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Homework answers / question archive / University of Utah ACCTG 2600 Chapter 3 Quiz Multiple Choice 1)Which one of the following is an example of a deferred revenue? a
University of Utah
ACCTG 2600
Chapter 3 Quiz
Multiple Choice
1)Which one of the following is an example of a deferred revenue?
a. Sales are made to customers on credit
b. Revenue has been earned but not yet recorded
c. Cash sales are made to customers
d. Payments are received prior to providing the services to customers
2. On October 1, 2013, a company borrowed $200,000 on a two-year, 12% note, with interest and principal to be paid at maturity. How much interest expense will be reported on the income statement for the year ending December 31, 2013? Reminder: 12% is the ANNUAL interest rate (rate for one year).
a. $12,000
b. $6,000
c. $18,000
d. $24,000
3. Based on its income for the month, a company estimates that it will owe $23,000 of federal income taxes for the month of May. What is the effect of the adjustment on the financial statements?
a. Decrease income taxes payable
b. Increase income taxes expense
c. Increase retained earnings
d. Increase stockholders' equity
4. The asset account, Supplies, has a balance of $10,000 on January 1. During January, $22,000 of supplies were purchased on account and the liability was appropriately recorded. A count of supplies at the end of January indicates a balance of $2,000. What adjusting entry is necessary at January 31?
a. Supplies Expense 24,000
Supplies 24,000
b. Supplies 22,000
Accounts Payable 22,000
c. Supplies Expense 30,000
Supplies 30,000
d. Supplies Expense 22,000
Supplies 20,000
Accounts Payable 2,000
5. A company rented office space to a tenant on January 1 and received a total of $90,000 for the first nine months of rent. The amount was recorded as Rent Collected in Advance when received. Adjustments are recorded only at the end of every quarter. What effect does the adjustment at March 31 have on the
company’s net income for the quarter ending March 31?
a. Decrease by $30,000
b. Increase by $90,000 c. Increase by $30,000
d. Decrease by $60,000
6. What is the effect on the accounting equation when a company recognizes rent expense that had previously been paid in advance to the landlord?
a. Revenues decrease
b. Liabilities increase
c. Assets decrease
d. Net income increases
7. The university satellite office operates five days per week with a daily payroll of $5,000. Employees are paid every Saturday for the workweek just completed (Monday through Friday). The last day of the month is Wednesday, October 31. What is the effect of the correct adjustment at October 31?
a. Increases Wages Payable and decreases Cash by $10,000
b. Increases Stockholders' equity and Wages Payable by $15,000
c. Increases Wages Payable and increases Wages Expense by $25,000
d. Decreases Stockholders' equity and increases Wages Payable by 15,000
8. Failure to record the earned portion (the amount of revenue that should have been recognized) of unearned revenue would result in which of the following?
a. Total assets being understated
b. Stockholders' equity being overstated
c. No effect on total liabilities
d. Net income (profit) being understated
9. Which one of the following is an example of an accrued liability?
a. An insurance policy that expires in a future period has been acquired.
b. Supplies are purchased and used over several months.
c. Equipment that will benefit several periods has been purchased.
d. Rent that has been incurred, but have not been paid at the end of the period.
