Intermediate Accounting I: Chapter 3 Multiple Choice

On September 1, 2021, Oriole Company issued a note payable to National Bank in the amount of $ 1480000, bearing interest at 9%, and payable in three equal annual principal payments of $ 560000. On this date, the bank's prime rate was 8%. The first payment for interest and principal was made on September 1, 2021. At December 31, 2021, Oriole should record accrued interest payable of A. $ 27600. B. $ 44800. C. $ 50400. D. $ 22000.

A. $ 27600.

Included in Vaughn Manufacturing's balance sheet at June 30, 2021 is a 10%, $ 4600000 note payable. The note is dated October 1, 2019 and is payable in three equal annual payments of $ 2300000 plus interest. The first interest and principal payment was made on October 1, 2020. In Vaughn's June 30, 2021 balance sheet, what amount should be reported as accrued interest payable for this note? A. $ 345000. B. $ 115000. C. $ 517500. D. $ 173075.

A. $ 345000.

Reversing entries are1. normally prepared for prepaid, accrued, and estimated items.2. necessary to achieve a proper matching of revenue and expense.3. useful in simplifying the recording of transactions in the next accounting period. A. 3 B. 1 and 2 C. 1 D. 2

A. 3

Which of the following properly describes a deferral? A. Cash is received before revenue is recognized. B. Cash is received after revenue is recognized. C. Cash is paid after expense is incurred. D. Cash is paid in the same time period that an expense is incurred.

A. Cash is received before revenue is recognized.

Sunland Company recorded journal entries for the issuance of common stock for $ 208000, the payment of $ 65000 on accounts payable, and the payment of salaries expense of $ 103500. What net effect do these entries have on stockholders' equity? A. Increase of $ 104500. B. Increase of $ 208000. C. Increase of $ 143000. D. Increase of $ 39500.

A. Increase of $ 104500.

Which of the following statements is true about the accrual basis of accounting? A. Revenues are recognized in the period the performance obligation is satisfied, regardless of the time period the cash is received. B. A minimal amount of record keeping is required in accrual basis accounting compared to cash basis. C. This method is used less frequently by businesses than the cash method of accounting. D. The timing of cash receipts and disbursements is emphasized.

A. Revenues are recognized in the period the performance obligation is satisfied, regardless of the time period the cash is received.

Why are certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting cycles? A. To match the costs of production with revenues as recognized B. To aid management in cash-flow analysis C. To reduce the federal income tax liability D. To adhere to the accounting constraint of conservatism

A. To match the costs of production with revenues as recognized

Which of the following statements best describes the purpose of closing entries? A. To reduce the balances of revenue and expense accounts to zero so that they may be used to accumulate the revenues and expenses of the next period. B. To complete the record of various transactions that were started in a prior period. C. To determine the amount of net income or net loss for the following period. D. To facilitate posting and taking a trial balance.

A. To reduce the balances of revenue and expense accounts to zero so that they may be used to accumulate the revenues and expenses of the next period.

An optional step in the accounting cycle is the preparation of A. a post-closing trial balance. B. closing entries. C. a statement of cash flows. D. adjusting entries.

A. a post-closing trial balance.

A reversing entry should never be made for an adjusting entry that A. adjusts expired costs from an asset account to an expense account. B. adjusts unexpired costs from an expense account to an asset account. C. accrues unrecorded expenses. D. accrues unrecorded revenue.

A. adjusts expired costs from an asset account to an expense account.

Adjustments are often prepared A. after the balance sheet date, but dated as of the balance sheet date. B. before the balance sheet date, and dated after the balance sheet date. C. before the balance sheet date, and dated before the balance sheet date. D. after the balance sheet date, and dated after the balance sheet date.

A. after the balance sheet date, but dated as of the balance sheet date.

A journal entry to record a receipt of rent in advance will include a A. credit to Unearned Revenue. B. credit to Rent Revenue. C. debit to Rent Revenue. D. credit to Cash.

A. credit to Unearned Revenue.

During the first year of Swifty Corporation's operations, all purchases were recorded as assets. Supplies in the amount of $ 27100 were purchased. Actual year-end supplies amounted to $ 5900. The adjusting entry for store supplies will A. increase expenses by $ 21200. B. debit Accounts Payable for $ 5900. C. decrease supplies by $ 5900. D. increase net income by $ 21200.

A. increase expenses by $ 21200.

Factors that shape an accounting information system include the

A. nature of the business. B. size of the firm. C. volume of data to be handled. D. all of these answer choices are correct.

An accrued expense can best be described as an amount A. not paid and currently matched with earnings. B. paid and not currently matched with earnings. C. paid and currently matched with earnings. D. not paid and not currently matched with earnings.

A. not paid and currently matched with earnings.

An adjusted trial balance A. proves the equality of the debit balances and credit balances of ledger accounts after all adjustments have been made. B. is prepared after the financial statements are completed. C. cannot be used to prepare financial statements. D. is a required financial statement under generally accepted accounting principles.

A. proves the equality of the debit balances and credit balances of ledger accounts after all adjustments have been made.

Nominal accounts are also called A. temporary accounts. B. permanent accounts. C. real accounts. D. None of these answer choices are correct.

A. temporary accounts.

When a corporation pays a note payable and interest, A. they will debit notes payable and interest expense. B. the account interest expense will be decreased. C. they will debit cash. D. the account notes payable will be increased.

A. they will debit notes payable and interest expense.

The failure to properly record an adjusting entry to accrue a revenue item will result in an A. understatement of revenues and an understatement of assets. B. understatement of revenues and an understatement of liabilities. C. overstatement of revenues and an overstatement of liabilities. D. overstatement of revenues and an overstatement of assets.

A. understatement of revenues and an understatement of assets.

External events do not include A. using buildings and machinery in operations. B. interaction between an entity and its environment. C. a change in the price of a good or service that an entity buys or sells. D. improvement in technology by a competitor.

A. using buildings and machinery in operations.

Adjusting entries are necessary to 1. obtain a proper matching of revenue and expense. 2. achieve an accurate statement of assets and equities. 3. adjust assets and liabilities to their fair market value. A. 2 B. 1 and 2 C. 1 D. 3

B. 1 and 2

Coronado Industries recorded journal entries for the declaration of $ 250500 of dividends, the $ 163500 increase in accounts receivable for services rendered, and the purchase of equipment for $ 104000. What net effect do these entries have on stockholders' equity? A. Decrease of $ 191000. B. Decrease of $ 87000. C. Increase of $ 59500. D. Decrease of $ 354500.

B. Decrease of $ 87000.

Which of the following errors will cause an imbalance in the trial balance? A. Posting an entire journal entry twice to the ledger. B. Listing the balance of an account with a debit balance in the credit column of the trial balance. C. Posting a credit of $720 to Accounts Payable as a credit of $720 to Accounts Receivable. D. Omission of a transaction in the journal.

B. Listing the balance of an account with a debit balance in the credit column of the trial balance.

Which of the following is true if a company capitalizes rather than expenses a cost? A. Net income in the current period will go down as a result of the cost being capitalized. B. Net income in the current period will go up as a result of the cost being capitalized. C. There will be no effect on net income in the current period. D. Liabilities will increase in the current period.

B. Net income in the current period will go up as a result of the cost being capitalized.

To compute interest expense on a note for an adjusting entry, the formula is (principal × annual rate × a fraction). The numerator and denominator of the fraction are: A. Numerator - Total length of note, Denominator - 12 months. B. Numerator - Length of time note has been outstanding, Denominator - 12 months. C. Numerator - Length of time note has been outstanding, Denominator - Total length of note. D. Numerator - Length of time until note matures, Denominator - Total length of note.

B. Numerator - Length of time note has been outstanding, Denominator - 12 months.

Your answer is correct. How do these prepaid expenses expire? A. Rent - With the passage of time, Supplies - With the passage of time. B. Rent - With the passage of time, Supplies - Through use and consumption. C. Rent - Through use and consumption, Supplies - Through use and consumption. D. Rent - Through use and consumption, Supplies - With the passage of time.

B. Rent - With the passage of time, Supplies - Through use and consumption.

Which of the following is a nominal (temporary) account? A. Inventory B. Salaries and Wages Expense C. Unearned Service Revenue D. Retained Earnings

B. Salaries and Wages Expense

An adjusting entry should never include A. a debit to a revenue account and a credit to a liability account. B. a debit to an expense account and a credit to a revenue account. C. a debit to an expense account and a credit to a liability account. D. a debit to a liability account and a credit to revenue account.

B. a debit to an expense account and a credit to a revenue account.

A general journal A. contains one record for each of the asset, liability, stockholders' equity, revenue, and expense accounts. B. chronologically lists transactions and other events, expressed in terms of debits and credits. C. lists all the increases and decreases in each account in one place. D. contains only adjusting entries.

B. chronologically lists transactions and other events, expressed in terms of debits and credits.

An unearned revenue can best be described as an amount A. not collected and not currently matched with expenses. B. collected and not currently matched with expenses. C. collected and currently matched with expenses. D. not collected and currently matched with expenses.

B. collected and not currently matched with expenses.

At the time a company prepays a cost A. its credits a liability account to show the obligation to pay for the service in the future. B. it debits an asset account to show the service or benefit it will receive in the future. C. it credits an asset account and debits an expense account. D. it debits an expense account to match the expense against revenues recognized.

B. it debits an asset account to show the service or benefit it will receive in the future.

The omission of the adjusting entry to record depreciation expense will result in an A. understatement of assets and an understatement of owner's equity. B. overstatement of assets and an overstatement of owners' equity. C. overstatement of assets and an overstatement of liabilities. D. overstatement of liabilities and an understatement of owners' equity.

B. overstatement of assets and an overstatement of owners' equity.

When an expense is paid in cash before it is used, it is called a(n) A. accrued expense. B. prepaid expense. C. cash expense. D. estimated expense.

B. prepaid expense.

Sheffield Corp. pays all salaried employees on a biweekly basis. Overtime pay, however, is paid in the next biweekly period. Sheffield accrues salaries expense only at its December 31 year end. Data relating to salaries earned in December 2020 are as follows: Last payroll was paid on 12/26/20, for the 2-week period ended 12/26/20. Overtime pay earned in the 2-week period ended 12/26/20 was $ 28000. Remaining work days in 2020 were December 29, 30, 31, on which days there was no overtime. The recurring biweekly salaries total $ 451000. Assuming a five-day workweek, Sheffield should record a liability at December 31, 2020 for accrued salaries of A. $ 135300. B. $ 298600. C. $ 163300. D. $ 270600.

C. $ 163300.

Waterway Industries's trademark was licensed to Carla Vista Co. for royalties of 15% of sales of the trademarked items. Royalties are payable semiannually on March 15 for sales in July through December of the prior year, and on September 15 for sales in January through June of the same year. Waterway received the following royalties from Carla Vista: March 15, 2019 - $9900 September 15, 2019 - $14500 March 15, 2020 - $12300 September 15, 2020 - $19100 Carla Vista estimated that sales of the trademarked items would total $ 69000 for July through December 2020. In Waterway's 2020 income statement, the royalty revenue should be A. $ 32550. B. $ 48750. C. $ 29450. D. $ 41750.

C. $ 29450.

Swifty Corporation sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to Unearned Service Revenue. This account had a balance of $ 5696000 at December 31, 2020 before year-end adjustment. Service contract costs are charged as incurred to the Service Contract Expense account, which had a balance of $ 1351000 at December 31, 2020. Service contracts still outstanding at December 31, 2020 expire as follows: During 2021$ 1440000 During 2022 $1714000 During 2023 $1053000 What amount should be reported as Unearned Service Revenue in Swifty's December 31, 2020 balance sheet? A. $ 4345000. B. $ 1489000. C. $ 4207000. D. $ 2840000.

C. $ 4207000.

Bramble Corp.'s account balances at December 31, 2020 for Accounts Receivable and the Allowance for Doubtful Accounts are $ 700000 debit and $ 1600 credit. Sales during 2020 were $ 2709000. It is estimated that 2% of sales will be uncollectible. The adjusting entry would include a credit to the allowance account for A. $ 52580. B. $ 55780. C. $ 54180. D. $ 14000.

C. $ 54180.

At December 31, 2020, Margaret's Boutique had 1500 gift certificates outstanding, which had been sold to customers during 2020 for $ 40 each. Margaret's operates on a gross profit of 60% of its sales. What amount of revenue pertaining to the 1500 outstanding gift certificates should be deferred at December 31, 2020? A. $ 0. B. $ 24000. C. $ 60000. D. $ 36000.

C. $ 60000.

A company receives interest on a $86000, 6%, 5-year note receivable each April 1. At December 31, 2020, the following adjusting entry was made to accrue interest receivable: (Dr) Interest Receivable $3870 (Cr) Interest Revenue $3870 Assuming that the company does not use reversing entries, what entry should be made on April 1, 2021 when the annual interest payment is received? A. (Dr) Cash 5160 (Cr) Interest Revenue B. (Dr) Cash 3870 (Cr) Interest Receivable 3870 C. (Dr) Cash 5160 (Cr) Interest Receivable 3870 (Cr) Interest Revenue 1290 D. (Dr) Cash 1290 (Cr) Interest Revenue 1290

C. (Dr) Cash 5160 (Cr) Interest Receivable 3870 (Cr) Interest Revenue 1290

Which of the following would not be a correct form for an adjusting entry? A. A debit to an expense and a credit to a liability B. A debit to a revenue and a credit to a liability C. A debit to an asset and a credit to a liability D. A debit to a liability and a credit to a revenue

C. A debit to an asset and a credit to a liability

When converting from cash-basis to accrual-basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual-basis service revenue? A. Subtract ending accounts receivable. B. Subtract beginning unearned service revenue. C. Add ending accounts receivable. D. Add cash sales.

C. Add ending accounts receivable.

Blossom Corporation loaned $ 610000 to another corporation on December 1, 2020 and received a 3-month, 9% interest-bearing note with a face value of $ 610000. What adjusting entry should Blossom make on December 31, 2020? A. Debit Cash and credit Interest Receivable, $ 13725. B. Debit Interest Receivable and credit Interest Revenue, $ 13725. C. Debit Interest Receivable and credit Interest Revenue, $ 4575. D. Debit Cash and credit Interest Revenue, $ 4575.

C. Debit Interest Receivable and credit Interest Revenue, $ 4575.

Which of the following is not an internal event? A. Depreciation. B. Using raw materials in the production process. C. Dividend declaration and subsequent payment. D. All of these are internal transactions.

C. Dividend declaration and subsequent payment.

Which of the following is not a principal purpose of an unadjusted trial balance? A. It is the basis for any adjustments to the account balances. B. It proves that debits and credits of equal amounts are in the ledger. C. It proves that debits and credits were properly entered in the ledger accounts. D. It supplies a listing of open accounts and their balances.

C. It proves that debits and credits were properly entered in the ledger accounts.

Which type of account is always debited during the closing process? A. Retained earnings B. Expense C. Revenue D. Dividends

C. Revenue

When converting from cash-basis to accrual-basis accounting, which of the following adjustments should be made to cash paid for operating expenses to determine accrual-basis operating expenses? A. Add beginning accrued liabilities. B. Subtract interest expense. C. Subtract ending prepaid expense. D. Subtract beginning prepaid expense.

C. Subtract ending prepaid expense.

The double-entry accounting system means A. Each transaction is recorded with two journal entries. B. Each item is recorded in a journal entry, then in a general ledger account. C. The dual effect of each transaction is recorded with a debit and a credit. D. None of these answer choices are correct.

C. The dual effect of each transaction is recorded with a debit and a credit.

If ending accounts receivable exceeds the beginning accounts receivable A. no cash was collected during the period. B. cash collections during the period exceed the amount of revenue recognized. C. cash collections during the year are less than the amount of revenue recognized. D. net income for the period is less than the amount of cash-basis income.

C. cash collections during the year are less than the amount of revenue recognized.

Stockholders' equity is not affected by all A. dividends. B. expenses. C. cash receipts. D. revenues.

C. cash receipts.

Concord Corporation had revenues of $ 337000, expenses of $ 202000, and dividends of $ 42500. When Income Summary is closed to Retained Earnings, the amount of the debit or credit to Retained Earnings is a A. debit of $ 135000. B. debit of $ 92500. C. credit of $ 135000. D. credit of $ 92500.

C. credit of $ 135000.

Waterway Industries received cash of $39600 on September 1, 2020 for one year's rent in advance and recorded the transaction with a credit to Unearned Rent Revenue. The December 31, 2020 adjusting entry is A. debit Rent Revenue and credit Unearned Rent Revenue, $26400. B. debit Cash and credit Unearned Rent Revenue, $26400. C. debit Unearned Rent Revenue and credit Rent Revenue, $13200. D. debit Rent Revenue and credit Unearned Rent Revenue, $13200.

C. debit Unearned Rent Revenue and credit Rent Revenue, $13200.

The process of transferring figures from the book of original entry to the ledger accounts is called A. adjusting. B. balancing. C. posting. D. ledgering.

C. posting.

The accounting equation (A = L + SE) must remain in balance: A. only when formal financial statements are prepared. B. only at the time the trial balance is prepared. C. throughout each step in the accounting cycle. D. only when journal entries are recorded.

C. throughout each step in the accounting cycle.

The accounting equation must remain in balance A. only when formal financial statements are prepared. B. only when journal entries are recorded. C. throughout each step in the accounting cycle. D. only at the time the trial balance is prepared.

C. throughout each step in the accounting cycle.

When a revenue is collected and recorded in advance, it is normally accounted for as a(n) ___________ revenue. A. cash B. prepaid C. unearned D. accrued

C. unearned

Adjusting entries that should be reversed include those for prepaid or unearned items that A. create an asset or a liability account. B. were originally entered in a receivable or liability account. C. were originally entered in a revenue or expense account. D. were originally entered in an asset or liability account.

C. were originally entered in a revenue or expense account.

Under the cash-basis of accounting, revenues are recorded A. when the performance obligation is satisfied and cash is received. B. when the performance obligation is satisfied. C. when cash is received. D. when expenses are incurred.

C. when cash is received.

Which of the following must be considered in estimating depreciation on an asset for an accounting period? A. The original cost of the asset B. Its useful life C. The decline of its fair value D. Both the original cost of the asset and its useful life

D. Both the original cost of the asset and its useful life

An accounting record into which the essential facts and figures in connection with all transactions are first recorded is called the A. ledger. B. account. C. trial balance. D. None of these answer choices are correct.

D. None of these answer choices are correct.

Which of the following is a recordable event or item? A. Changes in managerial policy B. The value of human resources C. Changes in personnel D. Payment of monthly payroll.

D. Payment of monthly payroll.

Which of the following is an example of an accrued expense? A. Rent recognized during the period, to be received at the end of the year. B. Office supplies purchased at the beginning of the year and debited to an expense account. C. Depreciation expense. D. Property taxes incurred during the year, to be paid in the first quarter of the subsequent year.

D. Property taxes incurred during the year, to be paid in the first quarter of the subsequent year.

Which of the following would NOT support the decision to capitalize a cost rather than expense it: A. The cost incurred can be reasonably related to future revenues. B. The cost incurred is expected to provide future measurable benefits. C. The cost incurred is expected to significantly add to the value of an existing asset. D. The cost incurred would otherwise have resulted in lower net income.

D. The cost incurred would otherwise have resulted in lower net income.

During an accounting period, if an expense has been incurred and consumed but not yet paid for or recorded, then the end-of-period adjusting entry would involve A. a receivable account and a revenue account. B. an asset or contra asset account and an expense account. C. a liability account and an asset account. D. a liability account and an expense account.

D. a liability account and an expense account.

Unearned revenue on the books of one company is likely to be A. an accrued expense on the books of the company that made the advance payment. B. an unearned revenue on the books of the company that made the advance payment. C. an accrued revenue on the books of the company that made the advance payment. D. a prepaid expense on the books of the company that made the advance payment.

D. a prepaid expense on the books of the company that made the advance payment.

Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry for A. an unearned revenue. B. an accrued expense. C. an accrued revenue. D. a prepaid expense.

D. a prepaid expense.

Adjusting entries that should be reversed include A. all accrued revenues. B. all accrued expenses. C. those that debit an asset or credit a liability. D. all of these answer choices are correct.

D. all of these answer choices are correct.

The debit and credit analysis of a transaction normally takes place A. when the entry is posted to the ledger. B. when the trial balance is prepared. C. at the end of the accounting cycle. D. before an entry is recorded in a journal.

D. before an entry is recorded in a journal.

Sheridan Company purchased equipment on November 1, 2020 and gave a 3-month, 9% note with a face value of $74000. The December 31, 2020 adjusting entry is A. debit Interest Expense and credit Interest Payable, $1665. B. debit Interest Expense and credit Interest Payable, $6660. C. debit Interest Expense and credit Cash, $1110. D. debit Interest Expense and credit Interest Payable, $1110.

D. debit Interest Expense and credit Interest Payable, $1110.

Vaughn Manufacturing paid cash of $144000 on June 1, 2020 for one year's rent in advance and recorded the transaction with a debit to Prepaid Rent. The December 31, 2020 adjusting entry is A. debit Prepaid Rent and credit Cash, $60000. B. debit Prepaid Rent and credit Rent Expense, $60000. C. debit Prepaid Rent and credit Rent Expense, $84000. D. debit Rent Expense and credit Prepaid Rent, $84000.

D. debit Rent Expense and credit Prepaid Rent, $84000.

A journal entry to record a payment on account will include a A. debit to Accounts Receivable. B. credit to Accounts Receivable. C. credit to Accounts Payable. D. debit to Accounts Payable.

D. debit to Accounts Payable.

A journal entry to record the sale of inventory on account will include a A. debit to Sales Revenue. B. credit to Cost of Goods Sold. C. debit to Inventory. D. debit to Accounts Receivable.

D. debit to Accounts Receivable.

An adjusting entry to record an accrued expense involves a debit to a(an) A. expense account and a credit to Cash. B. expense account and a credit to a prepaid account. C. liability account and a credit to an expense account. D. expense account and a credit to a liability account.

D. expense account and a credit to a liability account.

When revenue or expense has been recognized or incurred but not yet collected or paid, it is normally called a(n) ____________ revenue or expense. A. deferred B. adjusted C. estimated D. none of these answer choices are correct

D. none of these answer choices are correct

Debit always means A. the right side of an account. B. an increase. C. a decrease. D. none of these answer choices are correct.

D. none of these answer choices are correct.

An accrued revenue can best be described as an amount A. not collected and not currently matched with expenses. B. collected and not currently matched with expenses. C. collected and currently matched with expenses. D. not collected and currently matched with expenses.

D. not collected and currently matched with expenses.

A prepaid expense can best be described as an amount A. not paid and not currently matched with revenues. B. paid and currently matched with revenues. C. not paid and currently matched with revenues. D. paid and not currently matched with revenues.

D. paid and not currently matched with revenues.

The failure to properly record an adjusting entry to accrue an expense will result in an A. understatement of expenses and an overstatement of assets. B. overstatement of expenses and an understatement of assets. C. understatement of expenses and an overstatement of liabilities. D. understatement of expenses and an understatement of liabilities.

D. understatement of expenses and an understatement of liabilities.

Which of the following is true if a company capitalizes rather than expenses a cost? A. Assets will go down in the current period as a result of the cost being capitalized. B. Owners equity will go up in the current period as a result of the cost being capitalized. C. Liabilities will go up in the current period as a result of the cost being capitalized. D. Net income will go down in the current period as a result of the cost being capitalized.

Owners equity will go up in the current period as a result of the cost being capitalized.

In November and December 2020, Sheridan Company, a newly organized magazine publisher, received $ 80400 for 1,000 three-year subscriptions at $ 28 per year, starting with the January 2021 issue. Sheridan included the entire $ 80400 in its 2020 income tax return. What amount should Sheridan report in its 2020 income statement for subscriptions revenue? A. $ 4466. B. $ 0. C. $ 80400. D. $ 26800.

B. $ 0.

On June 1, 2020, Concord Corporation loaned Pharoah $ 1530000 on a 12% note, payable in five annual installments of $ 306000 beginning January 2, 2021. In connection with this loan, Pharoah was required to deposit $ 5100 in a noninterest-bearing escrow account. The amount held in escrow is to be returned to Pharoah after all principal and interest payments have been made. Interest on the note is payable on the first day of each month beginning July 1, 2020. Pharoah made timely payments through November 1, 2020. On January 2, 2021, Concord received payment of the first principal installment plus all interest due. At December 31, 2020, Concord's interest receivable on the loan to Pharoah should be A. $ 45900. B. $ 30600. C. $ 15300. D. $ 0.

B. $ 30600.

Sheffield Corp.'s account balances at December 31, 2020 for Accounts Receivable and the related Allowance for Doubtful Accounts are $917000 debit and $2000 credit, respectively. From an aging of accounts receivable, it is estimated that $37900 of the December 31 receivables will be uncollectible. The necessary adjusting entry would include a credit to the allowance account for A. $2000. B. $39900. C. $37900. D. $35900.

D. $35900.

A company receives interest on a $ 102000, 7%, 5-year note receivable each April 1. At December 31, 2020, the following adjusting entry was made to accrue interest receivable: (Dr) Interest Receivable 5355 (Cr) Interest Revenue 5355 Assuming that the company does use reversing entries, what entry should be made on April 1, 2021 when the annual interest payment is received? A. (Dr) Cash 7140 (Cr) Interest Receivable 5355 (Cr) Interest Revenue 1785 B. (Dr) Cash 5355 (Cr) Interest Receivable 5355 C. (Dr) Cash 1785 (Cr) Interest Revenue 1785 D. (Dr) Cash 7140 (Cr) Interest Revenue 7140

D. (Dr) Cash 7140 (Cr) Interest Revenue 7140

Oriole Company sublet a portion of its warehouse for five years at an annual rental of $ 71400, beginning on May 1, 2020. The tenant, Elizabeth Brown, paid one year's rent in advance, which Oriole recorded as a credit to Unearned Rent Revenue. Oriole reports on a calendar-year basis. The adjustment on December 31, 2020 for Oriole should be A. (Dr) Rent Revenue 23800 (Cr) Unearned Rent Revenue 23800 B. No Entry C. (Dr) Unearned Rent Revenue 23800 (Cr) Rent Revenue 23800 D. (Dr) Unearned Rent Revenue 47600 (Cr) Rent Revenue

D. (Dr) Unearned Rent Revenue 47600 (Cr) Rent Revenue

A trial balance A. proves that debits and credits are equal in the ledger. B. supplies a listing of open accounts and their balances that are used in preparing financial statements. C. is normally prepared three times in the accounting cycle. D. All of these answer choices are correct.

D. All of these answer choices are correct.

A trial balance may prove that debits and credits are equal, but A. an amount could be entered in the wrong account. B. a transaction could have been entered twice. C. a transaction could have been omitted. D. All of these answer choices are correct.

D. All of these answer choices are correct.

Year-end net assets would be overstated and current expenses would be understated as a result of failure to record which of the following adjusting entries? A. Expiration of prepaid insurance. B. Depreciation of fixed assets. C. Use of supplies. D. All of these answer choices are correct.

D. All of these answer choices are correct.

Which of the following criteria must be met before an item should be recognized in the accounts? A. The item can be measured objectively in financial terms. B. The item is relevant and representationally faithful. C. The item is an element. D. All of these must be met.

D. All of these must be met.

Which of the following is a real (permanent) account? A. Goodwill B. Service Revenue C. Accounts Receivable D. Both Goodwill and Accounts Receivable

D. Both Goodwill and Accounts Receivable