Question

30. If the adjusting entry to record the accrued interest revenue is omitted:

Select one:

a. net income would be overstated and liabilities would be overstated.

b. net income would be understated and assets would be understated.

c. net income would not be affected but assets would be overstated.

d. no impact on both net income and assets.

31. Presented below is the adjused trial balance columns on a worksheet of Kimberly Company for the year ended December 31, 2018. Using this adjusted trial balance to answer questions 31 and 32:

                                                                                Adjusted Trial Balance
Account Titles                                                             Debit             Credit
______________                                                       _____            _____
Cash                                                                           1,000
Supplies                                                                         300
Prepaid Insurance                                                         2,000
Equipment                                                                 24,000
Accumulated Depreciaton- Equipment                                              49,000
Accounts Payable                                                                                2,400
Notes Payable                                                                                      4,000
Rent Payable                                                                                          600
Common Stock                                                                                     5,300
Retained Earnings                                                                              10,000
Dividends                                                                      2,400
Copy Revenue                                                                                     4,900
Utility Expense                                                                 400
Supplies Expense                                                            800
InsuranceExpense                                                           200
Depreciation Expense                                                      400
Rent Expense                                                                   600
                                                                                    ________     ________
Totals                                                                          32,100          32,100

What is the net income (net loss) of Kimberly Company for the year ended December 31, 2018?

Select one:

a. net income, $2,500.

b. net income, $4,500.

c. net income, $100.

d. net loss, ($1,500).

Answer 1

Q30. at the time of posting accrued interest revenue entry, Interest receivable account will be debited and Interest revenue account will be credit. it means, Total assets will increase and net income will also increase., So, if this entry omitted, net income and total assets will be show lesser than actual.

So, answer will be: b. net income would be understated and assets would be understated.

Q31

Copy Revenue		$ 4,900
Less: Expenses
Utility Expense	$ 400
Supplies Expense	$ 800
InsuranceExpense	$ 200
Depreciation Expense	$ 400
Rent Expense	$ 600
Total expenses		$ 2,400
Net income		$ 2,500

Answer is a. net income, $2,500.

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