Question

1-7. Which of the following statements about the trail balance is NOT true? Debit balances must equal credit balances It includes only assets, liability and equity accounts c) It is useful for detecting errors it is an important step in the accounting cycle. 1-B. An example of a contra asset account is a) Accumulated depreciation b) Depreciation expense e) Discount on Bonds Payable. d) Prepaid expenses 1-9. Which of the following would cause the trial balance to be out of balance? a) an entry recorded with only debits b) an unrecorded entry e) an entry recorded twice d) an entry recorded to the wrong accounts 1-10. Which of the following would most likely be recorded with an adjusting entry a) sales on account b) payment for supplies bought on account c) Wage expense d) Depreciation expense 1-11. Which of the following would be the adjusting journal entry to expense prepaid rent for the period? a) Dr. Prepaid rent, Cr. Rent expense b) Dr. Rent expense, Cr. Cash c) Dr. Prepaid rent, Cr. Cash d) Dr. Rent expense, Cr. Prepaid rent 1-1 2. Revenue is recorded when performance is substantially complete, even if cash has not1 collected, because of the a) revenue recognition criteria. b) cash basis of accounting. c) actual basis of accounting. d) matching concept 1-13. A company borrows $250,000 from the bank on January 1, 2014 at 6% annual inter Interest is to be paid on June 30 each year, starting in 2014. The principal on the loan wi repaid in full on December 31, 2017. At March 31, 2014, the amount of the current inter payable liability on the balance sheet will be a) $250,000. b) $O. c) $3,750 d) $15,000.

Answer 1

So Anse1-7. The statement "It is use full for detecting errors" is not true about trial balance.

Explanation: Because suspense account is the main method used to detect errors and not trial balance. Rest all statments is true about Trial Balance.

1-8. Accumlated Depreciation is An Example of contra asset account .

Explanation: Accumlated depreciation is associated with property,plant and equiment or other fixed asset it is credited when Depreciation Expense is recorded in books of account.

1-9. An entry recorded with only debits would cause the trial balance to be out of balance.

Explanation: This will show excess debit balance . Rest all statements will not put any impact on matching the trial balance eventhough there are errors.

1-10 The Depreciation expense would most likely be recorded with an adjustment entry.

Explanation: Rest all entries would record in normal course of business, But depreciation would record at the end of the year as an Adjustment entry ,

Dr. Depreciation expense

Cr. Accumlated Depreciation.

1-11 Adjusting journal Entry to enpense prepaid rent for the period ,

Dr.Rent Expense Cr. Prepaid Rent

1-12 Revenue is recorded when performance is substantially complete even if cash has not been collected because of the "Accural basis of Accounting. "

1-13. The amount of current interest payable liability on the balance sheet will be :

$250,000 X 6% X 3/12 = $3,750

So the answer: (c ) 3,750