Question

1.
Which of the following does not correctly describe the following adjusting journal entry?

Wages expense. xxx
Wages payable. xxx

A. Total assets do not change.
B. The transaction is an example of an accrual.
C. Stockholders' equity decreases.
D. Net income is not affected.
This journal entry increases expenses and liabilities; the increase in expenses decreases net income, retained earnings, and thus stockholders' equity.

2.Which of the following does not correctly describe the following adjusting journal entry?

Interest receivable. xxx
Interest revenue. xxx

A. Total assets increase.
B. The transaction is an example of an accrual.
C. Stockholders' equity decreases.
D. Net income increases.

3.Which of the following correctly describes the following adjusting journal entry?

Accounts receivable. xxx

Restaurant sales revenue. xxx

A. Total assets do not change.
B. The transaction is an example of an accrual.
C. Stockholders' equity decreases.
D. Net income is not affected.

4.Which of the following does not correctly describe the following adjusting journal entry?

Rent expense. xxx
Prepaid rent. xxx

A. Total assets decrease.
B. Retained earnings are not affected.
C. Stockholders' equity decreases.
D. Net income decreases.

5.Which of the following correctly describes the following adjusting journal entry?

Depreciation expense. xxx
Accumulated depreciation. xxx

A. Total assets decrease.
B. Liabilities will increase.
C. Stockholders' equity is not affected.
D. Net income increases.

6.Which of the following correctly describes the following adjusting journal entry?

Utilities expense. xxx

Utilities payable. xxx

A. Total assets decrease and net income decreases.
B. Stockholders' equity decreases and liabilities increase.
C. The transaction is an example of a deferral.
D. Net income decreases and stockholders' equity does not change.
7.On January 1, 2016, the general ledger of Global Corporation included supplies of $1,000. During 2016, supplies purchased amounted to $5,000. A physical count of inventory on hand at December 31, 2016 determined that the amount of supplies on hand was $1,200. How much is the supplies expense for year 2016?

A. $6,000.
B. $5,200.
C. $4,800.
D. $1,000.
8.Which of the following adjusting journal entries is created as the result of an accrual?
A. Wages expense. xxx
Wages payable. xxx
B. Depreciation expense. xxx
Accumulated depreciation. xxx
C.
Prepaid Rent xxx
Rent expense. xxx
D.
Accounts receivable xxx
Unearned revenue. xxx

9.
Which of the following adjusting journal entries is not created as the result of an accrual?

A.
Interest expense. xxx
Interest payable xxx

B.

Accounts receivable. xxx
Service revenue. xxx

C.

Prepaid Rent. xxx
Rent expense. xxx

D.

Interest receivable xxx
Interest revenue. xxx

10.
Which of the following accounts is used to record an accrual for expenses?

A. Prepaid rent.
B. Unearned revenues.
C. Accounts receivable.
D. Interest payable.

Expense accrual journal entries recognize expenses that have been incurred but will be paid in the subsequent accounting period, with a credit to a liability.

Answer 1

1) Option D is the answer.

It's an adjustment entry for accrued expenses. The effect of this adjustment is increase in expenses and liabilities. When expense increases income decreases. Therefore it's not true that net income is not effect/ed. It will be reduced.

2) Option C is correct. It's an adjustment entry for accrued revenues. he effect of this adjustment is increase in revenues and assets.

3) Option B is correct. The transaction is an example of an accrual. It increases assets and revenues.

4)Option B is correct. It's an adjustment entry for deferred expenses which increase expense and decrease the asset. Retained earnings also decrease as net income decreases.

5)Option A is correct. Accumulated depreciation os used as a contra asset account. It reduces the value of an asset when its credited.

6)Option B is correct.It's an adjustment entry for accrued expenses. The effect of this adjustment is increase in expenses and liabilities which decreases stockholders equity.

7)Option C is correct.

Supply expense = Opening stock + Purchases - Closing stock = $1000 + $5000 - $1200 = $4800

8)Option A is correct.t's an adjustment entry for accrued expenses

9) Option C is correct. Its not an accrual entry

10) Option D is correct. Interest payable is used to record an accrual for expenses.