Question

16). The employees of Able Com oyees of Able Company have worked the last two weeks of Year 1, but the employees salaries have not been paid or recorded as of December 31, Year 1 been paid or recorded as of December 31. Year 1. The adjusting entry that Able should make to accrue these unpaid salaries on December 31, Year 1 is: A) debit to Salaries Expense and credit to Cash. B) debit to Salaries Expense and credit to Salaries Payable. C) debit to Salaries Payable and credit to Salaries Expense. D) No entry is required until the employee is paid next period. C) dan to Salaries Expense 1 On October 1. Year 1. Senegal Company paid $12,000 in advance for rent of office space for one year and recorded a journal entry debiting Prepaid Rent and crediting Cash for $12,000. On December 31. Year 1, the required adjusting entry was recorded. What are the adjusted account balances at December 31. Year 1? A) Prepaid Rent, $3,000; Rent Expense, $9,000 B) Prepaid Rent, $12,000; Rent Expense, $0 C) Prepaid Rent, $0; Rent Expense, $12,000 D) Prepaid Rent, $9,000; Rent Expense, $3,000 18) During a company's first year of operations, the asset account, Office Supplies, was debited for $2,300 for the purchases of supplies. At year-end, a physical count of the supplies on hand revealed that $825 of unused supplies were available for future use. How will the related adjusting entry affect the company's financial statements? A) Expenses will increase and assets will decrease by $1,475. B) Assets and expenses will both increase by $825. C) Expenses and assets will both increase by $1,475. D) The related adjusting entry has no effect on net income or the accounting equation. 19) Which of the following accounts is decreased with a credit? A) Unearned Revenue B) Prepaid Insurance C) Accounts Payable D) Service Revenue 20). Which of the following accounts would not appear on an income statement? A) Service Revenue B) Salaries Expense C) Unearned Revenue D) Supplies Expense E) All of the above would appear on an income statement. Page 5 of 10

Answer 1

16)

Journal entry to record expense incurred but not paid is debiting the expense account and crediting the expense payable account.

Option B)

17)

Rent expense for 3 months = $12,000 X 3/12 = $3,000

Balance in prepaid rent = $12,000 - $3,000 = $9,000

Option D)

18)

Supplies used = $2,300 - $825 = $1,475

Supplies expense will increase by $1,475 and Supplies will reduce by $1,475.

Option A)

19)

Prepaid insurance is an asset account and has a debit balance. A credit to prepaid insurance will reduce the balance.

Option B)

20)

Unearned revenue is a liability and has a credit balance which is included in the balance sheet and does not appear in income statement.

Option C)