(solution) 1. If the income statement debit column shows $600 supplies

(solution) 1. If the income statement debit column shows $600 supplies

1.   If the income statement debit column shows $600 supplies expense, $400 depreciation expense, and $300 salaries expense.

what would the journal entry to close the expense account be?

a. Income Summary $1300

                   Supplies expense          $600

                   Depreciation expense  $400

                   Salaries expense            $300

b. Income Summary $1200

                   Capital                        $1200

c. Supplies exp.          $500

   Depreciation exp.  $400

   Salaries exp.           $300

                          Income Summary    $1200

d. Capital                      $1200

              Income Summary       $1200

2.   The entry to close the expense account(s) was entered in reverse-Income Summary was credited and the expense account(s) was/were debited.  THe result of this error is that:

a. before closing it, Income Summary will have a credit balance.

b. before closing it, Income summary will have a debit balance.

c. the assets will be overstated

d. the liabilities will be overstated

3.   Which accounts are affected when the company provides services to a credit customer?

a. assets and capital

b. liabilities and capital

c. assets and revenue

d. none of the above answers are correct

4.    The accounts receivable account is:

a. a revenue, and it has a normal debit balance

b. an expense, and it has a normal credit balance

c. a liability, and it has a normal debit balance

d. an asset, and it has a normal debit balance

5.   The time frame for which a statement of owner’s equity is prepared is a(an:

a. calendar year

b. accounting period

c. fiscal year

d. accounting cycle

6.   The proper sequence used in recording a business transaction is:

a. analyze, journalize, post, record the account balance, and complete the reference column in the journal

b. analyze, journalize, post, complete the reference column in the journal, and record the account balance

7.   If the trial balance is not equal, you should first:

a. re-compute the ledger balances

b. trace all postings

c. re-add the trial balance and calculate the difference

d. look for missing transactions

8.   a contra-asset is:

a. in reality a liability

b. an asset with a debit balance

c. and account with an opposite balance of a normal asset

d. an account that increases the asset

9.    Pre-paid rent is considered to be

a. liability

b. asset

c. contra-asset

d. revenue

10.   The adjustment that is made to allocate the cost of a building over its expected life is called:

a. depreciation

b. residual life

c. accumulated depreciation

d. none of the above

11.   Journal entries that re needed in order to update account balances for internal business transactions (such as supplies and prepaid rent) at the end of the period are:

a. closing entries

b. adjusting entries

c. none of the above