ACCT 2331 Chapter 3: Chapter 3 ACCT 2331
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Question 16
Corresponds to CLO 3(d) Hemmingway Corporation paid salaries of$5,000 and advertising expense of $2,000. Which of the followingjournal entries correctly records these expenses?
Debit: Cash $7,000 | ||
Debit: Salaries/Wages Expense$5,000 | ||
Debit: Salaries/Wages Expense$5,000 | ||
Debit: Salaries/Wages Expense$5,000 |
3 points
Question 17
Corresponds to CLO 4(a) Which of the following statements iscorrect regarding accrued revenues and unearned revenues, beforeadjusting entries have been made?
Accrued revenues have not been earned and unearned revenues havebeen earned. | ||
Accrued revenues have been paid and unearned revenues havenot. | ||
Accrued revenues have not been recorded and unearned revenueshave been recorded. | ||
Accrued revenues have been recorded and unearned revenues havebeen recorded. |
3 points
Question 18
Corresponds to CLO 4(b) Hudson Law Corporation received $5,500cash for legal services to be rendered in the future. The fullamount was credited to the liability account Unearned ServiceRevenue. At the end of the period, Hudson determines that $3,000 ofthe legal services have been rendered. The appropriate adjustingjournal entry to be made at the end of the period is:
debit Unearned Service Revenue, $3,000; credit Cash, $3,000. | ||
debit Unearned Service Revenue, $3,000; credit Service Revenue,$3,000. | ||
debit Unearned Service Revenue, $2,500; credit Service Revenue,$2,500. | ||
debit Service Revenue, $2,500; credit Unearned Service Revenue,$2,500. |
3 points
Question 19
Corresponds to CLO 4(c) Ace Corporation purchased officesupplies costing $13,000 and debited Office Supplies for the fullamount. At the end of the accounting period, a physical count ofoffice supplies revealed $2,700 still on hand. The appropriateadjusting journal entry to be made at the end of the period is:
debit Office Supplies Expense, $10,300; credit Office Supplies,$10,300. | ||
debit Office Supplies, $10,300; credit Office Supplies Expense,$10,300. | ||
debit Office Supplies Expense, $2,700; credit Office Supplies,$2,700. | ||
debit Office Supplies, $2,700; credit Office Supplies Expense,$2,700. |
3 points
Question 20
Corresponds to CLO 4(d) On September 1, Northgate paid $18,000to Evans Management Company for 12 months of rent beginning onSeptember 1. The appropriate journal entry was made to record thistransaction. If financial statements are prepared for the 9 monthsended September 30, the adjusting entry to be made by Northgateis:
debit Rent Expense, $13,500; credit Prepaid Rent, $13,500. | ||
debit Prepaid Rent, $1,500; credit Rent Revenue, $1,500. | ||
debit Prepaid Rent, $1,500; credit Rent Expense, $1,500. | ||
debit Rent Expense, $1,500; credit Prepaid Rent, $1,500. |
3 points
Question 21
Corresponds to CLO 5(a) Lennox Corporation purchased a newdelivery truck for 35,000. The sales taxes are $2,700. The logo ispainted on the side of the truck for $800. The truck's annuallicense is $200. Annual insurance on the truck is $1,300. Whatshould Lennox record as the cost of the new truck?
$40,000 | ||
$38,500 | ||
$37,700 | ||
$35,000 |
3 points
Question 22
Corresponds to CLO 5(b) On April 1, 2013, Ballard Corporationpurchased equipment for $65,000. It is estimated that the equipmentwill have a $5,000 salvage value at the end of its 5 year usefullife. If Ballard uses the straight-line method of depreciation,what is the accumulated depreciation at December 31, 2013?
$13,000 | ||
$12,000 | ||
$9,750 | ||
$9,000 |
3 points
Question 23
Corresponds to CLO 5(c) Tyree Company purchased equipment with acost of $90,000 and an estimated salvage value of $18,000. Theequipment is expected to produce 150,000 units over its estimateduseful life of 10 years. If Tyree uses the units-of-activitymethod, what is the depreciation cost per unit to be used incalculating depreciation?
$1.67 | ||
$0.48 | ||
$2.08 | ||
$0.60 |
3 points
Question 24
Corresponds to CLO 5(d) Kerns Company purchased equipment with acost of $200,000 and an estimated salvage value of $10,000. Theequipment has an estimated useful life of 10 years. If Kerns usesthe double-declining balance method, what is the annualdepreciation rate to be used in calculating depreciation?
5% | ||
10% | ||
20% | ||
40% |
3 points
Question 25
Corresponds to CLO 6(a) Marshall Machinery made a sale for$150,000 on March 31. The customer is sent a statement on April 6and payment is received on April 15. Marshall prepares March'smonthly internal financial statements on April 20. Marshall followsGAAP and applies the revenue recognition principle. When is the$150,000 considered to be earned?
March 31 | ||
April 6 | ||
April 15 | ||
April 20 |
QUESTION 6
Which of the following statements is not true regarding prepaidexpenses?
Prepaid expenses represent assets. | ||
Prepaid expenses are shown in a special section of the incomestatement. | ||
Prepaid expenses become expenses only as goods or services areused up. | ||
Prepaid expenses appear in the balance sheet. |
4 points
QUESTION 7
The balance of an unearned revenue account:
Appears in the balance sheet as a component of stockholders'equity. | ||
Appears in the income statement along with other revenueaccounts. | ||
Appears in a separate section of the income statement forrevenue not yet earned. | ||
Appears in the liability section of the balance sheet. |
4 points
QUESTION 8
As of January 31, Hudson Corporation owes $600 to U-Rent-It forequipment used during January. If no adjustment is made for thisitem at January 31, how will Hudson's financial statements beaffected?
Cash will be overstated at January 31. | ||
Net income for January will be overstated. | ||
Stockholders' equity will be understated. | ||
The financial statements will be accurate since the $600 doesnot have to be paid yet. |
4 points
QUESTION 9
The accountant for the Linville Company forgot to make anadjusting entry to record revenue earned but not yet billed tocustomers. The effect of this error is:
An overstatement of assets. | ||
An overstatement of stockholders' equity. | ||
Understatement of both assets and stockholders' equity | ||
Overstatement of both assets and stockholders' equity. |
4 points
QUESTION 10
An adjusting entry involving recognition of unrecorded revenueis necessary at the end of March in which of the followingsituations?
Financial Consultants received payment in February forconsulting services rendered in March. | ||
Financial Consultants began working for a client on March 15;bills will be sent monthly beginning April 15. | ||
Financial Consultants made payment in January for office rentfor the first three months of the year. | ||
On March 31, a major customer paid his bill for a consulting jobcompleted in February. |
4 points
QUESTION 11
Which of the following entries causes an immediate decrease inassets and in stockholders' equity?
The entry to record depreciation expense. | ||
The entry to record revenue earned but not yet received. | ||
The entry to record the earned portion of rent received inadvance. | ||
The entry to record accrued wages payable. |
4 points
QUESTION 12
The CPA firm auditing Greer Company found that net income hadbeen overstated. Which of the following errors could be thecause?
Failure to record depreciation expense for the period. | ||
No entry made to record purchase of land for cash on the lastday of the year. | ||
Failure to record payment of an account payable on the last dayof the year. | ||
Failure to make an adjusting entry to record revenue which hadbeen earned but not yet billed to customers. |