Question :
71. The supplies account has a balance of $1,000 January 1. : 1224890
71. The supplies account has a balance of $1,000 on January 1. During January, the company purchased $25,000 of supplies on account and the liability was appropriately recorded. A count of supplies at the end of January indicates a balance of $3,000. Which one of the following is a correct amount to be reported on the company’s financial statements for the month ending January 31?
A. Supplies expense – $23,000
B. Supplies on hand – $1,000
C. Accounts payable – $28,000
D. Supplies expense – $26,000
72. The asset account, Supplies, has a balance of $10,000 on January 1. During January, $22,000 of supplies were purchased on account and the liability was appropriately recorded. A count of supplies at the end of January indicates a balance of $2,000. What adjusting entry is necessary at January 31?
A. Supplies Expense 22,000
Supplies 20,000
Accounts Payable 2,000
B. Supplies Expense 24,000
Supplies 24,000
C. Supplies Expense 30,000
Supplies 30,000
D. Supplies 30,000
Accounts Payable 30,000
73. Which one of the following adjustments decreases net income for the period?
A. Recognition of depreciation on plant assets.
B. Recognition of interest earned on a note receivable.
C. Recognition of services that had been provided to customers but the cash has not yet been received.
D. Recognition of rent earned that had been received in advance from customers.
74. What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers?
A. Assets increase
B. Assets decrease
C. Liabilities increase
D. Equity increases
75. Failure to record accrued interest expense would result in which of the following?
A. Assets being overstated
B. Assets being understated
C. Liabilities being overstated
D. Liabilities being understated
76. Failure to record the earned portion of unearned revenue would result in which of the following?
A. Net income being understated
B. No effect on total liabilities
C. Stockholders’ equity being overstated
D. Total assets being understated
77. Failure to record dividends paid would result in which of the following?
A. Net income being understated
B. An increase in total liabilities
C. Stockholders’ equity being overstated
D. Net income being overstated
78. Failure to record the supplies used during the year would result in which of the following?
A. Net income being understated
B. An overstatement of liabilities
C. Assets and Stockholders’ equity being overstated
D. Total assets being understated
79. Failure to record amounts earned for services provided to customers but cash not yet received results in which of the following?
A. Net income being overstated
B. No effect on total assets
C. Stockholders’ equity being overstated
D. Total assets being understated
80. Failure to record depreciation expense for the period results in which of the following?
A. Net income being overstated
B. No effect on total assets
C. Stockholders’ equity being overstated
D. Total assets being understated
