Question : 58. Which of the following would not be considered an adjusting : 1229707

58. Which of the following would not be considered an adjusting entry?
   
A. A Above.
B. B Above.
C. C Above.
D. D Above.

59. In which of the following situations would an adjusting entry be made at the end of January to record an accrued expense? 
A. Ramona’s Nursery purchased playground equipment on January 1 with an estimated useful life of six years.
B. On January 25, Ramona’s Nursery hired a college student to drive the minibus; the new employee is to begin work in February.
C. January 31 falls on a Tuesday; salaries are paid on Friday of each week.
D. On January 31, Ramona’s Nursery paid the interest owed on a note payable for January.

60. As of January 31, Princess Company owes $500 to Butler Co. for equipment rented during January. If no adjustment is made for this item at January 31, how will Princess’s financial statements be affected? 
A. Cash will be overstated at January 31.
B. Net income for January will be overstated.
C. Owners’ equity will be understated.
D. The financial statements will be accurate since the $500 does not have to be paid yet.

61. The accountant for the Grassroots Company failed to make an adjusting entry to record revenue earned but not yet billed to customers. The effect of this error is: 
A. An overstatement of assets and of net income offset by an understatement of owners’ equity.
B. An overstatement of net income and an understatement of assets.
C. An understatement of assets, net income, and owners’ equity.
D. An overstatement of liabilities offset by an understatement of owners’ equity.

62. Recently, Bon Appetite Café contracted and paid for a relatively expensive advertisement in Haute Cuisine magazine. Despite the fact that the ad will appear in Haute Cuisine three months after the end of Bon Appetite Café’s current fiscal year, the Cafe’s accountant recorded the disbursement to advertising expense. If no adjusting entry is made, how will this year’s financial statements of Bon Appetite Café be affected? 
A. Net income will be overstated and total assets will be understated.
B. Net income will be overstated and total assets will be overstated.
C. Net income will be understated and total assets will be understated
D. Net income will be understated and total assets will be overstated.

63. An adjusting entry involving recognition of accrued revenue is necessary at the end of March in which of the following situations? 
A. Midwood Consultants received payment in February for consulting services rendered in March.
B. Midwood Consultants began working for a client on March 15; bills will be sent monthly beginning April 15.
C. Midwood Consultants made payment in January for office rent for the first three months of the year.
D. On March 31, a major customer paid his bill for a consulting job completed in February.

64. An example of a contra-asset account is: 
A. Depreciation Expense.
B. Accumulated Depreciation.
C. Prepaid expenses.
D. Unearned revenue.

65. Which of the following entries causes an immediate decrease in assets and in net income? 
A. The entry to record depreciation expense.
B. The entry to record revenue earned but not yet received.
C. The entry to record the earned portion of rent received in advance.
D. The entry to record accrued wages payable.

66. Which of the following is not considered an end-of-period adjusting entry? 
A. The entry to record the portion of unexpired insurance which has become expense during the period.
B. An entry to record revenue which has been earned but has not yet been billed to customers.
C. The entry to record depreciation expense.
D. An entry to record repayment of a bank loan and to recognize related interest expense.

67. Which of the following is the accounting principle that governs the timing of revenue recognition? 
A. Realization principle.
B. Materiality.
C. Matching.
D. Depreciation.