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