Question

[3 points each = ber 31, 2010, before any year-end adjustments, J.Tucker's Insurance Expense acco ce of $1,800 and its Prepaid Insurance account had a balance of $5,000. It was determine $2,000 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for th would be: A) $1,800 B $2,000 $3,800 D) $5,000 2. When expenses for a reporting period exceed revenue for the period: A) Equity is reduced B) The company must borrow money to remain in business C) An expense is created D) There is Net Income for the period 3. T.Braxton Company purchased office supplies costing $7,000 and debited (increased) Office Supp Asset for the full amount. At the end of the accounting period, a physical count of office supplies rew $2,000 still on hand. The appropriate adjusting journal entry to be made at the end of the period wo be: A) Debit (increase) Office Supplies Expense, $2,000; Credit (decrease) Office Supplies, $2,000. Debit (increase) Office Supplies, $5,000; Credit (decrease) Office Supplies Expense, $5,000. Debit (increase) Office Supplies Expense, $5,000; Credit (decrease) Office Supplies, $5,000. D) Debit (increase) Office Supplies, $7,000; Credit (decrease) Office Supplies Expense, $7,000. B C 4. W.Stanhope, Inc. purchased equipment for $3,500. The Company paid $1,500 in cash and signed a for the balance. The accountant debited (increased) the Equipment account, credited (decreased) the Cash account and: A) nothing further must be done; B) debited (decreased) the Capital account for $2,000; credited (decreased) some other asset account for $2,000; D) credited (increased) a liability account for $2,000. .C.Stalcup Company purchaseda piece of equipment for its manufacturing facility valued at $105 executing a note payable. In the current period: A) The $105,000 is an expense that will be reported on the Income statement; B) The $105.000 is recorded as an asset that will affect the Balance Sheet; C) Because the company is not purchasing the equipment for resale, it is not necessary to rec Transaction; D) Because the company did not pay cash for the equipment, it will not be recorded until the in full. 6. When costs are rising, and using LIFO inventory costing method, Net Income would be income calculated using FIFO inventory costing. Explain your choice. (select greater than 7. Cost of Goods Sold: A) Goes on the Balance Sheet as a liability B) is the value of all goods purchased in the current period intended for resale; C) is reported on the Income Statement and represents the value of merchandise so reporting period; D) is reported only on intern reports

Answer 1

Answer to Q#1 (First question in the list): Option-(C): $3,800 Reason: The unadjusted balance in insurance expense represents the actual insurance expense incurred till end of reporting period. This balance should be adjusted to include expired portion of prepaid insurance for the same period. Therefore, $1,800 Unadjusted balance in insurance expense account $2,000 Add: Prepaid insurance expired for the period $3,800 Adjusted insurance expense balance