116.A law firm received $2,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause
a.expenses to be overstated.
b.net income to be overstated.
c.liabilities to be understated.
d.revenues to be understated.
117.Bee-In-The-Bonnet Company purchased office supplies costing $8,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $2,200 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be
a.Debit Supplies Expense, $2,200; Credit Supplies, $2,200.
b.Debit Supplies, $5,800; Credit Supplies Expense, $5,800.
c.Debit Supplies Expense, $5,800; Credit Supplies, $5,800.
d.Debit Supplies, $2,200; Credit Supplies Expense, $2,200.
118.If an adjustment is needed for unearned revenues, the
a.liability and related revenue are overstated before adjustment.
b.liability and related revenue are understated before adjustment.
c.liability is overstated and the related revenue is understated before adjustment.
d.liability is understated and the related revenue is overstated before adjustment.
119.The balance in the supplies account on June 1 was $5,200, supplies purchased during June were $3,500, and the supplies on hand at June 30 were $2,000. The amount to be used for the appropriate adjusting entry is
a.$5,500.
b.$3,500.
c.$10,700.
d.$6,700.
120.Depreciation expense for a period is computed by taking the
a.original cost of an asset – accumulated depreciation.
b.depreciable cost ÷ depreciation rate.
c.cost of the asset ÷ useful life.
d.market value of the asset ÷ useful life.
121.Accumulated Depreciation is
a.an expense account.
b.an equity account.
c.a liability account.
d.a contra asset account.
122.Hercules Company purchased a computer for $4,500 on December 1. It is estimated that annual depreciation on the computer will be $900. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:
a.Debit Depreciation Expense, $900; Credit Accumulated Depreciation, $900.
b.Debit Depreciation Expense, $75; Credit Accumulated Depreciation, $75.
c.Debit Depreciation Expense, $3,600; Credit Accumulated Depreciation, $3,600.
d.Debit Office Equipment, $4,500; Credit Accumulated Depreciation, $4,500.
123.Action Real Estate received a check for $24,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $24,000. Financial statements will be prepared on July 31. Action Real Estate should make the following adjusting entry on July 31:
a.Debit Unearned Rent Revenue, $4,000; Credit Rent Revenue, $4,000.
b.Debit Rent Revenue, $4,000; Credit Unearned Rent Revenue, $4,000.
c.Debit Unearned Rent Revenue, $24,000; Credit Rent Revenue, $24,000.
d.Debit Cash, $24,000; Credit Rent Revenue, $24,000.
124.As prepaid expenses expire with the passage of time, the correct adjusting entry will be a
a.debit to an asset account and a credit to an expense account.
b.debit to an expense account and a credit to an asset account.
c.debit to an asset account and a credit to an asset account.
d.debit to an expense account and a credit to an expense account.
125.A company usually determines the amount of supplies used during a period by
a.adding the supplies on hand to the balance of the Supplies account.
b.summing the amount of supplies purchased during the period.
c.taking the difference between the supplies purchased and the supplies paid for during the period.
d.taking the difference between the balance of the Supplies account and the cost of supplies on hand.