Chapter 8

Question 1

If the total amount for rent expense is inadvertently posted to prepaid rent at the end of the year, what will be the effect on the year and financial statements?
- Expenses will be overstated
- owners equity will be understated
- Assets will be overstated
- Revenues will be understated

Answer 1

Assets will be overstated

Question 2

Which of the following is not a reason for problems occurring in the financial statements?
- fraud
- Errors
- safeguards
- disagreements

Answer 2

Safeguards

Question 3

Failure to record the used portion of supplies on hand during the month has the following effect on the financial statements prepared at the end of the month
- under states net income
- overstates assets
- overstates liabilities
- understates owners equity

Answer 3

Overstates assets

Question 4

If the total amount for insurance expense is in advertently posted to prepaid insurance at the end of the year, what will be the effect on the year in financial statements?
- Revenues will be overstated
- Revenues will be understated
- owners equity will be understated
- owners equity will be overstated

Answer 4

Owners equity will be overstated