Question :
71. What the effect the financial statements when a company fails : 1228505
71. What is the effect on the financial statements when a company fails to accrue revenue earned at year-end?
A. Net income is understated and assets are understated.
B. Revenue is understated and stockholders’ equity is overstated.
C. Revenue is understated and assets aren’t affected.
D. Net income is understated and liabilities are overstated.
72. On December 31, 2011, Krug Company reported pretax income of $120,000 prior to the following adjusting entries:
? Depreciation expense was $31,000;
? Accrued service revenues totaled $29,000;
? Accrued expenses totaled $12,000;
? Expired insurance which was prepaid totaled $9,000;
? Rent revenue earned was $7,000; the rent was prepaid by the tenant and credited to unearned rent revenue.
How much is Krug’s pretax income after adjusting entries?
A. $113,000
B. $104,000
C. $106,000
D. $128,000
73. On December 31, 2011, Krug Company reported total assets of $390,000 prior to the following adjusting entries:
? Depreciation expense was $31,000;
? Accrued service revenues totaled $29,000;
? Accrued expenses totaled $12,000;
? Expired insurance which was prepaid totaled $9,000;
? Rent revenue earned was $7,000; the rent was prepaid by the tenant and credited to unearned rent revenue.
How much are Krug’s total assets after adjusting entries?
A. $350,000
B. $386,000
C. $379,000
D. $374,000
74. On December 31, 2011, Krug Company reported total liabilities of $110,000 prior to the following adjusting entries:
? Depreciation expense was $31,000;
? Accrued service revenues totaled $29,000;
? Accrued expenses totaled $12,000;
? Expired insurance which was prepaid totaled $9,000;
? Rent revenue earned was $7,000; the rent was prepaid by the tenant and credited to unearned rent revenue.
How much are Krug’s total liabilities after adjusting entries?
A. $115,000
B. $141,000
C. $86,000
D. $110,000
75. On December 31, 2011, Krug Company reported stockholders’ equity of $280,000 prior to the following adjusting entries:
? Depreciation expense was $31,000;
? Accrued service revenues totaled $29,000;
? Accrued expenses totaled $12,000;
? Expired insurance which was prepaid totaled $9,000;
? Rent revenue earned was $7,000; the rent was prepaid by the tenant and credited to unearned rent revenue.
How much is Krug’s stockholders’ equity after adjusting entries?
A. $280,000
B. $262,000
C. $295,000
D. $264,000
76. On July 1, 2011, Goode Company borrowed $100,000. The company signed a note payable with interest at 6 percent per year. The note and interest are due on December 31, 2011. On December 31, 2011, Goode paid $103,000 to settle the debt in full. Assuming no accruals for interest have been made during the year, transaction analysis of the $103,000 cash payment on December 31, 2011 should reflect which of the following?
A. A decrease in assets of $103,000 and a decrease in liabilities of $103,000.
B. A decrease in assets of $100,000, a decrease in stockholders’ equity of $3,000, and a decrease in liabilities of $103,000.
C. A decrease in stockholders’ equity of $100,000, a decrease in liabilities of $3,000, and a decrease in assets of $103,000.
D. A decrease in liabilities of $100,000, a decrease in stockholders’ equity of $3,000 and a decrease in assets of $103,000.
77. On January 1, 2011, Ryan Company paid the premium on a three-year insurance policy in the amount of $6,000. At that time, the full amount paid was recorded as prepaid insurance. After recording the adjusting entry for the insurance policy on December 31, 2011, Ryan Company’s records would reflect what balance in the prepaid insurance account?
A. $6,000
B. $2,000
C. $3,000
D. $4,000
78. Assume Idaho Company recorded the following adjusting journal entry at year-end:
If the beginning balance in prepaid insurance was $500 and $2,500 was paid for an insurance premium during the year, what is the ending balance in the prepaid insurance account after the above adjusting entry?
A. $1,200
B. $700
C. $2,200
D. $1,000
79. Failure to make an adjusting entry to recognize rent revenue receivable would cause which of the following?
A. An understatement of assets, net income, and stockholders’ equity.
B. An overstatement of assets and stockholders’ equity and an understatement of net income.
C. No effect on assets, liabilities, net income, or stockholders’ equity.
D. An overstatement of assets, net income, and stockholders’ equity.
80. Which of the following best describes the difference between an unadjusted trial balance and an adjusted trial balance?
A. An unadjusted trial balance is prepared at the start of the accounting period and is not provided to external decision makers, while an adjusted trial balance is prepared at the end of the period and is provided to external decision makers.
B. An unadjusted trial balance is prepared by companies that make adjusting entries, while an adjusted trial balance is prepared by companies that do not make adjusting entries.
C. An unadjusted trial balance is prepared before the adjusting entries have been made, while an adjusted trial balance is prepared after the adjusting entries have been made.
D. An unadjusted trial balance is prepared after the post-closing trial balance.
