Question 1.1. As prepaid expenses expire with the passage of time, the correct adjusting entry will be a:
debit to an asset account and a credit to an expense account.
debit to an expense account and a credit to an asset account.
debit to an asset account and a credit to an asset account.
debit to an expense account and a credit to an expense account.
Question 2.2. An investment by the stockholders in a business increases
assets and stockholders’ equity.
assets and liabilities.
liabilities and stockholders’ equity.
Question 3.3. Which of the following describes the classification and normal balance of the Retained Earnings account?
Stockholders’ equity, credit
Question 4.4. If total liabilities decreased by $4,000, then
stockholders’ equity must have decreased by $4,000.
assets must have decreased by $4,000, or stockholders’ equity must have increased by $4,000.
assets and stockholders’ equity each increased by $2,000.
assets must have increased by $4,000.
Question 5.5. If expenses are paid in cash, then
assets will increase.
liabilities will decrease.
stockholders’ equity will increase.
assets will decrease.
Question 6.6. The Harris Company purchased a computer for $3,000 on December 1. It is estimated that annual depreciation on the computer will be $600. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:
debit Depreciation Expense, $600; credit Accumulated Depreciation, $600.
debit Depreciation Expense, $50; credit Accumulated Depreciation, $50.
debit Depreciation Expense, $2,400; credit Accumulated Depreciation, $2,400.
debit Office Equipment, $3,000; credit Accumulated Depreciation, $3,000.
Question 7.7. All of the following are required steps in the accounting cycle except:
journalizing and posting closing entries.
preparing an adjusted trial balance.
preparing a post-closing trial balance.
preparing a work sheet.
Question 8.8. An adjusting entry:
affects two balance sheet accounts.
affects two income statement accounts.
affects a balance sheet account and an income statement account.
is always a compound entry.
Question 9.9. Assets normally show
debit and credit balances.
debit or credit balances.
Question 10.10. Given the following adjusted trial balance:
Prepaid rent 43
Property, plant & equipment150
Salary expense 80
Travel expense 33 _____
Total $3,698 $3,698
After closing entries have been posted, the balance in retained earnings will be:
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