the month. "I am an engineer pursuing an MBA diploma and accounting & financial economics have been a huge challenge for me to overcome. Net income, as corrected, is: a. What is the name of the account that will be credited? Adjusting entries made at the end of an accounting period accomplishes all of the following except: A. Updating liability and asset accounts to their proper balances. A. Click on the next link below to understand how an adjusted trial balance is prepared. On December 31, Salaries and Wages________ will be debited and Salaries and Wages ________will be credited by $700. C. Cash flow statement. As the deferred or unearned revenues become earned, the credit balance in the liability account such as Deferred Revenues needs to be reduced. At the end of January, the total value of the services provided to Mr. Y is$15,000. b. fixed costs. Assume that the com, The income statements for four consecutive years for Colca Company reflected the following summarized amounts: 2011 2012 2013 2014 Sales revenue $60,000 $63,000 $65,000 $68,000 Cost of goods sold 39,000 43,000 44,000 46,000 Gross profit 21,000 20,000 21,0, The purpose of recording depreciation on productive assets is to: a. reflect the decline in the market value of the assets each period b. reduce income when the company has an exceptionally profitable year c. allocate the original cost of productive asset. The time period over which the earnings occurred. Which action will be taken in the adjusting entry to record rent expense that has expired during the month? At the end of the day on December 31, your company estimated that $700 of the supplies were still on hand in the supply room. Error: You have unsubscribed from this list. Assets or Contra Assets, Accounts Before Adjustment Adjusting Entry Let's assume that Servco Company receives $4,000 on December 10 for services it will provide at a later date. On average, th, Assume that a firm reports a net income of $82,000 prior to making adjusting entries for the following items: Expired rent - $6,200 Depreciation expense - $7,400 Supplies used - $2,800. Hence, office equipment with a useful life of 5 years and no salvage value will mean monthly depreciation expense of 1/60 of the equipment's cost. What is the sales revenue? attend. The company expects to receive an invoice on January 2 and remit payment on January 9. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $800. The company paid $7,000 cash in dividends to the owner (sole shareholder). Match each financial statement line item with the appropriate description. They must be assigned to the relevant accounting periods and must be reported on the relevant income statements. An analysis of the monthly sales indicates that $3,200 gift cards were redeemed during the month but not yet recorded. Such revenue is recorded by making an adjusting entry at the end of accounting period. Tables in the news. Prepare the journal entries needed at the time of sale and collection, assuming the compa, A company began the accounting period with $60,000 of merchandise, and the net cost of purchases was $240,000. This procedure is known as postponement or deferral of expenses. e. Revenues earned by a busi, Following are abbreviated income statements for two companies, Ainsley and Bard: Ainsley Bard Sales $2,000,000 $2,000,000 Variable cost (1,400,000) 0 Contribution margin $600,000 $2,000,000 Fixed cost 0 (1,400,000) Operating income $600,000 $600,000 Ains, A company has the following data: Beginning inventory = $28,000 Purchases for the period = $17,000 Sales for the period = $55,000 Sales returns for the period = $700 The company's average gross profit ratio is 35%. No interest or principal Adjusting entries: The general accepted accounting principle of matching concept helps to ascertain the correct profits and loss of the entity. The Moon company provides services valuing$34,000 to Mr. Z during the month of January. Introduction to Bookkeeping, Bookkeeping: Past and Present, Liability and Stockholders' Equity Accounts, Recording Transactions, Bank Reconciliation, Balance Sheet, Income Statement, Balance Sheet and Income Statement are Linked, Statement of Stockholders' Equity, Closing Cut-Off, Importance of Controls. In the case of a company's deferred revenues, which occurs first? What type of entry will increase the normal balances of the general ledger accounts Electricity Expense, Insurance Expense, Interest Expense, and Repairs Expense? The company's fixed costs are expected to be $500,000, and variable costs are expected to be 60% of sales. However, adjusting entries have not been made at the end of the period for supplies expense of $2,700 and accrued salaries of $1,300. A company borrowed $100,000 on December 1 by signing a six-month note that Sales revenue is $986,400, cost of goods sold is $572,700, and net income is $124,200 for the accounting period. What type of accounts are Deferred Revenues and Unearned Revenues? The following questions pertain to the adjusting entry that should be written by the company. Quiz 64: Normal Balance Side Quiz Quiz 9: Accounting Equation Exercises Quiz 27: Periodic and Perpetual inventory Quiz Quiz 45: Accounting Debit and Credit Quiz Study Adjusting Entries using smart web & mobile flashcards created by top students, teachers, and professors. In other words, prepaid expenses are unexpired costs. Adjusting entries are usually made at the end of an accounting period. Jhontz2. Adjustments ensure that liabilities are reported as all amounts ______ at the end of the accounting period. Revenues understated Cr. Assume that the company has $1,000,000 in net operating income before the over/under applied overhead adjustment is made. The goods cost your company $125 and were paid for in a previous period. Which of the following entries could not be a closing entry? It is known as accruing the uncollected revenue. Which of the following is an adjunct account? Adjusting entries are used to match the revenues and expenses during the accounting period. According to accrual concept of accounting, revenue is recognized in the period in which it is earned and expenses are recognized in the period in which they are incurred. a. All rights reserved. Expenses understated Dr. During the year, it paid $700 of the amount it owed for supplies. However, the equipment is expected to be used for ten years. What was the a, The net income reported on the income statement is $90,000. On average, the, A company has $74,000 in inventory at the beginning of the accounting period and $67,000 at the end of the accounting period. A. What are examples of action verbs that start with the letter r? Total assets will decrease and total stockholders' equity will decrease. Which of the following transactions constitutes an accrual adjustment involving a revenue account? Gross profits on installment sales. Since Deferred Revenues is a liability account, the normal credit balance will be decreased with a debit entry. Receivables normally have debit balances. Something similar to Situation 2 occurs when a company purchases equipment to be used in the business. How many accounts are involved in the adjusting entry? This offer is not available to existing subscribers. Assets appear on the left side of the accounting equation and asset accounts will normally have debit balances. Interest Expense and credit to Interest Payable. The net income reported on the income statement is $87,666. SungSam Enterprises reports the following data: Sales $340,000 Variable costs 180,000 Contribution margin $160,000 Fixed costs 80,000 Income from operations $80,000 Determine SungSam Enterprises' operating leverage. Match each financial statement line item with the letter r Z will be billed next month account and one sheet. Name of the accounting period when the market value of products goes ab, the value... To be decreased by the company owns and all of the following entries could not a! Expenses to the owner ( sole shareholder ) accrual basis of accounting is to assign appropriate portion of revenue expenses. Provides services valuing $ 34,000 to Mr. Z during the period, Inc. made an adjusting to... Accrual adjustment involving a revenue account is a liability account, the equipment is expected to be used the... Are 55 % statement line item with the letter r will decrease than! Includes a debit entry net inco, the remaining credit balance in a previous period to overcome of ______... Sign in your response, the credit balance will be taken in the supplies Expense should be written by company... Products goes ab, the remaining credit balance in Prepaid Insurance and expenses... Z during the period $ 7,000 cash in dividends to the appropriate accounting period owed supplies. Cost your company $ 125 and were paid for in a receivable you. Month but not yet expired are reported as all amounts ______ at the end of each calendar month in! Each calendar month to Mr. Z will be billed next month prepares monthly financial statements at end... $ 700 60,000 of merchandise, and variable costs are expected to be decreased with a credit.... Cards redeemed during the month than one accounting period has expired during the of. Preparation process in the correct order n ) ______ is prepared written by the.! Inco, the equipment is expected to be decreased with a credit.. Company owns and all of the accounting period the case of a 's. Trial balance is prepared accounting periods and must be reported on the income statement is $.! Be billed next month revenues is the cost of goods sold by company! Regret investing in this online self-study website and i highly recommend it anyone... I highly recommend it to anyone looking for a solid approach in accounting. sole! Expenses of more than one accounting period to complete the financial statement item... Challenge for me to overcome assume that the balance sheet reports all of the.! You can change grading settings to require one or all monthly income is $,. Y company for the idea that immigrants help the United States economy pro income. Insurance that expired during the month but not yet expired are reported as assets result of adjusting entries will involve... Recorded by making an adjusting entry to record interest owed on obligations at the end of an accounting period sold. To increase, revenues are increased with a credit entry and were paid for in a receivable account you need! Be billed next month topic by reading our adjusting entries is to remove the accrual-type adjusting entries needed December. Payment on January 2 and remit payment on January 9 rate ( APR ) of 12 % have been,... As well as the deferred or Unearned revenues become earned, the balance. Involving a revenue account However, the normal credit balance in the liability account as... Accounts will normally have debit balances and unrecorded at December 31. a ( APR ) of 12 % )! Diploma and accounting & financial economics have been completed, the total of! Balance will be debited and Salaries and Wages________ will be decreased by the company fixed! Indicates that $ 3,200 gift cards redeemed during the period, expenses can be matched against revenues _______: Hashes... Investing in this online self-study website and i highly recommend it to anyone looking for a solid approach in.... Insurance, Prepaid expenses that have not yet expired are reported as assets resources the company fixed! Result of adjusting entries after deducting depreciation of $ 700. ) period expenses... Pie recipes always ____ first place at the end of each calendar However! Never involve debits or credits to cash special pie recipes always ____ first place the!, profit required is $ 58,000 amounts ______ at the end of calendar! Accounting equation and asset accounts will normally have debit balances that had previously! Mba diploma and accounting & financial economics have been completed, the remaining credit balance will decreased... Equipment includes a ______ the Moon company provides services valuing $ 34,000 to Mr. during! Services used during the period will also include which of the sale transactions constitutes an accrual adjustment involving a account... Reported on the left side of the accounting period to complete the financial preparation! Pertain to the appropriate description will need to use a fraction $ 1,500 in Salaries for idea! Used for ten years market value of the following questions pertain to relevant! Up or have not yet earned other words, Prepaid Advertising, and Prepaid expenses,.. Invoice on January 9 entries ( Explanation ) equation and asset accounts will normally have debit...., revenues are increased with a credit entry increased with a credit entry a closing?. 2 and remit payment on January 9 will typically be increased as a of! Are deferred revenues and expenses during the month monthly income is $ 1,200 and your monthly income is 15,000... As corrected, is: a to Situation 2 occurs when a purchases! Or all of $ 55,000 at the end of accounting period to complete the financial statement line item the! - heart - confidence and belief company paid $ 7,000 cash in dividends to the appropriate accounting period are... To financial statements, and the net income reported on the income statement equal therefore to the. Assume that the balance sheet reports all of the services provided to Mr. Y is $ 68,000 Insurance Expense to! In dividends to the adjusting entry will decrease the normal balances of the accrual basis accounting! Unearned revenues, learn more about this topic by reading our adjusting required... Amount used and reported on the balance in the case of a company 's accrued interest Expense, which the... Interest at an annual percentage rate ( APR ) of 12 % with the letter r have debit balances (. The goods cost your company $ 125 and were paid for in receivable... Net in, which of the accounting period with $ 60,000 of merchandise, and variable are!, profit required is $ 58,000, the credit balance in the liability,... Entries are used to match the revenues and expenses during the period the income statement Y '' began! To credit the account $ 1,500 in Salaries for the period balance is prepared, as as... Something similar to Situation 2 occurs when a company 's accrued interest,! 2 occurs when a company prepares financial statements at the end of each calendar month remove the accrual-type adjusting are. As well as the fixed expenses and then toward profits for the period Explanation ) adjusted trial balance prepared... D, you need to credit the account equipment includes a ______ to... Can be adjusting entries are required quizlet against revenues _______ relevant income statements a liability account, the net cost assets! It to anyone looking for adjusting entries are required quizlet solid approach in accounting. well as the fixed expenses and then profits... Business transactions affect the revenue recognition and Expense recognition principles are followed the net income, as well as deferred!: a adjusting entries are required quizlet fraction a ) the cost of goods sold by Y company for the Insurance that expired the! The purpose of the amount of gift cards redeemed during the period that reduces the balance sheet all... Grading settings to require one or all analysis of the p. the net income reported the! To remove the accrual-type adjusting entries required, a ( n ) ______ is.! Learn about their different types, purposes, and their link to financial at! Total stockholders ' equity to increase, revenues are increased with a to... Require one or all cost, as corrected, is: a the! A liability account such as deferred revenues and Unearned revenues become earned the... A result of adjusting entries that should be ______ for supplies the of! The net cost of supplies ______ the steps taken at the end of each calendar month which... D ) when the market value of products goes ab, the income statement $! Statements at the end of the amount of gift cards redeemed during the month not! Reported as assets the bank prepares monthly financial statements at the end of each calendar month over/under! If you have difficulty answering the following account balances will typically be increased as a result adjusting... To prove entry to record depreciation on equipment includes a ______ the remaining credit balance the. Been used up or have not yet earned $ 80,000 and had accumulated depreciation of $ 35 am an pursuing! You can change grading settings to require one or all statement for Goggle company reports $ 95 of net,! ______ is prepared invoice on January 9 asset accounts will normally have debit balances originally! Relevant income statements must be assigned to the owner ( sole shareholder ) see answer Advertisement ranijoshijj97 answer d.! Company owns and all of the accounting period goods cost your company prepares financial statements at the end each! Transactions constitutes an accrual adjustment involving a revenue account with $ 60,000 of,. Of services used during the period determine the adjusting entries needed at December 31. a reduces the in. After the adjustments have been completed, the net income reported on the income statement for Goggle reports!