Chapter 8 (Corrected Again)
117) Which of the following accounts requires a debit to close the account at year-end? A) Prepaid rent B) Sales revenue C) Unearned revenue D) Wage expense
B
113) Which one of the following accounts wouldnot be closed at the end of the accounting year? A) Utilities expense B) Sales revenue C) Prepaid rent D) Wages expense
C
105) Which of the following statements isinaccurate with respect to the total asset turnover ratio? A) The ratio is calculated as sales revenues divided by total assets at year-end. B) The ratio is decreased when additional plant and equipment is purchased. C) A high ratio implies efficient management of assets. D) The ratio is decreased when additional inventory is purchased.
A
110) Which of the following account balances would be closed at year-end? A) Interest expense B) Accumulated depreciation C) Retained earnings D) Unearned revenues
A
120) On January 1, 2023, the balance in Harrison Company's prepaid insurance account was $5,000. On December 31, 2023, after the 2023 adjusting entries were made, the balance of the prepaid insurance account was $2,400. During 2023, cash payments for insurance premiums amounted to $10,000, which was debited to the prepaid insurance account. When the adjusting entries were prepared on December 31, 2023, what is the amount Harrison recorded for the adjustment and which account was debited?
A
125) On December 31, 2023, Oakcrest Company prepared an income statement and a balance sheet. In preparing the adjusting entries at year-end, Oakcrest failed to record the adjusting entry for wages earned by employees, but not yet paid, amounting to $18,500 for the last two days of the year. The income statement reported net income of $121,000. The balance sheet reported total assets of $533,500, total liabilities of $348,500, and stockholders' equity of $185,000. What is the correct amoun
A
130) On December 31, 2023, Hascall Company had revenue of $1,200,000 and expenses total $640,000 before consideration of the following: Accrued wages $44,000 Accrued revenues 144,000 Depreciation expense 68,000 Rental revenue (initially recorded as unearned rent revenue) 36,000 If Hascall's income tax rate is 40% of income before income taxes, what is the company's net income after consideration of the above information? A) $376,800 B) $628,000 C) $560,000 D) $355,200
A
133) Tangier Enterprises (TE) began operations on March 1, 2023. On March 1, 2023, TE received a payment of $1,880,000 from its primary tenant for rent for the next 3 years. The rental period began on March 1, 2023. TE has a December 31, 2023 year-end, and this was the only rental activity TE had for 2023. What amount of cash should be reported for the year on the statement of cash flows and what is the balance of the Unearned rent revenue account on the balance sheet at December 31, 2023?
A
134) Tangier Enterprises (TE) began operations on March 1, 2023. On March 1, 2023, TE received a payment of $1,800,000 from its primary tenant for rent for the next 3 years. The rental period began on March 1, 2023. TE has a December 31, 2023 year-end, and this was the only rental activity TE had for 2023. What amount of cash should be reported for the year on the statement of cash flows and what is the balance of the Unearned rent revenue account on the balance sheet at December 31, 2023?
A
42) Which of the following journal entries is created to adjust for a previously recorded deferral? A) Account Title Debit Credit Unearned revenue xxx Revenue xxx B) Account Title Debit Credit Interest expense xxx Interest payable xxx C) Account Title Debit Credit Cash xxx Revenue xxx D) Account Title Debit Credit Accounts receivable xxx Unearned revenue xxx
A
43) Which of the following journal entries is created to record an accrual? A) Account Title Debit Credit Accounts receivable xxx Revenues xxx B) Account Title Debit Credit Interest expense xxx Cash xxx C) Account Title Debit Credit Accounts receivable xxx Deferred revenue xxx D) Account Title Debit Credit Rent expense xxx Prepaid rent xxx
A
49) Which of the following does not correctly describe an adjusting journal entry that debits depreciation expense and credits accumulated depreciation? A) The entry increases expenses and increases assets. B) The entry decreases net income and decreases assets. C) The entry increases expenses and decreases retained earnings. D) The entry decreases assets and decreases net income.
A
52) Which of the following correctly describes the effects of initially recording prepaid insurance expense when cash is paid to purchase an insurance policy? A) Total assets do not change. B) Net income decreases. C) Liabilities are decreased. D) Stockholders' equity increases.
A
58) Which of the following correctly describes the following adjusting journal entry? Account Title Debit Credit Depreciation expense xxx Accumulated depreciation xxx A) Total assets decrease B) Liabilities will increase C) Stockholders' equity is not affected D) Net income increases
A
62) Which of the following adjusting journal entries is created as the result of an accrual? A) Account Title Debit Credit Wages expense xxx Wages payable xxx B) Account Title Debit Credit Depreciation expense xxx Accumulated depreciation xxx C) Account Title Debit Credit Prepaid Rent xxx Rent expense xxx D) Account Title Debit Credit Accounts receivable xxx Unearned revenue xxx
A
69) Which of the following transactions and events results in an increase in liabilities and a decrease in net income? A) The accrual of wages expense at year-end. B) Collecting cash from a customer for services to be provided in the future. C) The accrual of revenue earned at year-end. D) Adjustment of the unearned revenue account for revenue earned during the period.
A
73) What is the effect on the financial statements when a company fails to accrue wages expense at year-end? A) Net income is overstated and liabilities are understated. B) Expenses are understated and stockholders' equity is understated. C) Expenses and liabilities are both overstated. D) Net income is overstated and liabilities are properly reported.
A
78) What is the effect on the financial statements when a company fails to accrue revenue earned at year-end? A) Net income is understated and assets are understated. B) Revenue is understated and stockholders' equity is overstated. C) Revenue is understated and assets aren't affected. D) Net income is understated and liabilities are overstated.
A
84) On December 31, 2023, Vivid Corporation prepared adjusting entries that included the following items: Depreciation expense: $43,400. Accrued sales revenue: $40,600. Accrued expenses: $16,800. Used insurance: $12,600; the insurance was initially recorded as prepaid. Rent revenue earned: $9,800; the rent was initially prepaid by the tenant and credited to unearned rent revenue. If Vivid Corporation reported total liabilities of $154,000 prior to adjusting entries, how much are Vivid's total
A
86) On December 31, 2023, Vivid Corporation prepared adjusting entries that included the following items: Depreciation expense: $43,400. Accrued sales revenue: $40,600. Accrued expenses: $16,800. Used insurance: $12,600; the insurance was initially recorded as prepaid. Rent revenue earned: $9,800; the rent was initially prepaid by the tenant and credited to unearned rent revenue. If Vivid Corporation reported stockholders' equity of $392,000 prior to the adjusting entries, how much is Vivid'
A
89) On January 1, 2023, Ryan Company paid the premium on a two-year insurance policy in the amount of $7,800. At that time, the full amount paid was recorded as prepaid insurance. After recording the adjusting entry for the insurance policy on December 31, 2023, what would be the balance in Ryan Company's prepaid insurance account? A) $3,900 B) $2,800 C) $7,800 D) $2,900
A
93) Failure to make an adjusting entry to recognize rent revenue receivable would cause which of the following? A) An understatement of assets, net income, and stockholders' equity. B) An overstatement of assets and stockholders' equity and an understatement of net income. C) No effect on assets, liabilities, net income, or stockholders' equity. D) An overstatement of assets, net income, and stockholders' equity.
A
97) On December 31, 2023, Beaver Company's revenue is $600,000 and expenses total $320,000 before consideration of the following: Accrued wages total $22,000; Accrued revenues total $72,000; Depreciation expense is $34,000; Rental revenue of $18,000 was earned; the rent from a tenant was initially recorded by Bates as unearned rent revenue; The income tax rate is 40% of income before income taxes. What is Beaver's net income after consideration of the above information? A) $188,400 B) $314,00
A
104) The declaration of a $5,000 dividend by JLH Company would be reported on which of JLH's financial statements? A) The income statement only. B) The statement of stockholders' equity. C) The balance sheet only. D) The statement of cash flows.
B
106) Morning View Company's 2023 sales revenue was $210,000 and 2022 sales revenue was $190,000. Morning View's total assets as of December 31, 2023 were $220,000 and total assets as of January 1, 2023 were $200,000. What is Morning View's total asset turnover ratio? A) 1.05 B) 1.00 C) .95 D) .98
B
109) Which of the following account balances wouldnot be affected by closing entries? A) Interest expense B) Accumulated depreciation C) Dividends D) Retained earnings
B
112) Which of the following account balances would be closed at year-end by crediting the account? A) Investment revenue B) Loss on sale of building C) Sales revenue D) Unearned revenues
B
115) Which of the following correctly describes the accounts reported on the post-closing trial balance? A) They include permanent and temporary accounts with non-zero balances. B) The ending retained earnings balance includes the current period net income. C) They include only temporary account balances. D) They do not include stockholders' equity account balances.
B
122) Emiline Company records purchases of office supplies in the Office supplies account and adjusts the account balance at the end of the period. Emiline's Office supplies account had a $10,000 balance on January 1, 2023. A count of office supplies on hand at December 31, 2023 revealed $4,000 of supplies. During the year Emiline made purchases of supplies totaling $69,000. When the adjusting entries are prepared on December 31, 2023, what is the amount Emiline will record for Office sup
B
127) On December 31, 2023, Oakcrest Company prepared an income statement and a balance sheet. In preparing the adjusting entries at year-end, Oakcrest failed to record the adjusting entry for service revenue earned but not yet collected or billed amounting to $19,500. The income statement reported net income of $123,000. The balance sheet reported total assets of $536,500, total liabilities of $349,500, and stockholders' equity of $187,000. What is the correct amount for Oakcrest to report
B
131) Pasadena Company's 2023 sales revenue was $680,000 and 2022 sales revenue was $580,000. Pasadena's total assets as of December 31, 2023 were $490,000 and total assets as of January 1, 2023 were $438,000. What is Pasadena's total asset turnover ratio? A) 1.42 B) 1.47 C) 1.39 D) 1.52
B
132) Pasadena Company's 2023 sales revenue was $600,000 and 2022 sales revenue was $540,000. Pasadena's total assets as of December 31, 2023 were $450,000 and total assets as of January 1, 2023 were $390,000. What is Pasadena's total asset turnover ratio? A) 1.48 B) 1.43 C) 1.33 D) 1.36
B
34) On October 1, 2023, Penrod Company paid $4,440 for a two-year insurance policy with the insurance coverage beginning on that date. As of December 31, 2023, which of the following account balances are correct after adjusting entries have been made? A) Prepaid insurance $2,220, and Insurance expense $2,220. B) Prepaid insurance $3,885, and Insurance expense $555. C) Prepaid insurance $0, and Insurance expense $4,440. D) Prepaid insurance $4,440, and Insurance expense $0.
B
36) On April 1, 2023, the premium on a one-year insurance policy was purchased for $2,100 cash with the insurance coverage beginning on that date. The books are adjusted only at year-end. Which of the following correctly describes the effect on the financial statements of the December 31, 2023 adjusting entry? A) Insurance expense will increase $525. B) Insurance expense will increase $1,575. C) Prepaid insurance will increase $1,575. D) Prepaid insurance will decrease $525.
B
38) Glenn Company paid $90,000 cash to its landlord on November 1, 2023 for rent covering the six-month period from November 1, 2023 through April 30, 2024. The books are adjusted only at year-end. Which of the following does not correctly describe the effect on Glenn's financial statements of the December 31, 2023 adjusting entry? A) Rent expense increases $30,000. B) Stockholders' equity increases $30,000. C) Net income decreases $30,000. D) Prepaid rent decreases $30,000.
B
40) Which of the following journal entries is created as the result of an accrual? A) Account Title Debit Credit Deferred revenue xxx Revenue xxx B) Account Title Debit Credit Interest expense xxx Interest payable xxx C) Account Title Debit Credit Cash xxx Deferred revenue xxx D) Account Title Debit Credit Revenue receivable xxx Unearned revenue xxx
B
45) On July 1, 2023, Smith Industries signed a $250,000, one-year, 6 percent note payable. The principal and interest will be paid on June 30, 2024. How much interest expense should be reported on the income statement for the year ended December 31, 2023? A) $15,000 B) $7,500 C) $2,250 D) $0
B
56) Which of the following correctly describes the following adjusting journal entry? Account Title Debit Credit Accounts receivable xxx Sales revenue xxx A) Total assets do not change. B) The transaction is an example of an accrual. C) Stockholders' equity decreases. D) Net income is not affected.
B
57) Which of the following does not correctly describe the following adjusting journal entry? Account Title Debit Credit Rent expense xxx Prepaid rent xxx A) Total assets decrease B) Retained earnings are not affected C) Stockholders' equity decreases D) Net income decreases
B
59) Which of the following correctly describes the following adjusting journal entry? Account Title Debit Credit Utilities expense xxx Utilities payable xxx A) Total assets decrease and net income decreases. B) Stockholders' equity decreases and liabilities increase. C) The transaction is an example of a deferral. D) Net income decreases and stockholders' equity does not change.
B
60) On January 1, 2023, the general ledger of Hermoso Company included supplies of $2,000. During 2023, supplies purchased amounted to $7,000. A physical count of inventory on hand at December 31, 2023 determined that the amount of supplies on hand was $2,200. How much is the supplies expense for year 2023? A) $9,000 B) $6,800 C) $7,200 D) $2,000
B
66) Which of the following journal entries would not be used to record a deferral? A) Account Title Debit Credit Prepaid rent xxx Cash xxx B) Account Title Debit Credit Cash xxx Service revenue xxx C) Account Title Debit Credit Supplies xxx Cash xxx D) Account Title Debit Credit Cash xxx Unearned revenue xxx
B
77) What is the effect on the financial statements when a company fails to accrue interest expense at year-end? A) Net income is overstated and assets are overstated. B) Expenses are understated and liabilities are understated. C) Expenses are understated and stockholders' equity is understated. D) Net income is overstated and liabilities are overstated.
B
80) On December 31, 2023, Vivid Corporation prepared adjusting entries that included the following items: Depreciation expense: $43,400. Accrued sales revenue: $40,600. Accrued expenses: $16,800. Used insurance: $12,600; the insurance was initially recorded as prepaid. Rent revenue earned: $9,800; the rent was initially prepaid by the tenant and credited to unearned rent revenue. If Vivid Corporation reported pretax income of $168,000 prior to the adjusting entries, how much is Vivid's preta
B
83) On December 31, 2023, Vivid Corporation prepared adjusting entries that included the following items: Depreciation expense: $40,000; Accrued sales revenue: $38,000; Accrued expenses: $26,000; Used insurance: $6,000; the insurance was initially recorded as prepaid. Rent revenue earned: $4,000; the rent was initially prepaid by the tenant and credited to unearned rent revenue. If Vivid Corporation reported total liabilities of $180,000 prior to adjusting entries, how much are Vivid's total
B
96) On December 31, 2023, Beaver Company's revenue is $350,000 and expenses total $240,000 before consideration of the following: Accrued wages total $16,500; Accrued revenues total $47,000; Depreciation expense is $22,500; Rental revenue of $9,000 was earned; the rent from a tenant was initially recorded by Bates as unearned rent revenue; The income tax rate is 40% of income before income taxes. What is Beaver's net income after consideration of the above information? A) $82,300 B) $76,200 C
B
101) Which of the following statements doesnot correctly describe the relationship between the income statement and the ending retained earnings balance? A) Net income increases the ending balance of retained earnings. B) A net loss decreases the ending retained earnings balance. C) A net loss does not affect the ending retained earnings balance. D) Net income and net loss both affect the ending retained earnings balance.
C
108) Which of the following correctly describes the closing entry process? A) The closing process reduces the balances in the permanent accounts to zero at the end of each period. B) The closing entries are usually prepared prior to the adjusted trial balance. C) The closing process creates a zero balance in all temporary accounts at the end of each period. D) The closing process creates a zero balance at the end of each period for all accounts on the year-end trial balance.
C
116) Which of the following couldnot be a correct closing entry? A) Account Title Debit Credit Revenues xxx Gain on sale of land xxx Expenses xxx Retained earnings xxx B) Account Title Debit Credit Revenues xxx Loss on sale of Building xxx Expenses xxx Retained earnings xxx C) Account Title Debit Credit Loss on sale of land xxx Expenses xxx Revenues xxx Retained earnings xxx D) Account Title Debit Credit Retained earnings xxx Revenues xxx Expenses xxx
C
118) Which of the following accounts wouldnot be included in the closing process at yearend? A) Rent expense B) Sales revenue C) Additional paid-in capital D) Cost of goods sold
C
123) Gertrude Company's Unearned rent revenue account shows a balance of $60,000 on January 1, 2023. During the adjustment process at December 31, 2023, Gertrude recorded a $70,000 adjustment to Unearned rent revenue to recognize revenue earned during the year. If the balance in Gertrude's Unearned rent revenue account was $57,500 after the adjustments were recorded, what was the amount of cash collected by Gertrude for rent revenue during the year? A) $117,500 B) $72,500 C) $67,500 D)
C
124) Gertrude Company's Unearned rent revenue account shows a balance of $55,000 on January 1, 2023. During the adjustment process at December 31, 2023, Gertrude recorded a $60,000 adjustment to Unearned rent revenue to recognize revenue earned during the year. If the balance in Gertrude's Unearned rent revenue account was $52,500 after the adjustments were recorded, what was the amount of cash collected by Gertrude for rent revenue during the year? A) $107,500 B) $62,500 C) $57,500 D)
C
128) On December 31, 2023, Oakcrest Company prepared an income statement and a balance sheet. In preparing the adjusting entries at year-end, Oakcrest failed to record the adjusting entry for service revenue earned but not yet collected or billed amounting to $10,000. The income statement reported net income of $104,000. The balance sheet reported total assets of $508,000, total liabilities of $340,000, and stockholders' equity of $168,000. What is the correct amount for Oakcrest to report
C
31) Morgan Company used supplies in the amount of $2,000. Due to an error in posting to the general ledger, the supplies account was credited for $2,000 while supplies expense was debited for $200. Which of the following is correct? A) The required adjusting journal entry is classified as a deferral. B) Since only revenue and expense accounts need adjustments, the accountant should debit supplies expense and credit a revenue account. C) The other financial statements will be impacted by this
C
32) Which is the correct sequence of the following steps in the accounting cycle? A) Prepare journal entries, analyze transactions, prepare a trial balance. B) Prepare trial balance, prepare closing entries, and prepare financial statements. C) Post adjusting journal entries, prepare financial statements, close the income statement accounts. D) Close the permanent accounts, prepare financial statements, post effects to the ledger.
C
37) On April 1, 2023, the premium on a one-year insurance policy was purchased for $3,000 cash with the insurance coverage beginning on that date. The books are adjusted only at year-end. Which of the following correctly describes the effect on the financial statements of the December 31, 2023 adjusting entry? A) Prepaid insurance will decrease $750. B) Insurance expense will increase $750. C) Insurance expense will increase $2,250. D) Prepaid insurance will increase $2,250.
C
41) Which of the following journal entries is created as the result of a deferral? A) Account Title Debit Credit Wages expense xxx Wages payable xxx B) Account Title Debit Credit Interest expense xxx Interest payable xxx C) Account Title Debit Credit Cash xxx Unearned revenue xxx D) Account Title Debit Credit Accounts receivable xxx Deferred revenue xxx
C
44) On July 1, 2023, Smith Industries signed a $110,000, one-year, 6 percent note payable. The principal and interest will be paid on June 30, 2024. How much interest expense should be reported on the income statement for the year ended December 31, 2023? A) $990 B) $0 C) $3,300 D) $6,600
C
48) Which of the following does not correctly describe an adjusting journal entry that debits supplies expense and credits supplies? A) The entry increases expenses and decreases assets. B) The entry decreases net income and decreases assets. C) The entry increases expenses and increases retained earnings. D) The entry decreases net income and decreases stockholders' equity.
C
50) Which of the following correctly describes the effects of accruing income tax expense at year-end? A) A cash payment is made to pay the taxes due. B) Liabilities are not affected. C) Retained earnings decreases. D) Net income increases.
C
53) Which of the following does not correctly describe the following journal entry? Account Title Debit Credit Supplies xxx Cash xxx A) Total assets do not change. B) The transaction is an example of a deferral. C) Stockholders' equity decreases. D) Net income is not affected.
C
55) Which of the following does not correctly describe the following adjusting journal entry? Account Title Debit Credit Interest receivable xxx Interest revenue xxx A) Total assets increase. B) The transaction is an example of an accrual. C) Stockholders' equity decreases. D) Net income increases.
C
61) On January 1, 2023, the general ledger of Hermoso Company included supplies of $2,500. During 2023, supplies purchased amounted to $12,500. A physical count of inventory on hand at December 31, 2023 determined that the amount of supplies on hand was $3,000. How much is the supplies expense for year 2023? A) $15,000 B) $13,000 C) $12,000 D) $2,500
C
63) Which of the following adjusting journal entries is not created as the result of an accrual? A) Account Title Debit Credit Interest expense xxx Interest payable xxx B) Account Title Debit Credit Accounts receivable xxx Service revenue xxx C) Account Title Debit Credit Prepaid Rent xxx Rent expense xxx D) Account Title Debit Credit Interest receivable xxx Interest revenue xxx
C
67) Which of the following accounts is used to initially record a deferral? A) Interest payable B) Rent expense C) Supplies D) Supplies expense
C
71) Which of the following transactions does not create a deferral? A) Paying cash to purchase a three-month insurance policy. B) Receiving cash from a customer for services to be provided in the future. C) Paying cash to employees for wages they have earned. D) Paying cash to purchase a two-month supply of office supplies.
C
76) What is the effect on the financial statements when a company fails to adjust the unearned revenue account for revenues earned at year-end? A) Net income is understated and assets are understated. B) Revenues are understated and liabilities are understated. C) Net income is understated and liabilities are overstated. D) Revenues are understated and stockholders' equity is overstated.
C
81) On December 31, 2023, Vivid Corporation prepared adjusting entries that included the following items: Depreciation expense: $34,000. Accrued sales revenue: $32,000. Accrued expenses: $14,000. Used insurance: $6,000; the insurance was initially recorded as prepaid. Rent revenue earned: $4,000; the rent was initially prepaid by the tenant and credited to unearned rent revenue. If Vivid Corporation reported total assets of $320,000 prior to the adjusting entries, how much are Vivid's total
C
82) On December 31, 2023, Vivid Corporation prepared adjusting entries that included the following items: Depreciation expense: $43,400. Accrued sales revenue: $40,600. Accrued expenses: $16,800. Used insurance: $12,600; the insurance was initially recorded as prepaid. Rent revenue earned: $9,800; the rent was initially prepaid by the tenant and credited to unearned rent revenue. If Vivid Corporation reported total assets of $546,000 prior to the adjusting entries, how much are Vivid's total
C
87) On July 1, 2023, Goode Company borrowed $290,000. The company signed a note payable with interest at 5 percent per year. The note and interest are due on December 31, 2023. On December 31, 2023, Goode paid $297,250 to settle the debt in full. Assuming no accruals for interest have been made during the year, transaction analysis of the $297,250 cash payment on December 31, 2023 should reflect which of the following? A) A decrease in assets of $290,000, a decrease in stockholders' equity
C
91) Assume Idaho Company recorded the following adjusting journal entry at year-end: Account Title Debit Credit Insurance expense 3,800 Prepaid insurance 3,800 If the beginning balance in prepaid insurance was $800, and $6,000 was paid for an insurance premium during the year, what is the ending balance in the prepaid insurance account after the above adjusting entry? A) $5,700 B) $3,200 C) $3,000 D) $2,700
C
94) Which of the following statements regarding a trial balance spreadsheet isincorrect? A) The amount of Cash reported in the unadjusted columns is exactly equal to the amount of Cash reported in the adjusted columns. B) In the adjusted columns, Retained earnings does not yet include the effects of net income. C) Debits must equal credits in the unadjusted and adjusted columns but need not be equal in the adjustments columns. D) For each account, numbers are added or subtracted across the r
C
95) Which of the following accounts would most likelynot require an adjusting entry at yearend? A) Unearned subscription revenue B) Office supplies C) Cash D) Prepaid rent
C
99) Which of the following will result in an increase in earnings per share? A) Accruing expenses at year-end. B) Selling additional shares of common stock during the year. C) Accruing revenue at year-end. D) Receiving cash from a tenant that is recorded as unearned revenue.
C
100) Which of the following statements regarding earnings per share isnot correct? A) Earnings per share can be reported on the income statement. B) The numerator is net income less preferred stock dividends. C) The denominator is the weighted average number of shares of common stock outstanding. D) Earnings per share does not have to be disclosed on the income statement or the notes to the financial statements.
D
102) Which of the following statements regarding the balance sheet isfalse? A) Buildings and equipment are reported at book value. B) Assets are reported in the order of liquidity. C) Current liabilities are obligations to be paid with current assets. D) The balance sheet reflects balances for a period of time.
D
103) Of the four lists of accounts presented below, which of the following represents the correct order for the accounts to be reported on a balance sheet in terms of sections of the balance sheet? A) Intangible assets, Buildings, Treasury stock, Notes payable. B) Dividends payable, Wages payable, Additional paid-in capital, Common stock. C) Treasury stock, Accumulated depreciation, Supplies, Additional paid-in capital. D) Prepaid expenses, Intangible assets, Unearned revenue, Notes payable.
D
107) Morning View Company's 2023 sales revenue was $160,000 and 2022 sales revenue was $144,000. Morning View's total assets as of December 31, 2023 were $120,000 and total assets as of January 1, 2023 were $104,000. What is Morning View's total asset turnover ratio? A) 1.48 B) 1.33 C) 1.36 D) 1.43
D
111) Which of the following account balances wouldnot be closed at year-end by debiting the account? A) Interest revenue B) Gain on sale of building C) Sales revenue D) Unearned revenue
D
114) A post-closing trial balance would show a zero balance in which one of the following accounts? A) Supplies B) Accounts receivable C) Accumulated depreciation D) Income tax expense
D
119) On January 1, 2023, the balance in Harrison Company's prepaid insurance account was $6,900. On December 31, 2023, after the 2023 adjusting entries were made, the balance of the prepaid insurance account was $6,200. During 2023, cash payments for insurance premiums amounted to $19,500, which was debited to the prepaid insurance account. When the adjusting entries were prepared on December 31, 2023, what is the amount Harrison recorded for the adjustment and which account was debited?
D
121) Emiline Company records purchases of office supplies in the Office supplies account and adjusts the account balance at the end of the period. Emiline's Office supplies account had a $12,500 balance on January 1, 2023. A count of office supplies on hand at December 31, 2023 revealed $5,000 of supplies. During the year Emiline made purchases of supplies totaling $71,500. When the adjusting entries are prepared on December 31, 2023, what is the amount Emiline will record for Office sup
D
126) On December 31, 2023, Oakcrest Company prepared an income statement and a balance sheet. In preparing the adjusting entries at year-end, Oakcrest failed to record the adjusting entry for wages earned by employees, but not yet paid, amounting to $10,000 for the last two days of the year. The income statement reported net income of $104,000. The balance sheet reported total assets of $508,000, total liabilities of $340,000, and stockholders' equity of $168,000. What is the correct amoun
D
129) On December 31, 2023, Hascall Company had revenue of $1,220,000 and expenses total $650,000 before consideration of the following: Accrued wages $46,000 Accrued revenues 145,000 Depreciation expense 69,000 Rental revenue (initially recorded as unearned rent revenue) 37,000 If Hascall's income tax rate is 40% of income before income taxes, what is the company's net income after consideration of the above information? A) $570,000 B) $357,760 C) $637,000 D) $382,200
D
30) Which of the following is a false statement about adjustments? A) Adjusting entries include deferrals and accruals. B) Companies wait until the end of the accounting period to adjust their accounts. C) Adjusting entries are required every time a company wants to prepare financial statements for external users. D) Every account could require an adjustment.
D
33) Which is the correct order of the following steps in the accounting cycle? A) Prepare financial statements, journalize and post adjusting entries, journalize and post the closing entries, and prepare a post-closing trial balance. B) Prepare a trial balance, journalize and post adjusting entries, journalize and post the closing entries, and prepare financial statements. C) Journalize and post adjusting entries, journalize and post the closing entries, prepare financial statements, and pre
D
35) On October 1, 2023, Penrod Company paid $2,400 for a two-year insurance policy with the insurance coverage beginning on that date. As of December 31, 2023, which of the following account balances are correct after adjusting entries have been made? A) Prepaid insurance $2,400, and Insurance expense $0. B) Prepaid insurance $0, and Insurance expense $2,400. C) Prepaid insurance $1,200, and Insurance expense $1,200. D) Prepaid insurance $2,100, and Insurance expense $300.
D
39) Glenn Company paid $9,000 cash to its landlord on November 1, 2023 for rent covering the six-month period from November 1, 2023 through April 30, 2024. The books are adjusted only at year-end. Which of the following does not correctly describe the effect on Glenn's financial statements of the December 31, 2023 adjusting entry? A) Net income decreases $3,000. B) Prepaid rent decreases $3,000. C) Rent expense increases $3,000. D) Stockholders' equity increases $3,000.
D
46) Which of the following does not correctly describe an adjusting journal entry that debits interest expense and credits interest payable? A) The entry increases expenses and decreases retained earnings. B) The entry decreases net income and decreases stockholders' equity. C) The entry increases expenses and increases liabilities. D) The entry decreases assets and decreases stockholders' equity.
D
47) Which of the following does not correctly describe an adjusting journal entry that debits rent expense and credits prepaid rent? A) The entry increases expenses and decreases stockholders' equity. B) The entry decreases net income and decreases assets. C) The entry increases expenses and decreases current assets. D) The entry decreases net income and decreases liabilities.
D
51) Which of the following correctly describes the effects of initially recording deferred revenue when cash is received from a customer? A) Revenue is increased. B) Liabilities are not affected. C) Retained earnings increases. D) Net income is not affected.
D
54) Which of the following does not correctly describe the following adjusting journal entry? Account Title Debit Credit Wages expense xxx Wages payable xxx A) Total assets do not change. B) The transaction is an example of an accrual. C) Stockholders' equity decreases. D) Net income is not affected.
D
64) Which of the following accounts is used to record an accrual for expenses? A) Prepaid rent B) Unearned revenue C) Accounts receivable D) Interest payable
D
65) Which of the following journal entries is used to record a deferral? A) Account Title Debit Credit Interest expense xxx Interest payable xxx B) Account Title Debit Credit Accounts receivable xxx Service revenue xxx C) Account Title Debit Credit Wages expense xxx Wages payable xxx D) Account Title Debit Credit Cash xxx Unearned revenue xxx
D
68) Which of the following transactions and events results in a decrease in both total assets and net income? A) The accrual of wages expense at year-end. B) Collecting cash from an account receivable. C) Recognizing previously recorded deferred revenue as revenue. D) Adjustment of the prepaid rent account for rent used during the period.
D
70) Which of the following transactions results in an increase in both net income and stockholders' equity? A) Paying cash to acquire a six-month insurance policy. B) Collecting cash from a customer for services to be provided in the future. C) The accrual of interest expense year-end. D) Adjustment of the unearned revenue account for revenue earned during the period.
D
72) Which of the following is not an accrual? A) Crediting wages payable for wages earned to date. B) Debiting interest receivable for interest earned to date. C) Debiting interest expense for interest incurred to date. D) Debiting depreciation expense for depreciation incurred during the period.
D
74) What is the effect on the financial statements when a company fails to record depreciation expense at year-end? A) Net income is overstated and stockholders' equity is understated. B) Expenses are understated and stockholders' equity is understated. C) Expenses are understated and liabilities are overstated. D) Net income is overstated and assets are overstated.
D
75) What is the effect on the financial statements when a company fails to adjust the prepaid insurance account at year-end for insurance coverage that has been used? A) Net income is overstated and stockholders' equity is understated. B) Expenses are understated and stockholders' equity is understated. C) Expenses are understated and net income is understated. D) Net income is overstated and assets are overstated.
D
79) On December 31, 2023, Vivid Corporation prepared adjusting entries that included the following items: Depreciation expense: $24,000. Accrued sales revenue: $22,000. Accrued expenses: $14,000. Used insurance: $9,000; the insurance was initially recorded as prepaid. Rent revenue earned: $7,000; the rent was initially prepaid by the tenant and credited to unearned rent revenue. If Vivid Corporation reported pretax income of $160,000 prior to the adjusting entries, how much is Vivid's pretax
D
85) On December 31, 2023, Vivid Corporation prepared adjusting entries that included the following items: Depreciation expense: $33,000; Accrued sales revenue: $31,000; Accrued expenses: $12,000; Used insurance: $5,000; the insurance was initially recorded as prepaid. Rent revenue earned: $3,000; the rent was initially prepaid by the tenant and credited to unearned rent revenue. If Vivid Corporation reported stockholders' equity of $210,000 prior to the adjusting entries, how much is Vivid's
D
88) On July 1, 2023, Goode Company borrowed $100,000. The company signed a note payable with interest at 6 percent per year. The note and interest are due on December 31, 2023. On December 31, 2023, Goode paid $103,000 to settle the debt in full. Assumingno accruals for interest have been made during the year, transaction analysis of the $103,000 cash payment on December 31, 2023 should reflect which of the following? A) A decrease in assets of $103,000 and a decrease in liabilities of $103
D
90) On January 1, 2023, Ryan Company paid the premium on a three-year insurance policy in the amount of $6,000. At that time, the full amount paid was recorded as prepaid insurance. After recording the adjusting entry for the insurance policy on December 31, 2023, what would be the balance in Ryan Company's prepaid insurance account? A) $6,000 B) $2,000 C) $3,000 D) $4,000
D
92) Assume Idaho Company recorded the following adjusting journal entry at year-end: Account Title Debit Credit Insurance expense 2,000 Prepaid insurance 2,000 If the beginning balance in prepaid insurance was $500, and $2,500 was paid for an insurance premium during the year, what is the ending balance in the prepaid insurance account after the above adjusting entry? A) $1,200 B) $700 C) $2,200 D) $1,000
D
98) Which of the following statements is correct? A) Balance sheet accounts are permanent accounts and do not retain their balances from one period to the next. B) Balance sheet accounts are temporary accounts and do retain their balances from one period to the next. C) Income statement accounts are permanent accounts and do retain their balances from one period to the next. D) Income statement accounts are temporary accounts and do not retain their balances from one period to the next.
D
