61.On December 31, 2007, Jimmy Landlord collected $6,000 rent for January, 2008 from his tenants. Which of the following should be reported on his company's December 31, 2007 financial statements?
a.revenue of $6,000
b.expense of $6,000
c.liability of $6,000
d.equity of $6,000
62.The Boater’s News magazine sold 5-year subscriptions in January, 2007 totaling $75,000. Assume that all subscriptions were effective January 1, 2007 and the calendar year is the accounting period. At December 31, 2007, which of the following should be reported on Boaters' financial statements?
a.revenue of $75,000 and an asset of $75,000
b.revenue of $15,000 and equity of $60,000
c.revenue of $15,000 and liabilities of $60,000
d.revenue of $15,000 and an asset of $60,000
63.On October 1, 2007, Kincaid Enterprises paid $8,000 for eight months rent to its landlord in advance. Kincaid’s bookkeeper recorded the transaction by decreasing the cash account and increasing the rent expense account. On December 31 (end of Kincaid's fiscal year), an entry will need to be made by the company that will result in a
a.decrease of rent expense by $8,000
b.increase of prepaid rent by $5,000
c.increase of cash by $5,000
d.decrease of cash by $5,000
64.On September 1, 2007, the Blue Streak Airline paid eight months rent to its landlord in advance. Blue Streak's bookkeeper recorded the transaction by decreasing the cash account and increasing the rent expense account. On December 31 (end of Blue Streak's fiscal year), an adjusting entry will need to be made by the airline that will increase
a.rent expense
b.prepaid rent
c.cash
d.accounts payable
65.On April 1, 2007, a two-year insurance policy was purchased and the total premium of $5,280 was paid. At December 31, 2008, the financial statements should report
a.Insurance Expense $2,640; Prepaid Insurance $2,640
b.Insurance Expense $5,280; Prepaid Insurance $0
c.Insurance Expense $3,300; Prepaid Insurance $1,980
d.Insurance Expense $1,980; Prepaid Insurance $3,300
66.Custom Bikes Corporation reports these balances in its accounting system. Determine the balance of the Retained Earnings account.
Accounts payable$ 400Bonds payable2,000
Land200Supplies inventory80
Notes payable160Owners' investment2,200
Equipment2,400Buildings, net2,000
Cash800Interest payable40
Accounts receivable2 ,200Retained earnings?
Inventory720
a.$3,600
b.$5,800
c.$6,200
d.$7,800
67.Which of the financial statements provides both cash and accrual information?
a.the income statement
b.the cash-flow statement
c.the balance sheet
d.all of the above
68.Doctor’s, Inc. subscribes to three magazines and pays $140, $90 and $76, respectively, on July 1, 2007 The subscriptions are for one year and are recorded in Prepaid Subscriptions when paid. At December 31, 2007, which of the following entries should be made?
Magazine Expense Prepaid Subscriptions
a.increase $153 decrease $153
b.increase $306 decrease $306
c.decrease $153 increase $153
d.decrease $306 increase $306
69.The systematic process used in accounting systems to convert accounting data into useful information is the
a.business cycle
b.operating cycle
c.accounting cycle
d.working cycle
70.The end product of an accounting system is the
a.internal control system
b.design and use of source documents
c.trial balance
d.financial statements
71.Which of the following is a TRUE statement about the accounting cycle?
a.accounting cycles are only used by large, public companies
b.regardless of the type of business, the activities of the accounting cycle remains the same
c.the accounting cycle determines the types of business activities in which a company will engage
d.the accounting cycle was developed by the SEC
72.Which of the following statements about the accounting cycle is NOT true?
a.the accounting cycle is an eight-step procedure that occurs each accounting period
b.adjusting entries must be prepared before the final closing of the books
c.financial statements are prepared after closing the books for the accounting period
d.the accounting cycle is a repeating process used to record, summarize, and report accounting information
73.The eight steps in the accounting cycle are listed. Identify the proper order in which these steps occur.
1. Preparing the income statement
2. Recording transactions in journals
3. Preparing summary of account balances
4. Post transactions to ledger accounts
5. Prepare post-closing summary of account balances
6. Prepare adjusting entries at end of fiscal period
7. Prepare balance sheet and statement of cash flows
8. Close revenue and expense accounts to retained earnings
a.3, 2, 5, 8, 4, 1, 6, 7
b.2, 3, 6, 1, 4, 7, 8, 5
c.4, 3, 2, 6, 8, 5, 1, 7
d.2, 4, 6, 3, 1, 8, 5, 7
74.Which of the following steps occurs last in the accounting cycle?
a.prepare income statement
b.close revenue and expense accounts to retained earnings
c.preparation of the balance sheet and statement of cash flows
d.prepare summary of accunt balances