51 adjusting entries a may be required only when revenues and expenses are recognize 4352223

51.Adjusting entries

a.may be required only when revenues and expenses are recognized at the same time cash is received or paid

b.may be required when revenues and expenses are recognized before cash is received or paid

c.are not allowed by generally accepted accounting principles

d.are recognized for tax purposes but not for financial reporting purposes

52.If a careless bookkeeper fails to accrue $12,000 of wages payable at the end of the accounting period, which of the following will be true of the financial statements?

a.net income will be understated by $12,000

b.retained earnings will be overstated by $12,000

c.liabilities will be overstated by $12,000

d.assets will be overstated by $12,000

53.Which of the following situations results in a decrease in both assets and owner's equity?

a.revenue is accrued for $10,000

b.liability is accrued for $6,000

c.depreciation expense is recorded for $2,000

d.$1,000 of rent received in advance is earned

54.Which of the following financial statements is usually prepared first?

a.balance sheet

b.stockholders' equity statement

c.cash-flow statement

d.income statement

55.When a bookkeeper closes the books, which of the following occurs?

a.all revenue and expense accounts are reset to zero

b.retained earnings is reset to zero

c.all asset and liability accounts are reset to zero

d.the company is liquidated

56.Which of the following is a temporary account?

a.cost of goods sold

b.office equipment

c.owners' equity

d.accumulated depreciation

57.Which of the following is NOT a temporary account?

a.sales

b.interest expense

c.accumulated depreciation

d.cost of goods sold

58.Which of the following accounts will be closed to Retained Earnings?

a.Interest Expense

b.Sales Revenue

c.Cost of Goods Sold

d.all of the above will be closed to Retained Earnings

59.During December, Francesca was hired. She earned $2,600 for the month. By December 31, $2,000 of these wages had been paid with the remainder to be paid during January. How will this information appear on the balance sheet and income statement at December 31?

Balance Sheet                     Income Statement

a.$2,600 as a liability            $2,000 as an expense

b.$2,000 as a liability            $2,600 as an expense

c.$  600 as a liability             $2,600 as an expense

d.$  600 as a liability             $2,000 as an expense

60.A firm with a fiscal year ending December 31, purchased a 6-month insurance policy for $1,200 on November 1. What amount of the insurance cost should be expensed for the year ended on December 31.

a.None

b.$100

c.$400

d.$1,200

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