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1. Adam's Produce opened business on January 1, 2015, and paid for two insurance policies effective that date. The liability policy was $36,000 for eighteen months, and the crop damage policy was $12,000 for a two-year term. What was the balance in Adam's prepaid insurance as of December 31, 2015? A. $9,000 B. $18,000 C. $30,000 D. $48,000 2. What's required when creating an adjusting entry when amounts were previously recorded as deferred revenues? A. A credit to a liability B. A debit to an asset C. A credit to an asset D. A debit to a liability 3. On September 1, 2015, Kromcast sold 600 one-year subscriptions for $81 each. The total amount received was credited to deferred subscriptions revenue. What would be the required adjusting entry at December 31, 2015? A. Deferred subscriptions revenue16,200 Subscriptions payable16,200 B. Deferred subscriptions revenue48,600 Subscriptions revenue16,200 Prepaid subscriptions32,400 C. Deferred subscriptions revenue16,200 Subscriptions payable16,200 D. Deferred subscriptions revenue16,200 Subscriptions revenue16,200 4. Which of the following accounts has a balance whereby debits normally exceed credits? A. Advertising expense B. Accounts payable C. Accumulated depreciation D. Accrued taxes 5. In its first year of operations, Number One Corp. had income before tax of $500,000. Number One made income tax payments totaling $210,000 during the year and has an income tax rate of 40%. What was Number One's net income for the year? A. $300,000 B. $290,000 C. $306,000 D. $294,000 6. Rent collected in advance is considered A. a temporary account, not in the balance sheet at all. B. a shareholders' equity account in the balance sheet. C. a liability account in the balance sheet. D. an asset account in the balance sheet. 7. What's an example of a contra account? A. Sales revenue B. Accumulated depreciation C. Accounts receivable D. Depreciation expense 8. Which of the following is a current liability account? A. Subscriptions collected in advance from customers B. Prepaid rent C. Accumulated depreciation D. Depreciation 9. Which of the following is a permanent account? A. Accumulated depreciation B. Cost of goods sold C. Depreciation expense D. Gain on sale of equipment 10. What happens when a company accrues salaries at the end of the accounting period? A. Its current ratio increases B. Its debt to equity ratio increases C. Its acid-test ratio increases D. Its debt to equity ratio decreases 11. Smith's Corporation Co.'s trial balance included the following account balances at December 31, 2015: Accounts payable$25,000 Bond payable, due 202522,000 Salaries payable16,000 Note payable, due 201620,000 Note payable, due 202140,000 What amount should be included in the current liability section of Smith's December 31, 2015, balance sheet? A. $61,000 B. $101,000 C. $41,000 D. $63,000 12. What are notes payable that are due in two years considered? A. Long-term investments B. Long-term liabilities C. Current liabilities D. Long-term intangible assets 13. Amy's Computers is preparing an annual report for the current fiscal year. The company's controller has asked for your help in determining how best to disclose information about the inventory costing method. Where should this information be disclosed? A. In the summary of significant accounting policies note B. It doesn't need to be disclosed C. In a separate disclosure note D. On the face of the balance sheet 14. Which of the following accounts has a balance whereby debits normally exceed credits? A. Accrued income taxes payable B. Prepaid rent C. Salary expense accounts payable D. Land 15. On January 1, Loyal Corp. began operating a service company with an initial cash investment by shareholders of $2,000,000. The company provided $6,400,000 of services in January and received full payment in February. Royal also incurred expenses of $3,000,000 in January that were paid in March. During January, Loyal paid its shareholders cash dividends of $1,000,000. What was the company's income before income taxes for the two months ended February 28 under the following methods of accounting? A. cash: $5,400,000/accrual: $2,400,000 B. cash: $6,400,000/accrual: $2,400,000 C. cash: $6,400,000/accrual: $3,400,000 D. cash: $3,400,000/accrual: $3,400,000 16. Based on recent financial statement data for Quantity Foods, Inc. (QF), shown below, what's QF's times interest earned ratio? (rounded) Current liabilities$ 180Income before interest and taxes$ 125 10% Bonds, long-term 360Interest expense 36 Total liabilities 540Income before tax 89 Shareholders' equityIncome tax 27 Capital stock 200Net income$ 62 Retained earnings 280 Total shareholders' equity 480 Total liabilities and equity $1,020 A. 10.0 B. 2.47 C. 1.73 D. 3.47 17. Which of the following is a temporary account? A. Inventory B. Depreciation expense C. Salaries payable D. Cash 18. GM Motor Company purchases services from suppliers on account and sells its products to distributors on short-term credit. Thus, do each of these events affect net income faster than they affect net operating cash flows? A. Purchase Services: No / Sell Products: No B. Purchase Services: No / Sell Products: Yes C. Purchase Services: Yes / Sell Products: Yes D. Purchase Services: Yes / Sell Products: No 19. The perceived lack of _______ was most likely the important flaw that lead to the demise of the APB. A. importance B. competence C. independence D. confidence 20. What will a balance sheet report? A. Assets and liabilities for a period of time B. Assets and equities at a point in time C. Cash flow for a period of time D. Net income at a point in time