Chapter 3 Flashcards
- On October 1, Seaview Apartments received $6,000 from a tenant for four months’ rent. The receipt was credited to Unearned Rent Revenue. What adjusting entry is needed on December 31 ?
A. Debit 1,500 under Unearned Rent Revenue. Credit 1,500 under Rent Revenue
B. Debit 4,500 under Cash. Credit 4,500 under Rent Revenue
C. Debit 1,500 under Rent Revenue. Credit 1,500 under Unearned Rent Revenue
D. Debit 4,500 under Unearned Rent Revenue. Credit 4,500 under Rent Revenue
D
95. Equipment of $150,000, Accumulated depreciation equipment of $22,500 and Depreciation expenses equipment of $7,500 appear on the adjusted trial balance of Park National Company. The carrying amount of the equipment is A. $120,000 B. $127,500 C. $142,500 D. $150,000
Answer: B
Chapter: 3
Explanation: Carrying amount = Equipment – Accumulated Depreciation
$150,000 - $22,500 = $127,500
96. Pisces, Inc., purchased supplies for $1,300 during 20X6. At the year-end, Pisces had $800 of supplies left. The adjusting entry should A. Credit Supplies $800 B. Debit Supplies $500 C. Debit Supplies Expense $500 D. Debit Supplies Expense $800
C
- The accountant for Starter Corp. failed to make the adjusting entry to record depreciation for the current year. The effect of this error is which of the following?
A. Assets are overstated; shareholders’ equity and net income are understated
B. Assets, net income, and shareholders’ equity are all overstated
C. Assets and expenses are understated; net income is understated
D. Net income is overstated and liabilities are understated
B
- Interest earned on a note receivable at December 31 equals $400. What adjusting entry is required to accrue this interest?
A. Debit 400 under Interest Receivable. Credit 400 under Interest Revenue
B. Debit 400 under Interest Expense. Credit 400 under Cash
C. Debit 400 under Interest Expense. Credit 400 under Interest Payable
D. Debit 400 under Interest Payable. Credit 400 under Interest Expense
B
- If a real estate company fails to accrue commission revenue,
A. Revenues are understated and net income is overstated
B. Net income is understated and shareholders’ equity is overstated
C. Liabilities are overstated and owners’ equity is understated
D. Assets are understated and net income is understated
D
101. The account Unearned Revenue is a(n) A. Revenue B. Asset C. Liability D. Expense
C
An adjusting entry for prepaid expenses results in ________ to an expense account and ________ to an asset account
An adjusting entry for prepaid expenses results in an increase (debit) to an expense account and a decrease (credit) to an asset account
The purchase of supplies results in _________ to an asset account
Increase (debit)
The cost of insurance paid in advance is recorded as _____ in the asset account prepaid insurance. At the financial statement date, companies _______ insurance expense and _______ prepaid insurance
an increase (debit)
increase (debit)
decrease (credit)
When companies receive cash before services are performed they record ______ by _______ a _______ account called unearned revenues.
A liability
increasing (crediting)
liability
The adjusting entry for unearned revenues results in _______ to a liability account and ______ to a revenue account
a decrease (debit) an increase (credit)
Name examples for unearned revenues
rent, magazine subscriptions, deposits
When accounting for prepaid expenses, the adjusting entry consists of _____ expenses and ______ assets
debiting
crediting
When accounting for unearned revenues, you ______ liabilities and ______ revenues
debit
credit
An adjusting entry for accrued revenues results in ______ to an asset account and an ______ to a revenue account
an increase (a debit) an increase (a credit)
When accounting for accrued revenues, the adjusting entry consists of _____ Assets and _____ Revenues
debiting
crediting
Expenses incurred but not yet paid or recorded are called _____
Accrued expenses
An adjusting entry for accrued expenses results in _______ to an expense account and _______ to a liability account
an increase (debit) an increase (credit)
When accounting for accrued expenses, the adjusting entry consists of _____ expenses and ______ liabilities
debiting
crediting
103.An adjusting entry that debits an expense and credits a liability is which type of expense? A.Accrued expense B.Cash expense C.Prepaid expense D.Depreciation expense
A
106.Which of the following accounts is not closed? A.Accumulated Depreciation B.Dividends C.Interest Revenue D.Depreciation Expense
A
109.A major purpose of preparing closing entries is to:
A.Close the liabilities accounts
B.Adjust the asset accounts to their correct current balances
C.Update the retained earnings account
D.Record the dividends
C
111.Earnings a revenue and immediately collecting the related cash will: A.Increase owner’s equity B.Have no effect on total assets C.Increase liabilities D.Have no effect on net assets
A
115.An expense incurred in 2016 is not paid until 2017. Using the accrual basis of accounting, the expense should appear on:
A.The 2016 income statement
B.The 2017 income statement
C.Neither the 2016 not the 2017 income statement
D.Both the 2016 and 2017 income statements
A
