Question :
61. Which of the following transactions results in a decrease in : 1228504
61. Which of the following transactions results in a decrease in both total assets and net income?
A. The accrual of salaries expense at year-end.
B. Collecting cash from an account receivable.
C. Recognizing revenue which was previously recorded as unearned revenue.
D. Adjustment of the prepaid rent account for rent which expired during the period.
62. Which of the following transactions results in an increase in liabilities and a decrease in net income?
A. The accrual of salaries expense at year-end.
B. Collecting cash from a customer for services to be provided in the future.
C. The accrual of revenue earned at year-end.
D. Adjustment of the unearned revenue account for revenue earned during the period.
63. Which of the following transactions results in an increase in both net income and stockholders’ equity?
A. Paying cash to acquire a six-month insurance policy.
B. Collecting cash from a customer for services to be provided in the future.
C. The accrual of interest expense year-end.
D. Adjustment of the unearned revenue account for revenue earned during the period.
64. Which of the following transactions does not create a deferral?
A. Paying cash to purchase a three-month insurance policy.
B. Receiving cash from a customer for services to be provided in the future.
C. Paying cash to employees for wages they have earned.
D. Paying cash to purchase a two-month supply of office supplies.
65. Which of the following is not an accrual?
A. Crediting salaries payable for salaries earned to date.
B. Debiting interest receivable for interest earned to date.
C. Debiting interest expense for interest incurred to date.
D. Debiting depreciation expense for depreciation incurred during the period.
66. What is the effect on the financial statements when a company fails to accrue salaries expense at year-end?
A. Net income is overstated and liabilities are understated.
B. Expenses are understated and stockholders’ equity is understated.
C. Expenses and liabilities are both overstated.
D. Net income is overstated and liabilities are not affected.
67. What is the effect on the financial statements when a company fails to record depreciation expense at year-end?
A. Net income is overstated and stockholders’ equity is understated.
B. Expenses are understated and stockholders’ equity is understated.
C. Expenses are understated and liabilities are overstated.
D. Net income is overstated and assets are overstated.
68. What is the effect on the financial statements when a company fails to adjust the prepaid insurance account at year-end for insurance coverage which has expired?
A. Net income is overstated and stockholders’ equity is understated.
B. Expenses are understated and stockholders’ equity is understated.
C. Expenses are understated and net income is understated.
D. Net income is overstated and assets are overstated.
69. What is the effect on the financial statements when a company fails to adjust the unearned revenue account for revenues earned at year-end?
A. Net income is understated and assets are understated.
B. Revenues are understated and liabilities are understated.
C. Revenues are understated and stockholders’ equity is overstated.
D. Net income is understated and liabilities are overstated.
70. What is the effect on the financial statements when a company fails to accrue interest expense at year-end?
A. Net income is overstated and assets are overstated.
B. Expenses are understated and liabilities are understated.
C. Expenses are understated and stockholders’ equity is understated.
D. Net income is overstated and liabilities are overstated.
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