Question : 111.Which of the following would not be a proper application : 1237587

 

111.Which of the following would not be a proper application of the concept of materiality by Millridge Corporation?   

A. Transactions involving small dollar amounts are not recorded in Millridge’s accounting records.

 

B. Estimates of supplies on hand are used to determine the supplies expense for the period.

 

C. On a monthly basis, utility bills are expensed in the month paid, rather than in the month in which services are used.

 

D. Immaterial items are ignored in making end-of-period adjusting entries.

 

 

 

 

112.Which statement is true about an adjusted trial balance?   

A. It is prepared before adjusting entries.

 

B. Revenue accounts and expense accounts should not appear on the adjusted trial balance.

 

C. Balance sheet items are presented before income statement items.

 

D. Accumulated depreciation should equal depreciation expense.

 

 

 

 

113.On the adjusted trial balance, retained earnings is:   

A. Stated at the period-end amount.

 

B. Stated at the period-beginning amount.

 

C. Adjusted for all revenues and expenses for the period.

 

D. Adjusted for the period’s dividends.

 

 

 

 

114.Before any month-end adjustments are made, the net income of Bennett Company is $76,000. The following adjustments are necessary: office supplies used, $3,160; services performed for clients but not yet recorded or collected, $3,640; interest accrued on note payable to bank, $3,040. After adjusting entries are made for the items listed above, Bennett Company’s netincomewillbe:   

A. $66,160.

 

B. $78,560.

 

C. $73,440.

 

D. $76,000.

$76,000 – $3,160 + $3,640 – $3,040 = $73,440

 

 

 

115.The accountant for Perfect Painting forgot the following two adjustments at the end of 2015:(a) The entry to record depreciation: $3,000.(b) The entry to record the portion of fees received in advance which have now been earned: $3,000.As a result of these two omissions:   

A. Net income for Perfect Painting for 2015 is overstated.

 

B. Net income for Perfect Painting for 2015 is understated.

 

C. Assets of Perfect Painting are overstated at December 31, 2015.

 

D. Liabilities of Perfect Painting are understated at December 31, 2015.

 

 

 

 

116.Before making month-end adjustments, net income of Cardinal Company was $116,000 for March. Adjusting entries are necessary for the following items:-Depreciation for the month of March: $2,300.-Rental income accrued during March, tenant to pay in April: $800.-Supplies used in March: $100.-Fees earned in March that had been collected in advance: $2,600.After recording these adjustments, net income for March is:   

A. $112,400.

 

B. $113,620.

 

C. $117,000.

 

D. $110,800.

$116,000 – $2,300 + $800 – $100 + $2,600 = $117,000

 

 

 

117.Before any month-end adjustments are made, the net income of Russell Company is $38,000. However, the following adjustments are necessary: office supplies used, $3,160; services performed for clients but not yet recorded or collected, $3,040; interest accrued on a note payable to bank, $3,640. After adjusting entries are made for the items listed above, Russell Company’s netincomewouldbe:   

A. $38,000.

 

B. $34,240.

 

C. $41,160.

 

D. $44,200.

$38,000 – $3,160 + $3,040 – $3,640 = $34,240

 

 

 

118.Before making month-end adjustments, net income of Bobwhite Company was $232,000 for March. Adjusting entries are necessary for the following items:-Depreciation for the month of March: $4,300.-Rental income accrued during March, tenant to pay in April: $900.-Supplies used in March: $300.-Fees earned in March that had been collected in advance: $3,600.After recording these adjustments, net income for March is:   

A. $222,900.

 

B. $227,700.

 

C. $231,900.

 

D. $235,600.

$232,000 – 4,300 + $900 – $300 + $3,600 = $231,900