Section #4 ** TA ANSWER KEY **
On December 31, 2009, the effect of recording an adjustment for accrued wages of
$2,000 would be
A) a decrease in stockholders' equity and decrease in an asset.
B) a decrease in liabilities and increase in stockholders' equity.
C) a decrease in stockholders' equity and an increase in liabilities.
D) an increase in stockholders' equity and increase in an asset.
none of the above is correct.
On April 1, 2007, the premium on a one-year insurance policy on equipment was paid
amounting to $3,000.
At the end of 2007 (end of the accounting period), the financial
statements for 2007, would report
A) Insurance expense, $3,000; Prepaid insurance $0.
B) Insurance expense, $0; Prepaid insurance $3,000.
C) Insurance expense, $750; Prepaid insurance $2,250.
D) Insurance expense, $2,250; Prepaid insurance $750
None of the above is correct.
On January 1, 2009, Ryan Company paid the premium in advance on a three-year
insurance policy on equipment in the amount of $6,000.
At that time, the full amount
paid was recorded as prepaid insurance.
On December 31, 2009, the end of the accounting year, Ryan Company would be
required to record an adjusting entry that would include a
A) $6,000 credit to prepaid insurance.
B) $2,000 debit to insurance expense.
C) $2,000 debit to prepaid insurance.
D) $6,000 debit to insurance expense.
none of the above.
At the end of 2005, the following data were taken from the accounts of Sante Fe Trading
Retained earnings, beginning balance January 1, 2005
Total revenue earned during 2005
Total expenses incurred during 2005
Total cash collected during 2005