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Effects of Adjustments, Adjusted Trial Balance and Current Ratio for Baptiste Publishing

1) Every adjustment affects which of the following accounts on the income statements

a) revenue and assets accounts

b) assets and equity account

c) revenue and liability account

d) none of these accounts.

2) Which of the following accounts would most likely appears on the adjusted trial balance (have and account balance), but not appears on the adjusted trial balance (account balance would be zero)?

a) depreciation expense

b) service revenue

c) unearned revenue

d) accumulated depreciation

3) the following contains information from the records of Baptiste Publishing

December 31, 2007

Current assets $ 74,000

Current Liability $ 44,000

Long term Assets $ 95,000

Long term liability $ 60,000

Total revenue $ 50,000

Total expense $ 30,000

Which of the statements are accurate interpretations of Baptiste Publishing current ratio?

1) the company has $2.32 of current asset for every $1.00 of liabilities.

2) the company has $0.59 of current assets for every $1.00 of current liabilities.

3) the company has $1.58 of current assets of every $1.00 of liabilities.

4) the company has $1.68 of current assets of every $1.00 of current liabilities

Solution Preview

Question 1 every adjustments affect which of the following accounts on the income statements

Correct Answer: (d) None of these accounts.

(a) Asset (b) Equity and (c) liability Accounts do not appear on income statement therefore second component of all these pairs is not affected on income statement. These items appear on the Balance sheet. For example for service revenue earned revenue Account ...

Solution Summary

The effects of adjustments, adjusted trail balance and current ratios are examined.

$2.19