Accounting Trial Balance Practice (Level 2)

What type of account is Prepaid Rent?

• Asset

• Liability

• Expense

• Equity

How does the adjustment for Prepaid Rent affect the financial statements?

• Increases assets and increases expenses

• Decreases assets and decreases liabilities

• Increases assets and decreases expenses

• Decreases assets and increases expenses

If supplies at the start are $4,500 and the physical count of supplies is $2,300. What adjustment amount is needed?

• Credit Supplies $2,300

• Debit Supplies $2,300

• Credit Supplies $2,200

• Debit Supplies $2,200

If you purchase $2,400 of insurance quarterly (4x a year), how much is used up each month after the purchase?

• $600

• $1,200

• $ 800

• $1,600

What is the purpose of adjusting entries for prepaid expenses?

• To decrease assets

• To match revenues and expenses

• To increase liabilities

• To adjust the trial balance

What adjusting entry is needed at the end of the period for the cost of used supplies?

• Debit Supplies, Credit Cash

• Debit Supplies Expense, Credit Supplies

• Debit Supplies Expense, Credit Cash

• Debit Supplies, Credit Supplies Expense

When adjusting prepaid accounts, which accounts are credited?

• Revenues

• Assets

• Expenses

• Liabilities

When adjusting prepaid accounts, which accounts are debited?

• Revenues

• Assets

• Expenses

• Liabilities

The company paid $2,400 for an annual insurance premium at the beginning of the year. What is the adjusting entry at the end of the first month?

• Debit Insurance Expense $200, Credit Prepaid Insurance $200

• Debit Prepaid Insurance $200, Credit Insurance Expense $200

• Debit Prepaid Insurance $2,400, Credit Insurance Expense $2,400

• Debit Insurance Expense $2,400, Credit Prepaid Insurance $2,400

The company paid $3,000 for a three-month advertising contract at the beginning of the quarter. What is the adjusting entry at the end of the first month?

• Debit Advertising Expense $1,000, Credit Prepaid Advertising $1,000

• Debit Prepaid Advertising $1,000, Credit Advertising Expense $1,000

• Debit Prepaid Advertising $3,000, Credit Advertising Expense $3,000

• Debit Advertising Expense $3,000, Credit Prepaid Advertising $3,000