Advanced Accounting 7

Which of the following statements is NOT true about permanent accounts?

• Permanent accounts are never closed.

• An asset is a permanent account.

• All balance sheet accounts are permanent

• An expense is a permanent account.

The entry on November 1, 20xx to record the payment with cash of rent for a full year would include:

• debit to rent expense

• debit to prepaid rent

• credit to prepaid rent

• credit to accounts payable

The purpose of a trial balance is to:

• check to see if the total debits equal the total credits

• insure that correct accounts have been debited and credited

• check to determine whether all journal entries were made

• all answers are correct

On November 4, 2010, Pauley & James, Chartered paid $12,000 for two years rent in advance. Assuming that Pauley & James's fiscal year ends on December 31, 2010, what would be the required adjusting entry:

• Rent Expense Dr 1,000

  Rent Revenue Cr 1,000

• Prepaid Rent Dr 10,000

  Rent Expense Cr 10,000

• Rent Expense Dr 1,000

  Prepaid Rent Cr 1,000

• Rent Expense Dr 1,000

  Cash Cr 1,000

The following journal entry:

Insurance Expense DR

Prepaid Insurance CR

• increasing assets and increasing liabilities

• decreasing liabilities and increasing owners' equity

• increasing assets and increasing owners' equity

• decreasing assets and decreasing owners' equity

The 7^th of 8 steps in the accounting cycle is to prepare:

• 
  the post-closing trial balance

• 
  adjusting entries

• financial statements

• 
  make and post closing entries

Net income would increase as a result of which of the following adjustments?

• Adjusting unearned revenue

• Accruing an expense

• 
  Recording depreciation

• Adjusting Prepaid Rent

Which of the following results in a revenue event?

• 
  Stock is issued for cash

• 
  A telephone bill is received but not paid

• A customer pays for merchandise purchased earlier

• A customer buys merchandise on account.

Which of the following appears on both the statement of cash flows and the balance sheet?

• Accounts payable

• Cash balance at the end of the year

• 
  Retained earnings

• Net income

If the year-end depreciation adjustment was too big which of the following would not be true?

• assets and owners' equity would be understated

• 
  assets and net income would be understated

• liabilities would be overstated and owners' equity would be understated

• 
  net income and owners' equity would be understated