In which month should Kelly record the cost of the cleaning supplies as an expense?
January
February
March
April
In which month should Kelly report the $35 revenue on the company’s Income Statement?
If Kelly Company uses the cash basis of accounting instead of the accrual basis, in which month will it report revenue and in which month will it report expense?
Revenue: February Expense: February
Revenue: March Expense: April
Revenue: February Expense: April
Revenue: March Expense: February
In which month should revenue be recorded?
. In the month that goods are ordered by the customer
In the month that cash is collected from the custome
In the month that the invoice is mailed to the customer
In the month that goods are shipped to the customer
Dumbo adjusts the accounts at the end of each month. Based on these facts, the adjusting entry at the end of January should include:
a. a debit to Prepaid Rent for $1,000. c
a debit to Prepaid Rent for $200.
a credit to Prepaid Rent for $1,000.
. a credit to Prepaid Rent for $200.
Assume the same facts as in question 3-49. Dumbo’s adjusting entry at the end of February should include a debit to Rent Expense in the amount of
$400
$0
$200
$1000
What effect does the adjusting entry in question 3-50 have on Dumbo’s net income for February?
Increase by $200
Increase by $400
. Decrease by $200
Decrease by $400
An adjusting entry recorded April salary expense that will be paid in May. Which statement best describes the effect of this adjusting entry on the company’s accounting equation?
Assets are not affected, liabilities are increased, and shareholders’ equity is decreased.
Assets are not affected, liabilities are increased, and shareholders’ equity is increased.
Assets are decreased, liabilities are increased, and shareholders’ equity is decreased.
. Assets are decreased, liabilities are not affected, and shareholders’ equity is decreased.
On April 1, 20X7, Royal Insurance Company sold a one-year insurance policy covering the year ended April 1, 20X8. Royal collected the full $3,200 on April 1, 20X7. Royal made the following journal entry to record the receipt of cash in advance:
Nine months have passed, and Royal has made no adjusting entries. Based on these facts, the adjusting entry needed by Royal at December 31, 20X7, is:
a
b
c
d
The Unearned Revenue account of Genius Incorporated began 20X6 with a normal balance of $3,000 and ended 20X6 with a normal balance of $18,000. During 20X6, the Unearned Revenue account was credited for $27,000 that Genius will earn later. Based on these facts, how much revenue did Genius earn in 20X6?
$6,000
$12,000
. $15,000
$27,000
What is the effect on the financial statements of recording depreciation on equipment?
Assets are decreased, but net income and shareholders’ equity are not affected.
Net income and assets are decreased, but shareholders’ equity is not affected.
Net income is not affected, but assets and shareholders’ equity are decreased.
. Net income, assets, and shareholders’ equity are all decreased.
For 20X6, Martin Company had revenues in excess of expenses. Which statement describes Martin’s closing entries at the end of 20X6?
a. Revenues will be debited, expenses will be credited, and retained earnings will be debited.
Revenues will be credited, expenses will be debited, and retained earnings will be debited.
Revenues will be debited, expenses will be credited, and retained earnings will be credited.
Revenues will be credited, expenses will be debited, and retained earnings will be credited.
Which of the following accounts would not be included in the closing entries?
Accumulated Depreciation
Depreciation Expense
Service Revenue
. Retained Earnings
A major purpose of preparing closing entries is to
. update the Retained Earnings account.
. adjust the asset accounts to their correct current balances.
close out the Supplies account
zero out the liability accounts.
Unadjusted net income equals $7,800. Calculate net income after the following adjustments: Salaries payable to employees, $680; Interest due on note payable at the bank, $120; Unearned revenue that has been earned, $940; Supplies used, $360
$8,020
$7,800
$7,580
. $7,820
Salary Payable at the beginning of the month totals $27,000. During the month, salaries of $132,000 were accrued as expense. If ending Salary Payable is $18,000, what amount of cash did the company pay for salaries during the month?
$123,000
$132,000
$141,000
$159,000
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