Fundamental Accounting Principles Chapter 3 Multiple Choice

A company forgot to record accrued and unpaid employee wages of $350,000 at period-end. This oversight would

• Understate net income by $350,000.

• Overstate net income by $350,000.

• Have no effect on net income.

• Overstate assets by $350,000.

• Understate assets by $350,000.

Prior to recording adjusting entries, the Supplies account has a $450 debit balance. A physical count of supplies shows $125 of unused supplies still available. The required adjusting entry is:

• Debit Supplies $125; Credit Supplies Expense $125.

• Debit Supplies $325; Credit Supplies Expense $325.

• Debit Supplies Expense $325; Credit Supplies $325.

• Debit Supplies Expense $325; Credit Supplies $125.

• Debit Supplies Expense $125; Credit Supplies $125.

On May 1, 2015, a two-year insurance policy was purchased for $24,000 with coverage to begin immediately. What is the amount of insurance expense that appears on the company's income statement for the year ended December 31, 2015?

• $4,000.

• $8,000.

• $12,000.

• $20,000.

• $24,000.

On November 1, 2015, Stockton Co. receives $3,600 cash from Hans Co. for consulting services to be provided evenly over the period November 1, 2015 to April 30, 2016--at which time Stockton credited $3,600 to Unearned Consulting Fees. The adjusting entry on December 31, 2015 (Stockton's year-end) would include a

• Debit to Unearned Consulting Fees for $1,200.

• Debit to Unearned Consulting Fees for $2,400.

• Credit to Consulting Fees Earned for $2,400.

• Debit to Consulting Fees Earned for $1,200.

• Credit to Cash for $3,600.

If a company had $15,000 in net income for the year, and its sales were $300,000 for the same year, what is its profit margin?

• 20%

• 2,000%

• $285,000

• $315,000

• 5%