Question : 31) Stan’s Shoe Repairs recorded $2,000 of unearned service revenue : 1212574

31) Stan’s Shoe Repairs recorded $2,000 of unearned service revenue being earned and the collection of $4,000 cash for service revenue previously accrued. The impact of these two entries on total service revenue is:

A) a decrease of $2,000.

B) an increase of $4,000.

C) an increase of $6,000.

D) an increase of $2,000.

32) Nuyen Services Company records the payment of $500 cash for a previously accrued expense and the accrual of $325 for another expense. The impact of these two entries on total expenses and net income is:

A)

Total Expenses

Net Income

increase by $825

decrease by $325

 

B)

Total Expenses

Net Income

increase by $825

decrease by $825

 

C)

Total Expenses

Net Income

increase by $325

decrease by $325

 

D)

Total Expenses

Net Income

increase by $325

decrease by $825

 

 

33) At the end of the fiscal period, Wilf Carter Services omitted the adjusting entry for accrued salaries. The effect of this error on the financial statements is to:

A) overstate net income.

B) understate assets.

C) understate net income.

D) overstate liabilities.

 

34) At the end of the fiscal period, Wilf Carter Services omitted the adjusting entry for amortization on equipment. The effect of this error on the financial statements is to:

A) understate liabilities.

B) understate owner’s equity.

C) overstate expenses.

D) overstate assets.

35) If an adjustment for prepaid insurance is not made at year end, net income will be:

A) unaffected.

B) understated.

C) overstated.

D) correct this year but incorrect next year.

 

36) A company began operations and purchased $5,000 of supplies. By year end, $2,700 was still on hand. The adjusting entry at year end would include a:

A) debit to supplies of $5,000.

B) credit to supplies for $2,700.

C) credit to supplies for $2,300.

D) debit to supplies expense for $2,700.

 

37) The entry for amortization has what effect on the financial statements?

A) increases assets and decreases liabilities

B) decreases net income and increases assets

C) increases expenses and decreases assets

D) decreases assets and increases liabilities

 

38) An accrued expense adjustment entry has the following effect on the balance sheet:

A) decreases liabilities.

B) increases assets.

C) increases liabilities.

D) correct this year but incorrect next year.

39) Prepaid insurance shows a beginning balance of $500 and an ending balance of $2,800. The insurance expense account was debited during the adjusting process for $1,800. How much cash was spent for insurance?

A) $1,500

B) $4,100

C) $1,000

D) $3,300

 

40) Prepaid rent shows a beginning balance of $500 and an ending balance of $600. During the year, prepaid rent was debited for $2,200. What is the amount of rent expense shown on the current year’s income statement?

A) $2,100

B) $1,700

C) $1,600

D) $2,700