Question :
Multiple Choice Questions
140. Joseph Jewelers purchased display shelves March 1 for : 1229699
Multiple Choice Questions
140. Joseph Jewelers purchased display shelves on March 1 for $36,000. If this asset has an estimated useful life of five years, what is the book value of the display shelves on April 30?
A. $600.
B. $34,800.
C. $33,600.
D. $900.
141. The adjusting entry to recognize an unrecorded expense is necessary:
A. When an expense is paid in advance.
B. When an expense has been neither paid nor recorded as of the end of the accounting period.
C. Whenever an expense remains unpaid at the end of an accounting period.
D. Because the accountant is likely to forget to pay these unrecorded expenses.
142. Before any month-end adjustments are made, the net income of Lawrence Company is $550,000. However, the following adjustments are necessary: office supplies used, $35,000; services performed for clients but not yet recorded or collected, $12,300; interest accrued on note payable to bank, $14,100. After adjusting entries are made for the items listed above, Lawrence Company’s net income would be:
A. $541,400.
B. $488,600.
C. $583,200.
D. $513,200.
143. Of the following adjusting entries, which one results in an increase in liabilities and the recognition of an expense at the end of an accounting period?
A. The entry to accrue salaries owed to employees at the end of the period.
B. The entry to record revenue earned but not yet collected or recorded.
C. The entry to record earned portion of rent previously received in advance from a tenant.
D. The entry to write off a portion of unexpired insurance.
144. The CPA firm auditing Indian Company found that net income had been overstated. Which of the following errors could be the cause?
A. Failure to record depreciation expense for the period.
B. No entry made to record purchase of land for cash on the last day of the year.
C. Failure to record payment of an account payable on the last day of the year.
D. Failure to make an adjusting entry to record revenue which had been earned but not yet billed to customers.
Manhattan Park adjusts its books each month and closes its books on December 31 each year. The trial balance at January 31, 2010, before adjustments, follows:
145. According to attendance records, $8,200 of the Unearned Admission Revenue has been earned in January. Compute the amount of admissions revenue to be shown in the January income statement:
A. $35,800.
B. $19,400.
C. $8,200.
D. $3,800.
146. At January 31, the amount of supplies on hand is $2,300. What amount is shown on the January income statement for supplies expense?
A. $2,300.
B. $5,400.
C. $3,100.
D. $7,700.
147. The equipment has an original estimated useful life of six years. Compute the book value of the equipment at January31 after the proper January adjustment is recorded:
A. $1,000.
B. $71,000.
C. $53,000.
D. $60,000.
148. Employees are owed $1,200 for services since the last payday in January to be paid the first week of February. No adjustment was made for this item. As a result of this error:
A. Assets at January 31 are overstated.
B. January net income is overstated.
C. Liabilities at January 31 are overstated.
D. Owners’ equity at January 31 is understated.
149. On August 1, 2009, the park purchased a 12-month insurance policy. The necessary adjusting entry at January 31 includes which of the following entries? (Hint: The company has adjusted its books on a monthly basis.)
A. A debit to Insurance Expense for $1,050.
B. A credit to Unexpired Insurance for $11,550.
C. A credit to Unexpired Insurance for $1,800.
D. A debit to Unexpired Insurance for $10,800.
