BUS 201 Ch3 Quick Check – Flashcards
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On September 1, Seaside Apartments received $2,800 from a tenant for four months' rent. The receipt was credited to Unearned Rent Revenue. Seaside's year-end is December 31, which is when it makes its adjusting entries for the year. What adjusting entry needs to be made by Seaside on December 31?
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Cr. Unearned Rent Revenue $2,800 Dr. Rent revenue $2,800
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Barlow, Inc., purchased supplies for $1,100 during 2016. At year-end, Barlow had $500 of supplies left. The adjusting entry should
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debit Supplies Expense $600.
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The accountant for Trumbull Corp. failed to make the adjusting entry to record depreciation for the current year. The effect of this error is which of the following?
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Assets, net income, and stockholders' equity are all overstated.
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Interest earned on a note receivable at December 31 equals $375. What adjusting entry is required to accrue this interest?
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Interest Receivable 375 Interest Revenue 375
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If a real estate company fails to accrue commission revenue,
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assets are understated, and net income is understated.
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all these are true
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b. Accrual accounting produces better information than cash-basis accounting. c. A fiscal year may end on some date other than December 31. d. The expense recognition principle directs accountants to identify and measure all expenses incurred and deduct them from revenues earned during the same period.
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this is false
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Adjusting entries are required for a business that uses the cash basis.
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The account Unearned Revenue is a(n)
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liability
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adjusting entries
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a. update the accounts. b. do not debit or credit Cash. c. are needed to measure the period's net income or net loss. ALL OF THE ABOVE
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An adjusting entry that debits an expense and credits a liability is which type?
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Accrued expense
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On a trial balance, which of the following would indicate that an error has been made?
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Service Revenue has a debit balance. (NOT ALL OF THE ABOVE)
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The entry to close Management Fee Revenue would be which of the following?
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dr Management Fee cr Revenue Retained Earnings
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Which of the following accounts is not closed?
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accumulated depreciation
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United Parcel Service earns service revenue of $650,000. How does this transaction affect UPS's current and debt ratios?
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improves both ratios
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Suppose Frederick Corporation borrows $20 million on a 10-year note payable. How does this transaction affect Frederick's current ratio and debt ratio?
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improves current hurts debt
