Accounting multiple choice

a. Credit balance of $4,000

b. Credit balance of $5,000

c. Debit balance of $4,000

d. Debit balance of $5,000

3. The accountant for sparks electric failed to make an adjusting entry to record $3,000 of telephone expenses for the last two months of the year. Which is true?

a. Total liabilities will be overstated

b. Total liabilities will be understated

c. Total assets will be overstated

d. Total assets will be understated

4. Financial statements are prepared from the balances in an

a. Chart of accounts

b. General journal

c. Unadjusted trial balance

d. Adjusted trial balance

5. Which of the following entries would be made as the result of the revenue recognition principle?

a. Accounts receivable (1,000)

i. Service Revenue (1,000)

b. Salaries expense (1,000)

i. Accounts payable (1,000)

c. Depreciation expense (1,000)

i. Accumulated expense (1,000)

d. Service revenue (1,000)

i. Service Revenue (1,000)

6. Qerty inc. prepaid $3,600 on November 1, 2014 for a one-year insurance premium. On January 1, 2015 the next year (after December 31 adjustments), the prepaid insurance account will have a debit balance of

a. 3,900

b. 3,000

c. 3,300

d. 3,600

7. if a company is using the accrual basis accounting method, when should it record its earned revenue?

a. When cash is received, even though services may be rendered later

b. When cash is received, 30 days after the completion of services

c. When services are rendered, even though cash may be received at a later date

d. When services are completely rendered and cash is received

8. Revenue is said to be earned when the business has

a. Prepared a journal entry to record revenue

b. Entered into a agreement with the customer about the goods or services being delivered

c. Received cash from the customer before goods or services are delivered

d. Delivered a good or service to the customer