31. The normal balance of the Accumulated Depreciation account is
A. A debit balance
B. A credit balance
C. Either a debit balance or a credit balance.
D. There is no normal balance for this account.
32. Unearned revenue may also be called
A. Net income
B. Deferred revenue
C. Unexpired revenue
D. Services rendered
33. The adjusting entry to record income taxes at the end of an unprofitable accounting period consists of a
A. Debit to Income Tax Expense and a credit to Income Tax Payable
B. Credit to Income Tax Expense and a debit to Income Tax Payable
C. Credit to Income Tax Receivable and a debit to Income Tax Expense
D. No adjusting entry is required for income taxes if there are no profits
34. Which of the following is not considered a basic type of adjusting entry?
A. An entry to convert a liability to a revenue
B. An entry to accrue unpaid expenses
C. An entry to convert an asset to an expense
D. An entry to convert an asset to a liability
35. The United Shipping Co. made an adjusting entry accruing interest on a note payable for the month of January for $800. The note required 12% per annum on the principal. The principal amount of the note payable must have been
A. $7,000
B. $9,600
C. $80,000
D. $10,800
$800/.12 ? 12 = $80,000.
36. Rose Corp. has a note receivable from Jewel Co for $80,000. The note matures in 5 years and bears interest of 6%. Rose is preparing financial statements for the month of June. Rose should make an adjusting entry
A. Debiting Interest Revenue for $400 and crediting Interest Receivable for $400.
B. Debiting Interest Receivable for $400 and crediting Interest Revenue for $400
C. Debiting Interest Revenue for $4,800 and crediting Interest Receivable for $4,800.
D. Crediting Interest Payable for $400 and debiting Interest Expense for $400.
($80,000 ? .06)/12 = $400
37. Hahn Corp. has three employees. Each earns $600 per week for a five day work week ending on Friday. This month the last day of the month falls on a Wednesday. The company should make an adjusting entry
A. Debiting Wage Expense for $1,080 and crediting Wages Payable for $1,080
B. Debiting Wage Expense for $360 and crediting Wages Payable for $360
C. Crediting Wage Expense for $1,080 and debiting Wages Payable for $1,080
D. Crediting Wage Expense for $360 and debiting Wages Payable for $360
$600 ? 3/5 ? 3 = $1,080
38. Which of the following activities is least likely to be limited to "year-end"?
A. Closing the accounts.
B. Drafting notes to accompany statements.
C. Recording transactions.
D. Undergoing an audit.
39. Depreciation is:
A. An exact calculation of the decline in value of an asset.
B. Only an estimate of the decline in value of an asset.
C. Only recorded at the end of a year and never over a shorter time period.
D. Management must know the exact life of an asset in order to calculate an acceptable depreciation expense.
40. We can compare income of the current period with income of a previous period to determine whether the operating results are improving or declining:
A. Only if each accounting period covered is a full year.
B. Only if the same accountant prepares the income statement each period.
C. Only if the accounting periods are equal in length.
D. Only if a manual accounting system is used in both periods.