166.Bread Basket provides baking supplies to restaurants and grocery stores. On November 1, 2014, Bread Basket signed a €500,000, 6-month note payable. The note requires Bread Basket to pay interest at an annual rate of 6%. Bread Basket’s accountant is a recent college graduate who lacks practical experience. Therefore, the appropriate adjusting entry is
not
made. What is the impact on its December 31, 2014 statement of financial position?
a.Assets are overstated by € 15,000.
b.Equity is overstated by € 15,000.
c.Liabilities are understated by € 15,000.
d.Liabilities are understated by € 5,000.
167.Wave Inn is a resort located in Canada. During December 2014 Spin Jammers held its annual conference at the resort. The charges related to the conference total $360,000, of which 25% has been paid by Spin Jammers. When Wave Inn makes the appropriate adjusting entry, which of the following is a part of the adjustment made to its December 31, 2014 statement of financial position?
a.Debit Cash $270,000.
b.Credit revenues $270,000.
c.Credit Cash $270,000.
d.Debit Cash and credit revenue $270,000.
168.Which of the following statements is false regarding adjusting entries?
a.Cash is neither debited nor credited as a result of adjusting entries.
b.Each adjusting entry affects one statement of financial position account and one income statement account.
c.Each adjusting entry affects one revenue account and one expense account.
d.Adjusting entries involve accruals or deferrals.
169.If an adjusting entry is
not
made for an accrued revenue,
a.assets will be overstated.
b.expenses will be understated.
c.equity will be understated.
d.revenues will be overstated.
170.If an adjusting entry is
not
made for an accrued expense,
a.expenses will be overstated.
b.liabilities will be understated.
c.net income will be understated.
d.equity will be understated.
171.Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause
a.net income to be understated.
b.an overstatement of assets and an overstatement of liabilities.
c.an understatement of expenses and an understatement of liabilities.
d.an overstatement of expenses and an overstatement of liabilities.
172.Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause
a.net income to be overstated.
b.an understatement of assets and an understatement of revenues.
c.an understatement of revenues and an understatement of liabilities.
d.an understatement of revenues and an overstatement of liabilities.
173.Betty Carson has performed $500 of accounting services for a client but has
not
billed the client as of the end of the accounting period. What adjusting entry must Betty make?
a.Debit Cash and credit Unearned Service Revenue
b.Debit Accounts Receivable and credit Unearned Service Revenue
c.Debit Accounts Receivable and credit Service Revenue
d.Debit Unearned Service Revenue and credit Service Revenue
174.Betty Carson, an accountant, has billed her clients for services performed. She subsequently receives payments from her clients. What entry will Betty make upon receipt of the payments?
a.Debit Unearned Service Revenue and credit Service Revenue
b.Debit Cash and credit Accounts Receivable
c.Debit Accounts Receivable and credit Service Revenue
d.Debit Cash and credit Service Revenue
175.Sherman Air Charter signed a four-month note payable in the amount of $12,000 on September 1. The note requires interest at an annual rate of 6%. The amount of interest to be accrued at the end of September is
a.$240.
b.$60.
c.$720.
d.$180.