Accounting Exam 2

Paramount Event Planning Services collects fees from its customers in advance. On January 1, 2017, the balance of its Unearned Revenue account was $6,000 (CR). During January and February, the company collected $4,000 and $8000 as advance fees. During the two-month period, it performed services of $5,500 related to the deferred revenue. What is the balance in Unearned Revenue at the end of February? A. credit balance of $5,300 B. credit balance of $18,000 C. credit balance of $12,500 D. credit balance of $1,500 E. None of the above

credit balance of $12,500

Rosewood, Inc. earned revenues of $19,000 and incurred expenses of $4,000. The company declared and paid cash dividends of $1,500. What is the balance in the Income Summary account prior to closing the account into the Retained Earnings account? A. credit balance of $4,000 B. balance of $0 C. debit balance of $19,000 D. credit balance of $15,000 E. None of the above

credit balance of $15,000

Dogwood, Inc. earned revenues of $11,000 and incurred expenses of $8,500. The company declared and paid cash dividends of $2,000. What is the balance in the Income Summary account prior to closing net income or loss to the Retained Earnings account? A. credit balance of $500 B. credit balance of $2,500 C. credit balance of $3,500 D. credit balance of $9,000 E. None of the above

credit balance of $2,500

A company received $8,000 for 100 one-year subscriptions on July 1. The journal entry to record this cash receipt would include a ________. The company uses a liability account for revenue received in advance. A. credit to Unearned Revenue for $8,000 B. credit to Accounts Payable for $5,000 C. credit to Unearned Revenue for $5,000 D. debit to Prepaid Expenses for $5,000 E. None of the above

credit to Unearned Revenue for $8,000

An adjusting entry that debits Accounts Receivable is an example of a(n) ________. A. deferred revenue B. accrued expense C. deferred expense D. accrued revenue E. None of the above

Accrued Revenue

Techno Technical Services is working on a six-month job for a client, starting on March 1. It will collect $18,000 from its customer when the job is finished but the revenue is earned evenly over the six months. On April 31, before adjusting entries are made, Techno's Accounts Receivable account had a debit balance of $4,000. After the April 31 monthly adjusting entry has been made, what will be the balance in Accounts Receivable? A. Credit balance of $15,000 B. Debit balance of $10,000 C. Debit balance of $7,000 D. Debit balance of $3,000 E. None of the above

Debit balance of $7,000

Which of the following entries would be made because of the matching principle? A. Cash 1,000 Salaries Expense 1,000 B. Cash 1,000 Unearned Revenue 1,000 C. Salaries Expense 1,000 Service Payable 1,000 D. Salaries Expense 1,000 Salaries Revenue 1,000 E. None of the above

Salaries Expense 1,000 Service Payable 1,000

Which of the following accounts would be used under the accrual basis of accounting, but not under cash basis accounting? A. Service Revenue B. Cash C. Unearned Revenue D. Salaries Expense E. None of the above

Unearned Revenue

Prepaid Rent in the worksheet's unadjusted trial balance column is $5,000. Prepaid Rent in the balance sheet column is $3,000. Which of the following entries would have caused this difference? A. a $2,000 debit entry to Rent Expense in the worksheet's adjustments column B. a $2,000 credit entry to Prepaid Rent in the worksheet's adjustments column C. a $3,000 credit entry to Rental Revenue in the worksheet's adjustments column D. a $3,000 credit entry to Prepaid Rent in the worksheet's adjustments column E. None of the above

a $2,000 credit entry to Prepaid Rent in the worksheet's adjustments column

The balances of select accounts of Stephanie, Inc. as of December 31, 2016 are given below. Building $100,000 Cash 8,000 Office Supplies 800 Furniture 6,000 Prepaid Insurance 500 Accumulated Depreciation--Furniture $4,000 Land 35,000 Accumulated Depreciation--Building 4,700 Accounts Receivable 4,000 What amount of total long-term assets would be shown on the balance sheet? A. $132,300 B. $135,000 C. $130,300 D. $139,000 E. None of the above

$132,300

Get in Shape, a healthy living magazine, collected $528,000 in subscription revenue on April 31. Each subscriber will receive an issue of the magazine in each of the next 12 months, beginning with the May issue. The company uses the accrual method of accounting. What is the balance in the Unearned Revenue account as of December 31? A. $176,000 B. $352,000 C. $528,000 D. $220,000 E. None of the above

$176,000

Mason Painting Services has a weekly payroll of $24,000. December 31 falls on Thursday and Mason will pay its employees the following Monday (January 4) for the previous full week. Assume that Mason has a five-day workweek and has an unadjusted balance in Salaries Expense of $770,000. What amount should be debited to Salaries Expense on December 31? A. $9,600 B. $14,400 C. $19,200 D. $24,000 E. None of the above

$19,200

The asset account, Office Supplies, had a beginning balance of $3,800. During the accounting period, office supplies were purchased, on account, for $2,500. Supplies Expense for the accounting period is $4,000. What is the ending balance of Office Supplies? A. $2,100 B. $2,300 C. $5,300 D. $6,100 E. None of the above

$2,300

The following Office Supplies account information is available for Able, Inc. Beginning balance $1,800 Office Supplies expensed $3,000 Ending balance $2,000 From the above information, calculate the amount of office supplies purchased. A. $1,800 B. $3,200 C. $5,200 D. $3,800 E. None of the above

$3,200

Dalton Delivery Service is hired on October 31, 2016 to perform services, beginning on November 1, 2016. The delivery services will be performed for six months at a rate of $2,000 per month. Dalton's fiscal year ends on December 31. What amount of service revenue should be recorded as an adjusting entry on December 31, 2016? A. $2,000 B. $4,000 C. $6,000 D. $12,000 E. None of the above

$4,000

Saturn, Inc. signed a one-year $24,000 note payable at 8% interest on March 1, 2017. How much interest expense must be accrued on May 31, 2017? (Round any intermediate calculations to two decimal places, and your final answer to the nearest whole number.) A. $480 B. $160 C. $800 D. $1,920 E. None of the above

$480

On January 1, 2017, the Accounts Receivable of Linda, Inc. had a debit balance of $180,000. During January, the company provided services for $700,000 on account. The company collected $330,000 from its customers on account in January. What was the ending balance in the Accounts Receivable account at the end of January? A. $880,000 B. $370,000 C. $650,000 D. $550,000 E. None of the above

$550,000

Qwerty, Inc. prepaid $9,600 on September 1, 2015 for a one-year insurance premium. On January 1, 2016 of the next year (after December 31 adjustments), the Prepaid Insurance account will have a debit balance of ________. (Round any intermediate calculations to two decimal places, and your final answer to the nearest whole number.) A. $7,200 B. $8,000 C. $6,400 D. $8,800 E. None of the above

$6,400

On the first day of January, Harris, Inc. borrowed $2,000 on a one-year note payable bearing interest at 9% per year. The note specifies that principal and interest must be paid in full at the end of the one-year period. On June 30, the adjusted trial balance will show Interest Payable of ________. A. $140 debit B. $180 credit C. $90 credit D. $70 credit E. None of the above

$90 credit

Bryson Services, Inc. performed accounting services for a client in December. A bill was mailed to the client on December 30. The company received a check by mail on January 5. Which of the following accounts should appear on the balance sheet as of December 31 as related to the services performed? A. Accounts Receivable B. Unearned Revenue C. Prepaid Expense D. None, there is no entry in December. E. None of the above

Accounts Receivable

Which of the following entries would be made as the result of the revenue recognition principle? A. Accounts Receivable 1,000 Service Revenue 1,000 B. Depreciation Expense 1,000 Accumulated Depreciation 1,000 C. Salaries Expense 1,000 Accounts Payable 1,000 D. Service Expense 1,000 Service Revenue 1,000 E. None of the above

Accounts Receivable 1,000 Service Revenue 1,000

An adjusting entry that credits Salaries Payable is an example of a(n) ________. A. accrued expense B. deferred expense C. deferred revenue D. accrued revenue E. None of the above

Accrued Expense

Classic Artists' Services signed a contract with a maintenance service company to maintain a building that Classic will use for office purposes. The contract states that the work will begin work on February 1 and end on May 31. Classic Artists' will pay the maintenance service company $2,000 at the end of May. It accrues Maintenance Expense at the end of every month. What is the balance in the Accounts Payable account for amounts owed to the maintenance service company at the end of April? A. Credit balance of $1,500 B. Debit balance of $1,000 C. Debit balance of $2,000 D. Credit balance of $1,000 E. None of the above

Credit balance of $1,500

A business purchased equipment for $140,000 on January 1, 2017. The equipment will be depreciated over the four years of its estimated useful life using the straight-line depreciation method. The business records depreciation once a year on December 31. Which of the following is the adjusting entry required to record depreciation on equipment for the year 2017? (Assume the residual value of the acquired equipment to be zero.) A. Debit $35,000 to Depreciation Expense'Equipment, and credit $35,000 to Accumulated Depreciation'Equipment. B. Debit $28,000 to Depreciation Expense'Equipment, and credit $28,000 to Accumulated Depreciation'Equipment. C. Debit $28,000 to Depreciation Expense, and credit $28,000 to Equipment. D. Debit $140,000 to Equipment, and credit $140,000 to Cash. E. None of the above

Debit $35,000 to Depreciation Expense'Equipment, and credit $35,000 to Accumulated Depreciation'Equipment.

If an adjusting entry includes a debit to Rent Expense, it indicates that the payment of rent had been previously recorded as a(n) ________. A. depreciation expense B. accrued expense C. deferred expense D. accrued revenue E. None of the above

Deferred expense

Kittery Services, Inc. purchased computers that are to be used in its consultancy services. Based on the matching principle, the related account that should appear on the income statement for the year ended December 31, 2016 is ________. A. Equipment Expense B. Accumulated Depreciation C. Service Revenue D. Depreciation Expense E. None of the above

Depreciation Expense

Which of the following accounts has a balance equal to net income immediately before it is closed? A. Net Income B. Dividends C. Retained Earnings D. Income Summary E. None of the above

Income Summary

The net income of Harriet, Inc. for the year is $35,000. The dividends declared during the year were $42,000. Which of the following statements is true? A. Retained Earnings account increases by $35,000. B. Retained Earnings increase by $7,000. C. Retained Earnings account decreases by $42,000. D. Retained Earnings account decreases by $8,000. E. None of the above

None of the above

What is the result if the amount of net income for the year is less than the amount of the Dividends? A. Retained Earnings decreases B. Retained Earnings increases C. Cash balance increases D. Cash balance decreases E. None of the above

Retained Earnings decreases

The accountant for Jones Auto Repair, Inc. failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year. Which of the following is an effect of this omission? A. The net income will be understated. B. The total assets will be overstated. C. The net income will be overstated. D. The total assets will be understated. E. None of the above

The net income will be overstated.

The accountant of Zeus Legal Services failed to make an adjusting entry for supplies that had been used for the year. Assume the supplies were initially recorded as an asset. Which of the following statements is true? A. The total liabilities will be overstated. B. The total assets will be overstated. C. The total assets will be understated. D. The equity will be understated. E. None of the above

The total assets will be overstated.

The accountant of Omega Consulting, Inc. failed to make an adjusting entry to record $6,000 for unearned service revenues that were earned before the end of the fiscal year. Assume the company initially recorded a liability. Which of the following statements is true? A. The total assets will be understated. B. The total assets will be overstated. C. The total liabilities will be overstated. D. The total liabilities will be understated. E. None of the above

The total liabilities will be overstated.

The accountant of Delta, Inc. failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned. Assume the deferred revenue was initially recorded as a liability. Which of the following statements is true? A. The total expenses will be overstated. B. The total expenses will be understated. C. The total revenue will be overstated. D. The total revenue will be understated. E. None of the above

The total revenue will be understated.

The Interest Expense in the worksheet's unadjusted trial balance column is $3,500. Interest Expense in the income statement column is $9,000. Which of the following entries would have caused this difference? A. a $5,500 credit to Interest Expense in the worksheet's adjustments column B. a $9,000 credit to Interest Expense in the worksheet's adjustments column C. a $9,000 credit to Interest Payable in the worksheet's adjustments column D. a $5,500 debit to Interest Expense in the worksheet's adjustments column E. None of the above

a $5,500 debit to Interest Expense in the worksheet's adjustments column

Which of the following steps must be completed before preparing the adjusted trial balance? A. preparation of the closing entries B. posting of journal entries to the accounts C. preparing the post-closing trial balance D. preparation of the financial statements E. None of the above

posting of journal entries to the accounts