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Question 1.1. As prepaid expenses expire with the passage of time, the correct adjusting entry will be a: (Points : 1)
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debit to an asset account and a credit to an expense account.
debit to an expense account and a credit to an asset account.
debit to an asset account and a credit to an asset account.
debit to an expense account and a credit to an expense account.
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Question 2.2. An investment by the stockholders in a business increases (Points : 1)
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assets and stockholders' equity.
assets and liabilities.
liabilities and stockholders' equity.
assets only.
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Question 3.3. Which of the following describes the classification and normal balance of the Retained Earnings account? (Points : 1)
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Asset, debit
Stockholders' equity, credit
Revenues, credit
Expense, debit
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Question 4.4. If total liabilities decreased by $4,000, then (Points : 1)
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stockholders' equity must have decreased by $4,000.
assets must have decreased by $4,000, or stockholders' equity must have increased by $4,000.
assets and stockholders' equity each increased by $2,000.
assets must have increased by $4,000.
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Question 5.5. If expenses are paid in cash, then (Points : 1)
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assets will increase.
liabilities will decrease.
stockholders' equity will increase.
assets will decrease.
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Question 6.6. The Harris Company purchased a computer for $3,000 on December 1. It is estimated that annual depreciation on the computer will be $600. If financial statements are to be prepared on December 31, the company should make the following adjusting entry: (Points : 1)
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debit Depreciation Expense, $600; credit Accumulated Depreciation, $600.
debit Depreciation Expense, $50; credit Accumulated Depreciation, $50.
debit Depreciation Expense, $2,400; credit Accumulated Depreciation, $2,400.
debit Office Equipment, $3,000; credit Accumulated Depreciation, $3,000.
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Question 7.7. All of the following are required steps in the accounting cycle except: (Points : 1)
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journalizing and posting closing entries.
preparing an adjusted trial balance.
preparing a post-closing trial balance.
preparing a work sheet.
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Question 8.8. An adjusting entry: (Points : 1)
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affects two balance sheet accounts.
affects two income statement accounts.
affects a balance sheet account and an income statement account.
is always a compound entry.
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Question 9.9. Assets normally show (Points : 1)
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credit balances.
debit balances.
debit and credit balances.
debit or credit balances.
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Question 10.10. Given the following adjusted trial balance:
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Debit
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Credit
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Cash
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$781
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Accounts receivable
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1,049
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Inventory
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1,562
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Prepaid rent
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43
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Property, plant & equipment
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150
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Accumulated depreciation
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26
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Accounts payable
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41
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Unearned revenue
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61
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Common stock
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103
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Retained earnings
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3,305
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Service revenue
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134
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Interest revenue
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28
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Salary expense
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80
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Travel expense
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33
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_____
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Total
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$3,698
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$3,698
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After closing entries have been posted, the balance in retained earnings will be: (Points : 1)
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$3,256
$3,170
$3,440
$3,354
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