TRUE/FALSE 1.
A ledger ledger is is where where the the compa company ny initial initially ly record records s transac transaction tions s and and select selected ed other other events. events.
2.
Nomina Nominall (tempo (temporar rary) y) accou accounts nts are are revenu revenue, e, expen expense, se, and and dividen dividend d accoun accounts ts and are are periodically closed.
3.
Real Real (perm (perman anen ent) t) acco accoun unts ts are revenu revenue, e, expen expense se,, and and divi divide dend nd accou account nts s and and are are periodically closed.
.
!nder !nder "ntern "nternat ation ional al #inan #inancia ciall Reporti Reporting ng $tand $tandard ards s ("#R$) ("#R$) the divide dividend nds s accoun accountt is considered a real account.
%.
!nder !nder "nterna "nternation tional al #inanci #inancial al Report Reporting ing $tand $tandards ards ("#R$) ("#R$) the &'oo &'oo o origin original al entry& entry& is is also nown as the *ournal.
+.
n the the incom income e statem statemen ent, t, de'i de'its ts are used used to incre increase ase acco accoun untt 'alanc 'alances, es, whe wherea reas s on the statement o inancial position, credits are used to increase account 'alances.
-.
he rule rules s or de'it de'it and and cred credit it and and the norm normal al 'alan 'alance ce o $hare $hare /ap /apita ital0 l0rdi rdina nary ry are the same as or lia'ilities.
.
n the incom income e sta stateme tement nt,, reve revenu nues es are incre increas ased ed 'y a de'it e'it where hereas as on the the statement o inancial position retained earnings is increased 'y a credit.
.
oth a corpor corporatio ation n and and a propriet proprietorsh orship ip commo commonly nly use the share share capita capitall accoun account. t.
14.
All lia'il lia'ility ity and and e5uity e5uity accounts accounts are increase increased d on the credit credit side side and and decre decrease ased d on the de'it side.
11.
"n gene genera ral, l, de'i de'its ts ree reerr to incr increa ease ses s in acco accoun untt 'ala 'alanc nces es,, and and cred credit its s ree reerr to decreases.
12. 12.
he irst irst step step in the accoun accountin ting g cycle cycle is the *ourna *ournali6 li6ing ing o tran transac sactio tions ns and selec selected ted other events.
13.
asic asic steps steps in the recordin recording g process process include include transer transerring ring the *ournal *ournal inor inormati mation on to the appropriate account in the statement o inancial position.
1.
he trial trial 'alance 'alance uncovers uncovers any errors errors in *ourna *ournali6in li6ing g and and postin posting g prior prior to preparat preparation ion o o the statement o inancial position.
1%.
he tr trial 'a 'alance wi will not 'alance when a company de'its two statement o inancial position accounts and no income statement accounts.
1+. 1+.
7osti 7osting ng is done done or income income statem statemen entt activit activity8 y8 activi activity ty relate related d to stateme statement nt o inan inancia ciall position does not re5uire posting.
1-. 1-.
he he trial trial 'alan 'alance ce is a list listin ing g o all all the acco accoun unts ts and and thier thier 'ala 'alanc nces es in the orde orderr the the accounts appear on the statement o inancial position.
.
1. 1.
he trail trail 'alan 'alance ce is used used to prepare prepare stat stateme ement nt o inan inancia ciall positio position n while while the gene general ral ledger is used to prepare the income statement.
1. 1.
ne purp purpose ose o o a trial trial 'alan 'alance ce is to prov prove e that that de'its de'its and and cred credits its o o an e5ual e5ual amou amount nt are in the general ledger.
24. 24.
A gene general ral *ourna *ournall chrono chronolog logica ically lly lists lists transa transacti ction ons s and other other events events,, express expressed ed in terms o de'its and credits to accounts.
21. 21.
" a comp compan any y ails ails to post post one o its its *our *ourna nall entr entrie ies s to its gene genera rall ledge ledger, r, the the trial trial 'alance will not show an e5ual amount o de'it and credit 'alance accounts.
22.
Ad*ustin Ad*usting g entrie entries s or or prepay prepayment ments s record record the the porti portion on o o the prepayme prepayment nt that that repres represents ents the expense incurred or the revenue earned in the current accounting period.
23. 23.
An ad*us ad*ustme tment nt or or wage wage expen expense, se, earn earned ed 'ut 'ut unpaid unpaid at at year year end, end, is an exampl example e o an accrued expense.
2. 2.
he he 'oo 'oo value value o any depre depreci cia' a'le le asset asset is the the di dier eren ence ce 'etw 'etween een its its cost cost and its its salvage value.
2%. 2%.
A compa company ny must must mae mae ad*us ad*ustin ting g entrie entries s each time time it prep prepare ares s an income income state statemen mentt and a statement o inancial position.
2+. 2+.
Ad*us Ad*ustin ting g entrie entries s are oten oten prepare prepared d ater ater the the stateme statement nt o inanci inancial al positi position on date, date, 'ut dated as o the statement o inancial position date.
2-. 2-.
Ad*u Ad*ust stin ing g entr entrie ies s are are nece necess ssar ary y to ena'l ena'le e the the ina inanc ncia iall stat statem emen ents ts to con conor orm m to "nternational #inancial Reporting $tanadard ("#R$).
2. 2.
9ach 9ach ad*u ad*ust stin ing g entry entry ae aect cts s one one stat statem emen entt o inan inanci cial al posi positi tion on accou account nt and one income statement account.
2. 2.
A docu documen mentt prepare prepared d to prove prove the e5ua e5ualit lity y o de'its de'its and and credits credits ater ater all all ad*ustm ad*ustmen ents ts have 'een prepared is the ad*usted statement o inancial position.
34. 34.
/ompan /ompanies ies can can prepare prepare the the income income statem statemen entt and the state stateme ment nt o inan inancia ciall positio position n directly rom the ad*usted trial 'alance.
31. 31.
:e'r :e'ra, a, "nc. "nc. is prepar preparin ing g its its annu annual al ina inanc ncia iall stat statem emen ents ts 'ased 'ased on its its ad*u ad*ust sted ed trial trial 'alance and will prepare its statement o inancial position irst ollowed 'y its income statement.
32. 32.
he he endi ending ng retai retaine ned d earn earnin ings gs 'alan 'alance ce is repo report rted ed on 'oth 'oth the retai retaine ned d earn earnin ings gs statement and the statement o inancial position.
33.
he post;c post;closin losing g trial trial 'alance 'alance consis consists ts o asset, asset, lia'i lia'ility lity,, e5uity e5uity,, revenu revenue e and expen expense se accounts.
3.
All revenues, expenses, and the dividends account are closed through the "ncome $ummary account.
3%.
"t is not necessary to post the closing entries to the ledger accounts 'ecause new revenue and expense accounts will 'e opened in the su'se5uent accounting period.
3+.
he closing process transers all income statement items to their related statement o inancial position accounts (or example, salaries expense transers to salaries paya'le).
3-.
!nder "nternational #inancial Reporting $tandards ("#R$) the cash;'asis method o accounting is accepted.
<3.
he accrual 'asis recogni6es revenue when earned and expenses in the period when cash is paid.
<3.
Reversing entries are made at the end o the accounting cycle to correct errors in the original recording o transactions.
<4. An ad*usted trial 'alance that shows e5ual de'it and credit columnar totals proves the accuracy o the ad*usting entries.
MULTIPLE CHOICE—Conceptual 1.
#actors that shape an accounting inormation system include the a. nature o the 'usiness. '. si6e o the irm. c. volume o data to 'e handled. d. all o these.
2.
An accounting record where a company initially records transactions and selected other events is called the a. ledger. '. account. c. trial 'alance. d. *ournal.
3.
=hich o the ollowing is a real (permanent) account> a. ?oodwill '. $ales c. Accounts Receiva'le d. oth ?oodwill and Accounts Receiva'le
.
=hich o the ollowing is a nominal (temporary) account> a. !nearned Revenue '. $alary 9xpense c. "nventory d. Retained 9arnings
%.
Nominal accounts are also called a. temporary accounts.
'. permanent accounts. c. real accounts. d. none o these. +.
!nder "nternational #inancial Reporting $tandards ("#R$) real accounts include all o the ollowing except a. :ividends '. Assets c. @ia'ilities d. 95uity
-.
!nder "nternational #inancial Reporting $tandards ("#R$) the &'oo o original entry& is also nown as the a. $u'sidiary ledger '. rial 'alance c. ?eneral ledger d. ournal
.
=hich o the ollowing statement is true regarding de'its and credits> a. n the income statement, de'its are used to increase account 'alances, whereas on the statement o inancial position, credits are used to increase account 'alances. '. eore ad*ustments, de'its will not e5ual credits in the trial 'alance. c. he rules or de'it and credit and the normal 'alance o $hare /apital0rdinary are the same as or lia'ilities. d. n the income statement, revenues are increased 'y de'it whereas on the statement o inancial position retained earnings is increased 'y a credit.
.
=hich o the ollowing accounts is reported in the 95uity section statement o inancial postion> a. :ividends. '. $hare capital0ordinary. c. Revenues. d. All o the choices are reported in the 95uity section o the statement o inancial position. Revenues are a. "mpacted 'y de'its and credits in the same way that expenses are impacted 'y de'its and credits. '. A su'division o e5uity, providing inormation a'out why e5uity increased. c. Reported on the statement o inancial position as a current item. d. All o the choices are correct regarding revenues.
%4.
%1.
:e'it always means a. right side o an account. '. increase. c. decrease. d. none o these.
%2.
he dou'le;entry accounting system means a. 9ach transaction is recorded with two *ournal entries. '. 9ach item is recorded in a *ournal entry, then in a general ledger account. c. he dual eect o each transaction is recorded with a de'it and a credit.
d. Bore than one o the a'ove. %3.
=hen a corporation pays a note paya'le and interest, a. the account Notes 7aya'le will 'e increased. '. the account "nterest 9xpense will 'e decreased. c. they will de'it Notes 7aya'le and interest expense . d. they will de'it /ash.
%.
95uity is not aected 'y all a. cash receipts. '. dividends. c. revenues. d. expenses.
%%.
he de'it and credit analysis o a transaction normally taes place a. 'eore an entry is recorded in a *ournal. '. when the entry is posted to the ledger. c. when the trial 'alance is prepared. d. at some other point in the accounting cycle.
%+.
he accounting e5uation must remain in 'alance a. throughout each step in the accounting cycle. '. only when *ournal entries are recorded. c. only at the time the trial 'alance is prepared. d. only when ormal inancial statements are prepared.
%-.
An optional step in the accounting cycle is the preparation o a. ad*usting entries. '. closing entries. c. a statement o cash lows. d. a post;closing trial 'alance. asic steps in the recording process include all o the ollowing except a. ranser the *ournal inormation to the appropriate account in the statement o inancial postion. '. Analy6e each transaction or its eect on the accounts. c. 9nter the transaction inormation in a *ournal. d. All o the choices are corrrect regarding the 'asic steps in the recording process.
%.
%.
he trial 'alance a. 7roves that de'its are greater than credits when the company has net income. '. !ncovers any errors in *ournali6ing and posting prior to preparation o the statement o inancial position. c. "s useul in preparing the statement o inancial position. d. All o the choices are correct.
+4.
he trial 'alance will not 'alance when a company a. #ails to *ournali6e a transaction. '. mits posting a correct *ournal entry. c. 7osts a *ournal entry twice. d. :e'its two statement o inancial position accounts and no income statement accounts.
+1.
Accounts maintained within the ledger that appear on the statement o inancial position include all o the ollowing except a. $alaries expense. '. "nterest paya'le. c. $upplies. d. $hare capital0ordinary.
+2.
7osting a. Accumulates the eects o ledger entries and transers them to the general *ournal. '. "s done only or income statement activity8 activity related to the statement o inancial position does not re5uire posting. c. "s done once per year. d. ransers *ournal entries to the ledger accounts.
+3.
he trial 'alance a. "s a listing o all the accounts and their 'alances in the order the accounts appear on the statement o inancial position. '. Cas as its primary purpose to prove (chec) that all *ournal entries were made or the period. c. /an 'e used to uncover errors in *ournali6ing and posting. d. "s used to prepare the statement o inancial position while the general ledger is used to prepare the income statement.
+.
Numerous errors may exist even though the trial 'alance columns agree. =hich o the ollowing is not one o these types o errors> a. A transaction is not *ournali6ed. '. ransposition error related to the statement o inancial position. c. A *ournal entry is posted twice. d. A *ournal entry to purchase 7144 worth o e5uipment is posted as a 71,444 purchase.
+%.
A trial 'alance may prove that de'its and credits are e5ual, 'ut a. an amount could 'e entered in the wrong account. '. a transaction could have 'een entered twice. c. a transaction could have 'een omitted. d. all o these.
++.
A general *ournal a. chronologically lists transactions and other events, expressed in terms o de'its and credits. '. contains one record or each o the asset, lia'ility, e5uity, revenue, and expense accounts. c. lists all the increases and decreases in each account in one place. d. contains only ad*usting entries.
+-.
A *ournal entry to record the sale o inventory on account will include a a. de'it to inventory. '. de'it to accounts receivable. c. de'it to sales. d. credit to cost of goods sold.
+.
A *ournal entry to record a payment on account will include a a. de'it to accounts receivable. '. credit to accounts receivable. c. de'it to accounts payable. d. credit to accounts payable.
+.
A *ournal entry to record a receipt o rent revenue in advance will include a a. de'it to rent revenue. '. credit to rent revenue. c. credit to cash. d. credit to unearned rent .
-4.
=hich o the ollowing errors will cause an im'alance in the trial 'alance> a. mission o a transaction in the *ournal. '. 7osting an entire *ournal entry twice to the ledger. c. 7osting a credit o 7-24 to Accounts 7aya'le as a credit o 7-24 to Accounts Receiva'le. d. @isting the 'alance o an account with a de'it 'alance in the credit column o the trial 'alance.
-1.
=hich o the ollowing is not a principal purpose o an unad*usted trial 'alance> a. "t proves that de'its and credits o e5ual amounts are in the ledger. '. "t is the 'asis or any ad*ustments to the account 'alances. c. "t supplies a listing o open accounts and their 'alances. d. "t proves that de'its and credits were properly entered in the ledger accounts.
-2.
An ad*usting entry should never include a. a de'it to an expense account and a credit to a lia'ility account. '. a de'it to an expense account and a credit to a revenue account. c. a de'it to a lia'ility account and a credit to revenue account. d. a de'it to a revenue account and a credit to a lia'ility account. =hich o the ollowing is an example o an accrued expense> a. ice supplies purchased at the 'eginning o the year and de'ited to an expense account. '. 7roperty taxes incurred during the year, to 'e paid in the irst 5uarter o the su'se5uent year. c. :epreciation expense. d. Rent earned during the period, to 'e received at the end o the year. An ad*usting entry to record an accrued expense involves a de'it to a(an)D a. expense account and a credit to a prepaid account. '. expense account and a credit to /ash. c. expense account and a credit to a lia'ility account. d. lia'ility account and a credit to an expense account.
-3.
-.
-%.
he ailure to properly record an ad*usting entry to accrue an expense will result in anD a. understatement o expenses and an understatement o lia'ilities. '. understatement o expenses and an overstatement o lia'ilities. c. understatement o expenses and an overstatement o assets. d. overstatement o expenses and an understatement o assets.
-+.
=hich o the ollowing properly descri'es a deerral>
a. '. c. d.
/ash is received ater revenue is earned. /ash is received 'eore revenue is earned. /ash is paid ater expense is incurred. /ash is paid in the same time period that an expense is incurred.
--.
he ailure to properly record an ad*usting entry to accrue a revenue item will result in anD a. understatement o revenues and an understatement o lia'ilities. '. overstatement o revenues and an overstatement o lia'ilities. c. overstatement o revenues and an overstatement o assets. d. understatement o revenues and an understatement o assets.
-.
he omission o the ad*usting entry to record depreciation expense will result in anD a. overstatement o assets and an overstatement o e5uity. '. understatement o assets and an understatement o e5uity. c. overstatement o assets and an overstatement o lia'ilities. d. overstatement o lia'ilities and an understatement o e5uity.
-.
Ad*ustments are oten prepared a. ater the statement o inancial position date, 'ut dated as o that date. '. ater the statement o inancial position date, and dated ater that date. c. 'eore the statement o inancial position date, 'ut dated as o that date. d. 'eore the statement o inancial position date, and dated ater that date.
4.
At a. '. c. d.
1.
Cow do these prepaid expenses expire> Rent a. =ith the passage o time '. =ith the passage o time c. hrough use and consumption d. hrough use and consumption
the time a company prepays a cost it de'its an asset account to show the service or 'eneit it will receive in the uture. it de'its an expense account to match the expense against revenues earned. its credits a lia'ility account to show the o'ligation to pay or the service in the uture. more than one o the a'ove.
Supplies hrough use and consumption =ith the passage o time hrough use and consumption =ith the passage o time
2.
Recording the ad*usting entry or depreciation has the same eect as recording the ad*usting entry or a. an unearned revenue. '. a prepaid expense. c. an accrued revenue. d. an accrued expense.
3.
!nearned revenue on the 'oos o one company is liely to 'e a. a prepaid expense on the 'oos o the company that made the advance payment. '. an unearned revenue on the 'oos o the company that made the advance payment. c. an accrued expense on the 'oos o the company that made the advance payment. d. an accrued revenue on the 'oos o the company that made the advance payment.
.
o compute interest expense or an ad*usting entry, the ormula is (principal E annual rate E a raction). he numerator and denominator o the raction areD Numerator Denominator a. @ength o time note has 'een outstanding 12 months '. @ength o note 12 months c. @ength o time until note matures @ength o note d. @ength o time note has 'een outstanding @ength o note
%.
Ad*usting entries are necessary to 1. o'tain a proper matching o expense to revenue. 2. achieve an accurate statement o assets and e5uities. 3. ad*ust assets and lia'ilities to their air value. a. 1 '. 2 c. 3 d. 1 and 2
+.
=hen an item o expense is paid and recorded in advance, it is normally called a(n) a. prepaid expense. '. accrued expense. c. estimated expense. d. cash expense.
-.
=hen an item o revenue or expense has 'een earned or incurred 'ut not yet collected or paid, it is normally called a(n) FFFFFFFFFFFF revenue or expense. a. prepaid '. ad*usted c. estimated d. none o these
.
=hen an item o revenue is collected and recorded in advance, it is normally called a(n) FFFFFFFFFFF revenue. a. accrued '. prepaid c. unearned d. cash
.
An accrued expense can 'est 'e descri'ed as an amount a. paid and currently matched with earnings. '. paid and not currently matched with earnings. c. not paid and not currently matched with earnings. d. not paid and currently matched with earnings.
4.
", during an accounting period, an expense item has 'een incurred and consumed 'ut not yet paid or or recorded, then the end;o;period ad*usting entry would involve a. a lia'ility account and an asset account. '. an asset or contra asset account and an expense account. c. a lia'ility account and an expense account. d. a receiva'le account and a revenue account.
1.
=hich o the ollowing must 'e considered in estimating depreciation on an asset or an accounting period> a. he original cost o the asset '. "ts useul lie c. he decline o its air value d. oth the original cost o the asset and its useul lie.
2.
=hich o the ollowing would not 'e a correct orm or an ad*usting entry> a. A de'it to a revenue and a credit to a lia'ility '. A de'it to an expense and a credit to a lia'ility c. A de'it to a lia'ility and a credit to a revenue d. A de'it to an asset and a credit to a lia'ility
3.
Gear;end net assets would 'e overstated and current expenses would 'e understated as a result o ailure to record which o the ollowing ad*usting entries> a. 9xpiration o prepaid insurance '. :epreciation o ixed assets c. Accrued wages paya'le d. All o these
.
A prepaid expense can 'est 'e descri'ed as an amount a. paid and currently matched with revenues. '. paid and not currently matched with revenues. c. not paid and currently matched with revenues. d. not paid and not currently matched with revenues. An accrued revenue can 'est 'e descri'ed as an amount a. collected and reported on the income statement. '. collected and not reported on the income statement. c. not collected and reported on the income statement. d. not collected and not reported on the income statement.
%.
+.
An unearned revenue can 'est 'e descri'ed as an amount a. collected and reported on the income statement. '. collected and not reported on the income statement. c. not collected and reported on the income statement. d. not collected and not reported on the income statement.
-.
A company must mae ad*usting entries a. o ensure that the revenue recognition and expense recognition principles are ollowed. '. 9ach time it prepares an income statement and a statement o inancial position. c. o account or accurals or deerrals. d. All o the choices are correct regarding ad*usting entries.
.
=hich o the ollowing ad*ustments would re5uire decreasing the lia'ilities reported on the statement o inancial position> a. A company uses 744 worth o supplies during the year. '. A company records 744 worth o depreciation on e5uipment. c. A company has earned 744 o revenue collected at the 'eginning o the year. d. A company records 744 o wages earned 'y employees that will 'e paid next year.
.
Ad*usting entries a. Are oten prepared ater the statement o inancial position date, 'ut dated as o the statement o inancial position date. '. Are necessary to ena'le the inancial statements to conorm to "nternational #inancial Reporting $tandard ("#R$). c. "nclude 'oth accruals and deerrals. d. All o the choices are correct regarding ad*usting entries.
144.
=hich o the ollowing statements is false regarding ad*usting enries> a. /ash is neither de'ited nor credited as a result o ad*usting entries. '. 9ach ad*usting entry aects one statement o inancial position account and one income statement account. c. 9ach ad*usting entry aects one revenue account and one expense account. d. Ad*usting entries involve accruals or deerrals.
141.
A document prepared to prove the e5uality o de'its and credits ater all ad*ustments have 'een prepared is the a. Ad*usted statement o ianancial position. '. Ad*usted trial 'alance. c. Ad*usted inancial statements. d. 7ost;closing trial 'alance.
142.
=hich o the ollowing statements is false> a. /ompanies can prepare the income statement and the statement o inancial position directly rom the ad*usted trial 'alance. '. /ompanies can prepare the statement o cash lows directly rom the ad*usted trial 'alance. c. he ad*usted trial 'alance proves the e5uality o total de'its and total credits ater all ad*ustments. d. 9ach ad*usting entry aects one statement o inancial position account and one income statement account.
143.
:e'ra, "nc. is preparing its annual inancial statements 'ased on its ad*usted trial 'alance. =hich inancial statement will :e'ra, "nc. prepare irst> a. $tatement o inancial position. '. "ncome statement. c. Retained earnings statement. d. here is no particular order, any inancial statement may 'e prepared irst once the ad*usted trial 'alance is prepared.
14.
An ad*usted trial 'alance a. is prepared ater the inancial statements are completed. '. proves the e5uality o the total de'it 'alances and total credit 'alances o ledger accounts ater all ad*ustments have 'een made. c. is a re5uired inancial statement under international inancial reporting standards. d. cannot 'e used to prepare inancial statements.
14%.
=hich type o account is always de'ited during the closing process> a. :ividends. '. 9xpense. c. Revenue.
d. Retained earnings. 14+.
=hich o the ollowing statements 'est descri'es the purpose o closing entries> a. o aciliate posting and taing a trial 'alance. '. o determine the amount o net income or net loss or the period. c. o reduce the 'alances o temporary accounts to 6ero so that they may 'e used to accumulate the revenues, expenses and dividends o the next period. d. o complete the record o various transactions that were started in a prior period.
14-.
he closing process a. "s done each time a transaction taes place and is *ournali6ed. '. ransers all income statement items to their related statement o inancial position account (or example, salaries expense transers to salaries paya'le). c. 7osts all closing entries to the appropriate general ledger account. d. All o the choices are correct regarding the closing process.
14.
he closing entries a. Bust de'it or credit one income statement account and one statement o inancial position account. '. "nclude closing the dividends account to income summary. c. Are posted to the appropriate general ledger accounts. d. All o the choices are correct regarding closing entries.
14.
he post;closing trial 'alance a. /onsists o statement o inancial position accounts only. '. =ill 'alance i a transaction is not *ournali6ed and posted, or i a transaction is *ournali6ed and posted twice. c. $hows that the accounting e5uation is in 'alance at the end o the accounting period. d. All o the choices are correct regarding the post;closing trial 'alance.
114.
!nder "nternational #inancial Reporting $tandards ("#R$) a. he cash;'asis method o accounting is accepted. '. 9vents are recorded in the period in which the event occurs. c. Net income will 'e lower under the cash;'asis than accural;'asis accounting. d. All o the choices are correct.
111.
" ending accounts receiva'le exceeds the 'eginning accounts receiva'leD a. cash collections during the period exceed the amount o revenue earned. '. net income or the period is less than the amount o cash 'asis income. c. no cash was collected during the period. d. cash collections during the year are less than the amount o revenue earned.
<112.
!nder the cash 'asis o accounting, revenues are recorded a. when they are earned and reali6ed. '. when they are earned and reali6a'le. c. when they are earned. d. when they are reali6ed.
<113.
=hen converting rom cash 'asis to accrual 'asis accounting, which o the ollowing ad*ustments should 'e made to cash receipts rom customers to determine accrual 'asis service revenue>
a. '. c. d.
$u'tract ending accounts receiva'le. $u'tract 'eginning unearned service revenue. Add ending accounts receiva'le. Add cash sales.
<11.
=hen converting rom cash 'asis to accrual 'asis accounting, which o the ollowing ad*ustments should 'e made to cash paid or operating expenses to determine accrual 'asis operating expenses> a. Add 'eginning accrued lia'ilities. '. $u'tract 'eginning prepaid expense. c. $u'tract ending prepaid expense. d. $u'tract interest expense.
<11%.
Reversing entries are 1. normally prepared or prepaid, accrued, and estimated items. 2. necessary to achieve a proper matching o revenue and expense. 3. desira'le to exercise consistency and esta'lish standardi6ed procedures. a. 1 '. 2 c. 3 d. 1 and 2
<11+.
Reversing entries do not apply to which o the ollowing items> a. !nearned revenue. '. Accrued wages. c. 7repaid insurance. d. :epreciation.
<11-.
Ad*usting entries that should 'e reversed include a. all accrued revenues. '. all accrued expenses. c. those that de'it an asset or credit a lia'ility. d. all o these.
<11.
A reversing entry should never 'e made or an ad*usting entry that a. accrues unrecorded revenue. '. ad*usts expired costs rom an asset account to an expense account. c. accrues unrecorded expenses. d. ad*usts unexpired costs rom an expense account to an asset account.
11.
Reversing entries a. "mpact the income statement only. '. "mpact the statement o inancial position and the income statement. c. Are not allowed under "nternational #inancial Reporting $tandards("#R$). d. /hange amounts reported in the inancial statements o the preceding peroid.
124.
=hich o the ollowing statements regarding reversing entries is ncorrect > a. :eerrals are generally entered in statement o inancial position accounts, thus maing reversing entries unnecessary. '. All accruals should 'e reversed. c. Ad*usting entries or depreciation and 'ad de'ts are never reversed.
d. Reversing entries change amounts reported in the statement o inancial position or the previous period. <121. he worsheet or $haro /o. consisted o ive pairs o de'it and credit columns. he dollar amount o one item appeared in 'oth the credit column o the income statement section and the de'it column o the 'alance sheet section. hat item is a. net income or the period. '. 'eginning inventory. c. cost o goods sold. d. Net loss or the period.
MULTIPLE CHOICE—Co!putatonal 122.
Baso /ompany recorded *ournal entries or the issuance o ordinary shares or 74,444, the payment o 713,444 on accounts paya'le, and the payment o salaries expense o 721,444. =hat net eect do these entries have on e5uity> a. "ncrease o 74,444. '. "ncrease o 72-,444. c. "ncrease o 71,444. d. "ncrease o 7+,444.
123.
Bune /ompany recorded *ournal entries or the declaration o 7%4,444 o dividends, the 732,444 increase in accounts receiva'le or services rendered, and the purchase o e5uipment or 721,444. =hat net eect do these entries have on e5uity> a. :ecrease o 7-1,444. '. :ecrease o 73,444. c. :ecrease o 71,444. d. "ncrease o 711,444.
12.
7appy /orporation received cash o 713,%44 on $eptem'er 1, 241 or one yearHs rent in advance and recorded the transaction with a credit to !nearned Rent. he :ecem'er 31, 241 ad*usting entry is a. de'it Rent Revenue and credit !nearned Rent, 7,%44. '. de'it Rent Revenue and credit !nearned Rent, 7,444. c. de'it !nearned Rent and credit Rent Revenue, 7,%44. d. de'it /ash and credit !nearned Rent, 7,444. 7anda /orporation paid cash o 71,444 on une 1, 241 or one yearHs rent in advance and recorded the transaction with a de'it to 7repaid Rent. he :ecem'er 31, 241 ad*usting entry is a. de'it 7repaid Rent and credit Rent 9xpense, 7-,%44. '. de'it 7repaid Rent and credit Rent 9xpense, 714,%44. c. de'it Rent 9xpense and credit 7repaid Rent, 714,%44. d. de'it 7repaid Rent and credit /ash, 7-,%44.
12%.
12+.
ate /ompany purchased e5uipment on Novem'er 1, 2414 and gave a 3;month, I note with a ace value o 724,444. he :ecem'er 31, 2414 ad*usting entry is a. de'it "nterest 9xpense and credit "nterest 7aya'le, 71,44. '. de'it "nterest 9xpense and credit "nterest 7aya'le, 7%4. c. de'it "nterest 9xpense and credit /ash, 7344. d. de'it "nterest 9xpense and credit "nterest 7aya'le, 7344.
12-.
/hen /ompanyJs account 'alances at :ecem'er 31, 2414 or Accounts Receiva'le and the Allowance or :ou'tul Accounts are K324,444 de'it and 7+44 credit. $ales during 2414 were K44,444. "t is estimated that 1I o sales will 'e uncollecti'le. he ad*usting entry would include a credit to the allowance account or a. K,+44. '. K,444. c. K,44. d. K3,244.
12.
$tarr /orporation loaned =4,444 to another corporation on :ecem'er 1, 2414 and received a 3;month, I interest;'earing note with a ace value o =4,444. =hat ad*usting entry should $tarr mae on :ecem'er 31, 2414> a. :e'it "nterest Receiva'le and credit "nterest Revenue, =1,44. '. :e'it /ash and credit "nterest Revenue, =+44. c. :e'it "nterest Receiva'le and credit "nterest Revenue, =+44. d. :e'it /ash and credit "nterest Receiva'le, =1,44.
!se the ollowing inormation or 5uestions 12 and 134D A company receives interest on a K34,444,444, I, %;year note receiva'le each April 1. At :ecem'er 31, 2414, the ollowing ad*usting entry was made to accrue interest receiva'leD "nterest Receiva'le ............................................................. 1,44,444 "nterest Revenue ..................................................... 1,44,444 12.
Assuming that the company does not use reversing entries, what entry should 'e made on April 1, 2411 when the annual interest payment is received> a. /ash ................................................................................... +44,444 "nterest Revenue ..................................................... +44,444 '. /ash ................................................................................... 1,44,444 "nterest Receiva'le ................................................. 1,44,444 c. /ash ................................................................................... 2,44,444 "nterest Receiva'le ................................................. 1,44,444 "nterest Revenue ..................................................... +44,444 d. /ash ................................................................................... 2,44,444 "nterest Revenue ..................................................... 2,44,444
<134. Assuming that the company uses reversing entries, what entry should 'e made on April 1, 2411 when the annual interest payment is received> a. /ash ................................................................................... +44,444 "nterest Revenue ..................................................... +44,444 '. /ash ................................................................................... 1,44,444 "nterest Receiva'le ................................................. 1,44,444 c. /ash .................................................................................. 2,44,444 "nterest Receiva'le ................................................. 1,44,444 "nterest Revenue ..................................................... +44,444 d. /ash ................................................................................... 2,44,444 "nterest Revenue...................................................... 2,44,444 131.
Burphy /ompany su'let a portion o its warehouse or ive years at an annual rental o 72,444, 'eginning on Bay 1, 2414. he tenant, $heri /harter, paid one yearJs rent in advance, which Burphy recorded as a credit to !nearned Rental Revenue. Burphy reports on a calendar;year 'asis. he ad*ustment on :ecem'er 31, 2414 or Burphy should 'e a. No entry '. !nearned Rent Revenue .................................................... ,444 Rent Revenue ......................................................... ,444 c. Rent Revenue ..................................................................... ,444 !nearned Rent Revenue ......................................... ,444 d. !nearned Rent Revenue .................................................... 1+,444 Revenue Revenue................................................... 1+,444
132.
:uring the irst year o =ilinson /o.Js operations, all purchases were recorded as assets. $tore supplies in the amount o 71,3%4 were purchased. Actual year;end store supplies amounted to 7+,%4. he ad*usting entry or store supplies will a. increase net income 'y 712,44. '. increase expenses 'y 712,44. c. decrease store supplies 'y 7+,%4. d. de'it Accounts 7aya'le or 7+,%4.
133.
/ara, "nc. purchased supplies costing @2,%44 on anuary 1, 2411 and recorded the transaction 'y increasing assets. At the end o the year @1,344 o the supplies are still on hand. Cow will the ad*usting entry impact /ara, "nc.Hs statement o inancial position at :ecem'er 31, 2411> a. :ecrease Assets @1,344. '. "ncrease 95uity @1,344. c. "ncrease @ia'ilities @1,244. d. :ecrease Assets @1,244.
13.
/ara, "nc. purchased supplies costing @2,%44 on anuary 1, 2411 and recorded the transaction 'y increasing assets. At the end o the year @1,344 o the supplies are still on hand. " /ara, "nc. does not mae the appropriate ad*usting entry, what is the impact on its statement o inancial position at :ecem'er 31, 2411> a. Assets overstated 'y @1,244. '. 95uity understated 'y @1,244. c. 95uity overstated 'y @1,344. d. Assets overstated 'y @1,344.
13%.
/ara, "nc. purchased a 'uilding on anuary 1, 2411 or /C#%44,444. he useul lie o the 'uilding is 14 years. =hat impact will the approriate ad*usting entry at :ecem'er 31, 2411 have on its statement o inancial position at :ecem'er 31, 2411> a. "ncrease 95uity /C#%4,444. '. "ncrease @ia'ilities /C#%4,444. c. :ecrease Assets /C#%4,444. d. $ince the ad*usting entry has osetting de'its and credits, there is no impact on the statement o inancial position.
13+.
/ara, "nc. purchased a 'uilding on anuary 1, 2411 or /C#%44,444. he useul lie o the 'uilding is 14 years. he asset is reported on the :ecem'er 31, 2411 statement o inancial position at /C#%4,444. =hat was the impact o the ad*usting entry recorded 'y /ara, "nc.> a. :ecrease 95uity /C#%4,444. '. "ncrease @ia'ilities /C#%4,444. c. "ncrease Assets /C#%4,444. d. All o the choices are correct regarding the impact o /ara, "nc.Hs ad*usting entry at :ecem'er 31, 2411.
13-.
=ave "nn is a resort located in /anada. =ave "nn collects cash when guest mae a reservation. :uring :ecem'er 2411, =ave "nn collected 7+4,444 o cash and recorded the receipt 'y recogni6ing unearned revenue. y the end o the month =ave "nn had earned one third o this amount, the other two thirds will 'e earned during anuary 2412. he ad*usting entry re5uired at :ecem'er 31, 2411 would impact the statement o inancial position 'y a. "ncreasing 95uity 74,444. '. :ecreasing @ia'ilities 724,444. c. "ncreasing Assets 7+4,444. d. :ecreasing 95uity 724,444.
13.
=ave "nn is a resort located in /anada. :uring :ecem'er 2411,$pin ammers held its annual conerence at the resort. he charges related to the conerence total 734,444, o which 2%I has 'een paid 'y $pin ammers. Assuming =ave "nn ails to mae the appropriate ad*usting entry, which o the ollowing is true regarding =ave "nnHs :ecem'er 31, 2411 would impact the statement o inancial position> a. 95uity is overstated 'y 72%%,444. '. 95uity is understated 'y 7%,444. c. Assets are understated 'y 72%%,444. d. Assets are overstated 'y 7%,444.
13
=ave "nn is a resort located in /anada. :uring :ecem'er 2411, $pin ammers held its annual conerence at the resort. he charges related to the conerence total 734,444, o which 2%I has 'een paid 'y $pin ammers. Assuming $pin ammers ails to mae the appropriate ad*usting entry, which o the ollowing is true regarding its :ecem'er 31, 2411 statement o inancial position> a. 95uity is overstated 'y 72%%,444. '. 95uity is understated 'y 7%,444. c. @ia'ilities are overstated 'y 72%%,444. d. @ia'ilities are overstated 'y 7%,444.
14
read aset provides 'aing supplies to restaurants and grocery stores. :uring :ecem'er 2411, read asetHs employees wored 1,244 hours at an average rate o R24 per hour. At :ecem'er 31, 2411, read aset has paid R11,444 o salary expense. " read aset ails to mae the appropriate ad*usting entry, which o the ollowing is true regarding its :ecem'er 31, 2411 statement o inancial position> a. 95uity is overstated 'y R11,444. '. 95uity is overstated 'y R13,444. c. @ia'ilities are overstated 'y R13,444. d. @ia'ilities are overstated 'y R11,444.
11
read aset provides 'aing supplies to restuarants and grocery stores. n Novem'er 1, 2411, read aset signed a R%44,444, +;month note paya'le. he note re5uires read aset to pay interest at an annual rate o 12I. Assuming read aset maes the appropriate ad*usting entry, what is the impact on its :ecem'er 31, 2411 statement o inancial position> a. An expense o R34,444. '. An expense o R14,444. c. A @ia'ility o R14,444. d. wo o the choices are correct.
12.
=ave "nn is a resort located in /anada. :uring :ecem'er 2411, $pin ammers held its annual conerence at the resort. he charges related to the conerence total 734,444, o which 2%I has 'een paid 'y $pin ammers. =hen =ave "nn maes the appropriate ad*usting entry, which o the ollowing is part o ad*ustment made to its :ecem'er 31, 2411 statement o inancial position> a. :e'it cash 72%%,444. '. /redit revenue 72%%,444. c. /redit cash 72%%,444. d. wo o the choices are correct.
13.
ig;Bouth #rog /orporation had revenues o 7244,444, expenses o 7124,444, and dividends o 734,444. =hen "ncome $ummary is closed to Retained 9arnings, the amount o the de'it or credit to Retained 9arnings is a a. de'it o 7%4,444. '. de'it o 74,444. c. credit o 7%4,444. d. credit o 74,444.
!se the ollowing inormation or 5uestions 1 through 1+D he income statement o :olan /orporation or 2411 included the ollowing itemsD "nterest revenue L+%,%44 $alaries expense %,444 "nsurance expense -,+44 he ollowing 'alances have 'een excerpted rom :olan /orporationJs statement o inancial positionD :ecem'er 31, 2411 :ecem'er 31, 2414 Accrued interest receiva'le L,144 L-,%44 Accrued salaries paya'le ,44 ,244 7repaid insurance 1,144 1,%44 <1. he cash received or interest during 2411 was a. L%+,44. '. L+3,44. c. L+%,%44. d. L+-,144. <1%. he cash paid or salaries during 2411 was a. L,-44. '. L4,344. c. L4,44. d. L3,44. <1+. he cash paid or insurance premiums during 2411 was a. L+,%44. '. L+,144. c. L,444. d. L-,244. !se the ollowing inormation or 5uestions 1- through 1D lsen /ompany paid or collected during 2411 the ollowing itemsD "nsurance premiums paid "nterest collected $alaries paid
7 14,44 33,44 124,244
he ollowing 'alances have 'een excerpted rom lsenJs statement o inancial positionD :ecem'er 31, 2411 :ecem'er 31, 2414 7repaid insurance 7 1,244 7 1,%44 "nterest receiva'le 3,-44 2,44 $alaries paya'le 12,344 14,+44 <1-. he insurance expense on the income statement or 2411 was a. 7-,-44. '. 714,144. c. 714,-44. d. 713,144.
<1. he interest revenue on the income statement or 2411 was a. 72-,344. '. 733,144. c. 73,-44. d. 74,%44. <1. he salary expense on the income statement or 2411 was a. 7-,344. '. 711,%44. c. 7121,44. d. 713,144. <1%4. he ice $upplies account had a 'alance at the 'eginning o year 3 o M,444 ('eore the reversing entry). 7ayments or purchases o oice supplies during year 3 amounted to M2%,444 and were recorded as expense. A physical count at the end o year 3 revealed supplies costing M,-%4 were on hand. Reversing entries are used 'y this company. he re5uired ad*usting entry at the end o year 3 will include a de'it toD a. ice $upplies 9xpense or M-%4. '. ice $upplies or M-%4. c. ice $upplies 9xpense or M2,2%4. d. ice $upplies or M,-%4. <1%1. At the end o 2411, :iego /ompany made our ad*usting entries or the ollowing itemsD 1. :epreciation expense, R72%,444. 2. 9xpired insurance, R72,244 (originally recorded as prepaid insurance.) 3. "nterest paya'le, R7+,444. . Rental revenue receiva'le, R714,444. "n the normal situation, to acilitate su'se5uent entries, the ad*usting entry or entries that may 'e reversed is (are) a. 9ntry No. 3. '. 9ntry No. . c. 9ntry No. 3 and No. . d. 9ntry No. 2, No. 3 and No. . <1%2. ?arcia /orporation received cash o R71,444 on August 1, 2411 or one yearJs rent in advance and recorded the transaction with a credit to Rent Revenue. he :ecem'er 31, 2411 ad*usting entry is a. de'it Rent Revenue and credit !nearned Rent, R7-,%44. '. de'it Rent Revenue and credit !nearned Rent, R714,%44. c. de'it !nearned Rent and credit Rent Revenue, R7-,%44. d. de'it /ash and credit !nearned Rent, R714,%44. <1%3. @ow /ompany received C7+,44 on April 1, 2411 or one yearJs rent in advance and recorded the transaction with a credit to a nominal account. he :ecem'er 31, 2411 ad*usting entry is a. de'it Rent Revenue and credit !nearned Rent, C71,+44. '. de'it Rent Revenue and credit !nearned Rent, C7,44. c. de'it !nearned Rent and credit Rent Revenue, C71,+44. d. de'it !nearned Rent and credit Rent Revenue, C7,44.
<1%. ?hiou /ompany paid L3,+44 on une 1, 2411 or a two;year insurance policy and recorded the entire amount as "nsurance 9xpense. he :ecem'er 31, 2411 ad*usting entry is a. de'it "nsurance 9xpense and credit 7repaid "nsurance, L1,4%4. '. de'it "nsurance 9xpense and credit 7repaid "nsurance, L2,%%4. c. de'it 7repaid "nsurance and credit "nsurance 9xpense, L1,4%4 d. de'it 7repaid "nsurance and credit "nsurance 9xpense, L2,%%4. 1%%.
n $eptem'er 1, 2414, @oo /o. issued a note paya'le to National an in the amount o C7+44,444, 'earing interest at 12I, and paya'le in three e5ual annual principal payments o C7244,444. n this date, the 'anJs prime rate was 11I. he irst payment or interest and principal was made on $eptem'er 1, 2411. At :ecem'er 31, 2411, @owe should record accrued interest paya'le o a. C72,444. '. C722,444. c. C71+,444. d. C71,++-.
1%+.
9aton /o. sells ma*or household appliance service contracts or cash. he service contracts are or a one;year, two;year, or three;year period. /ash receipts rom contracts are credited to !nearned $ervice Revenues. his account had a 'alance o L1,44,444 at :ecem'er 31, 2414 'eore year;end ad*ustment. $ervice contract costs are charged as incurred to the $ervice /ontract 9xpense account, which had a 'alance o L%4,444 at :ecem'er 31, 2414. $ervice contracts still outstanding at :ecem'er 31, 2414 expire as ollowsD :uring 2411 L34,444 :uring 2412 %-4,444 :uring 2413 3%4,444 =hat amount should 'e reported as !nearned $ervice Revenues in 9atonJs :ecem'er 31, 2414 statement o inancial position> a. L1,3%4,444. '. L1,344,444. c. L%4,444. d. L%44,444.
1%-.
"n Novem'er and :ecem'er 2414, @ane /o., a newly organi6ed maga6ine pu'lisher, received L4,444 or 1,444 three;year su'scriptions at L34 per year, starting with the anuary 2411 issue. @ane included the entire L4,444 in its 2414 income tax return. =hat amount should @ane report in its 2414 income statement or su'scriptions revenue> a. L4. '. L%,444. c. L34,444. d. L4,444.
1%.
n une 1, 2414, Nott /orp. loaned Corn M44,444 on a 12I note, paya'le in ive annual installments o M4,444 'eginning anuary 2, 2411. "n connection with this loan, Corn was re5uired to deposit M%,444 in a noninterest;'earing escrow account. he amount held in escrow is to 'e returned to Corn ater all principal and interest payments have 'een made. "nterest on the note is paya'le on the irst day o each month 'eginning uly 1, 2414. Corn made timely payments through Novem'er 1, 2414. n anuary 2, 2411, Nott received payment o the irst principal installment plus all interest due. At :ecem'er 31, 2414, NottJs interest receiva'le on the loan to Corn should 'e a. M4. '. M,444. c. M,444. d. M12,444.
1%.
Allen /orp.Js lia'ility account 'alances at une 34, 2411 included a 14I note paya'le. he M2,44,444 note was dated cto'er 1, 244 and is paya'le in three e5ual annual payments o M44,444 plus interest. he irst interest and principal payment was made on cto'er 1, 2414. "n AllenJs une 34, 2411 statement o inancial position, what amount should 'e reported as accrued interest paya'le or this note> a. M14,444. '. M124,444. c. M+4,444. d. M4,444.
1+4.
/olaw /o. pays all salaried employees on a 'iweely 'asis. vertime pay, however, is paid in the next 'iweely period. /olaw accrues salaries expense only at its :ecem'er 31 year end. :ata relating to salaries earned in :ecem'er 2414 are as ollowsD @ast payroll was paid on 12O2+O14, or the 2;wee period ended 12O2+O14. vertime pay earned in the 2;wee period ended 12O2+O14 was R 714,444. Remaining wor days in 2414 were :ecem'er 2, 34, 31, on which days there was no overtime. he recurring 'iweely salaries total R 714,444. Assuming a ive;day wor wee, /olaw should record a lia'ility at :ecem'er 31, 2414 or accrued salaries o a. R7%,444. '. R7+,444. c. R714,444. d. R711,444.
1+1.
olan /orp.Js trademar was licensed to 9ddy /o. or royalties o 1%I o sales o the trademared items. Royalties are paya'le semiannually on Barch 1% or sales in uly through :ecem'er o the prior year, and on $eptem'er 1% or sales in anuary through une o the same year. olan received the ollowing royalties rom 9ddyD Barch 1% $eptem'er 1% 2414 R7%,444 R7-,%44 2411 +,444 ,%44 9ddy estimated that sales o the trademared items would total R 74,444 or uly through :ecem'er 2411. "n olanJs 2411 income statement, the royalty revenue should 'e a. R71,%44. '. R71+,444. c. R724,%44. d. R722,444.
1+2.
At :ecem'er 31, 2414, $uoHs outi5ue had 1,444 git certiicates outstanding, which had 'een sold to customers during 2414 or L%4 each. $ueHs operates on a gross margin o +4I o its sales. =hat amount o revenue pertaining to the 1,444 outstanding git certiicates should 'e deerred at :ecem'er 31, 2414> a. L4. '. L24,444. c. L34,444. d. L%4,444.
<1+3. /ompared to the accrual 'asis o accounting, the cash 'asis o accounting overstates income 'y the net increase during the accounting period o the a. '. c. d.
Accounts Receiva'le No No Ges Ges
Accrued 9xpenses 7aya'le No Ges No Ges
<1+. ?regg /orp. reported revenue o Rp1,144,444 in its accrual 'asis income statement or the year ended une 34, 2411. Additional inormation was as ollowsD Accounts receiva'le une 34, 2414 Rp 3%4,444 Accounts receiva'le une 34, 2411 %34,444 !ncollecti'le accounts written o during the iscal year 13,444 !nder the cash 'asis, ?regg should report revenue o a. Rp +-,444. '. Rp -44,444. c. Rp 4-,444. d. Rp 33,444. <1+%. im Gount, B.:., eeps his accounting records on the cash 'asis. :uring 2411, :r. Gount collected Rp 3+4,444 rom his patients. At :ecem'er 31, 2414, :r. Gount had accounts receiva'le o Rp %4,444. At :ecem'er 31, 2411, :r. Gount had accounts receiva'le o Rp -4,444 and unearned revenue o Rp 14,444. n the accrual 'asis, how much was :r. GountJs patient service revenue or 2411> a. Rp 314,444. '. Rp 3-4,444.
c. Rp 34,444. d. Rp 34,444. <1++. he ollowing inormation is availa'le or Ace /ompany or 2414D :is'ursements or purchases "ncrease in trade accounts paya'le :ecrease in merchandise inventory
71,4%4,444 -%,444 34,444
/osts o goods sold or 2414 was a. 71,1%%,444. '. 71,4%,444. c. 71,44%,444. d. 7%,444. Pr" #$%&'PAd*usting entries. :ata relating to the 'alances o various accounts aected 'y ad*usting or closing entries appear 'elow. (he entries which caused the changes in the 'alances are not given.) Gou are ased to supply the missing *ournal entries which would logically account or the changes in the account 'alances. 1. "nterest receiva'le at 1O1O14 was M1,444. :uring 2414 cash received rom de'tors or interest on outstanding notes receiva'le amounted to M%,444. he 2414 income statement showed interest revenue in the amount o M%,44. Gou are to provide the missing ad*usting entry that must have 'een made, assuming reversing entries are not made. 2. !nearned rent at 1O1O14 was M%,344 and at 12O31O14 was M,444. he records indicate cash receipts rom rental sources during 2414 amounted to M4,444, all o which was credited to the !nearned Rent Account. Gou are to prepare the missing ad*usting entry. 3. Accumulated depreciationPe5uipment at 1O1O14 was M234,444. At 12O31O14 the 'alance o the account was M2-4,444. :uring 2414, one piece o e5uipment was sold. he e5uipment had an original cost o M4,444 and was 3O depreciated when sold. Gou are to prepare the missing ad*usting entry. . Allowance or dou'tul accounts on 1O1O14 was M%4,444. he 'alance in the allowance account on 12O31O14 ater maing the annual ad*usting entry was M+%,444 and during 2414 'ad de'ts written o amounted to M34,444. Gou are to provide the missing ad*usting entry. %. 7repaid rent at 1O1O14 was M,444. :uring 2414 rent payments o M124,444 were made and charged to &rent expense.& he 2414 income statement shows as a general expense the item &rent expense& in the amount o M12%,444. Gou are to prepare the missing ad*usting entry that must have 'een made, assuming reversing entries are not made. +. Retained earnings at 1O1O14 was M1%4,444 and at 12O31O14 it was M214,444. :uring 2414, cash dividends o M%4,444 were paid and a share dividend o M4,444 was issued. oth dividends were properly charged to retained earnings. Gou are to provide the missing closing entry.
