Question :
48. The entry to record depreciation an example of an adjusting : 1229706
48. The entry to record depreciation is an example of an adjusting entry:
A. To apportion a recorded cost.
B. To apportion unearned revenue.
C. To convert a liability to revenue.
D. To record unrecorded revenue.
49. During the last month of its fiscal year, Echo Lake Resort accepted numerous deposits from customers. By the end of the month many, but not all, of these guests had completed their stays. The entry to record this event is an example of an adjusting entry:
A. To apportion a recorded cost.
B. To apportion unearned revenue.
C. To record unrecorded expenses.
D. To record unearned revenue.
50. Prepaid expenses are:
A. Assets.
B. Income.
C. Liabilities.
D. Expenses.
51. Colonial Systems prepares monthly financial statements. Colonial would record a prepaid expense in each of the following situations except:
A. Colonial Systems purchased a two-year fire insurance policy.
B. Colonial Systems paid for six months’ gardening services in advance.
C. A tenant paid Colonial Systems three months’ rent in advance.
D. Colonial Systems purchased enough office supplies to last several months.
52. Which of the following statements is not true regarding prepaid expenses?
A. Prepaid expenses represent assets.
B. Prepaid expenses are shown in a special section of the income statement.
C. Prepaid expenses become expenses only as goods or services are used up.
D. Prepaid expenses appear in the balance sheet.
53. The concept of materiality:
A. Involves only tangible assets and not intangible assets.
B. Relates only to the income statement and not the balance sheet.
C. Is always an exact percentage of a financial account balance.
D. Is measured as an item significant enough to influence the decisions of users of financial statements.
54. The balance of an unearned revenue account:
A. Appears in the balance sheet as a component of owners’ equity.
B. Appears in the income statement along with other revenue accounts.
C. Appears in a separate section of the income statement for revenue not yet earned.
D. Appears in the liability section of the balance sheet.
55. In which of the following situations would Daystar Company record unearned revenue in May?
A. In April, Daystar Company received payment from a customer for services that are performed in May.
B. Daystar Company completes a job for a customer in May; payment will be received in June.
C. Daystar Company is paid on May 25 for work done in the first two weeks of May.
D. Daystar Company receives payment in May for work to be performed in June and July.
56. Interest that has accrued during the accounting period on a note payable requires an adjusting entry consisting of:
A. A debit to Interest Expense and a credit to Cash.
B. A debit to Notes Payable and a credit to Interest Payable.
C. A debit to an asset and a credit to a liability.
D. A debit to Interest Expense and a credit to Interest Payable.
57. The adjusting entry to record interest that has accrued on a note payable to the bank will cause an immediate:
A. Increase in liabilities and reduction in net income.
B. Decrease in liabilities and reduction in net income.
C. Decrease in assets and reduction in net income.
D. Increase in assets and increase in net income.
