Question

 

QUESTION 1

Which of the following is the correct reversing entry?

		Depreciation Expense        1550    Accumulated Depreciation          1550
		Interest Revenue            2350    Interest Receivable               2350
		Salary Expense              1980    Salary Payable                    1980
		Income Tax Expense          2500    Income Tax Payable                2500

  

QUESTION 2

Prior to preparing the organization's financial statements, the accountant prepares

		a balance sheet
		a post-closing trial balance
		an adjusted trial balance
		a closed trial balance

QUESTION 3

On April 1, 2014, Miller Company paid $6,280 for a two-year insurance policy. On that date, the company charged an asset account. The correct December 31, 2014, adjusting entry would be

		Prepaid Insurance        3,140    Insurance Expense              3,140
		Insurance Expense       2,355    Prepaid Insurance             2,355
		Prepaid Insurance        2,355    Insurance Expense             2,355
		Insurance Expense        3,925    Prepaid Insurance              3,925

QUESTION 4

Which of the following rules is incorrect?

		The accounting equation must always remain in balance.
		Asset accounts are increased by debit entries and decreased by credit entries.
		Expense accounts normally have debit balances.
		Common stock accounts are increased by debit entries and decreased by credit entries.

QUESTION 5

Which of the following is a permanent account?

		Dividend Revenue
		Allowance for Doubtful Accounts
		Interest Expense
		Sales Revenue

Answer 1

1

The correct reversing entry is:

Interest Revenue            2350

Interest Receivable               2350

2

An adjusted trial balance is prepared prior to preparing the organization's financial statements

3

Insurance expense = 6280/2*9/12= $2355

Insurance Expense       2,355

Prepaid Insurance             2,355

4

Common stock accounts are increased by debit entries and decreased by credit entries is incorrect

5

Allowance for Doubtful Accounts is a permanent account