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Financial Accounting

Question 1
A company shows a $600 balance in Prepaid Insurance in the Unadjusted Trial Balance columns of the work sheet. The Adjustments columns show expired insurance of $200. This adjusting entry results in:

A. $200 less in net income.

B. $200 more in net income.

C. $200 difference between the debit and credit columns of the Unadjusted Trial Balance.

D. $200 of prepaid insurance.

E. An error in the financial statements.

Question 2
Assets created by selling goods and services on credit are:
A. Accounts payable.

B. Accounts receivable.

C. Liabilities.

D. Expenses.

E. Equity.

Question 3
A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below. What amount will be posted to Tricia DeBarre, Capital in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

T. DeBarre, Capital $ 7,000
T. DeBarre, Withdrawals 9,600
Revenue 29,000
Rent expense 3,600
Salaries expense 7,200
Insurance expense 920
Dep. Expense - equip. 500
Accum. Dep. - equipment 1,500

A. $16,780 debit.

B. $ 7,180 credit.

C. $16,780 credit.

D. $18,280 credit.

E. $23,780 credit.

Question 4
If assets are $99,000 and liabilities are $32,000, then equity equals
A. $ 32,000.

B. $ 67,000.

C. $ 99,000.

D. $131,000.

E. $198,000.

Question 5
The difference between the cost of an asset and the accumulated depreciation for that asset is called
A. Depreciation Expense.

B. Unearned Depreciation.

C. Prepaid Depreciation.

D. Depreciation Value.

E. Book Value.

Solution Preview

1. A. $200 less in net income.
The adjusting entry would increase the insurance expense by $200 and so reduce the net income by $200
2. B. Accounts receivable.
When sales are made on credit, these are recorded as accounts ...

Solution Summary

The solution explains some multiple choice questions in financial accounting