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quiz1page2 - 6th Fax-i V t 1.i a 1w M at its-rd i van-sag...

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Unformatted text preview: 6th Fax-i . V t ,- ., 1- .i _ . ' a, 1w M at its-rd??? i van-sag. B. (10 Points) Multiple Choice — Select the best answer for each of the following questions. Remember to place your answers Onto the separate answer sheet. 1. Adjusting entries are necessary to ./ I. obtain a proper matching of revenue and expense. :2 2. achieve an accurate statement of assets and equities. .. BL adjust assets and liabilities to their fair market value. 1 2 3 1 and2 @9qs . Perez Corporation received cash of $6,000 on August 1, 2005 for one year's rent in advance and recorded the transaction with a credit to Rent Revenue. The December 31, 2005 adjusting entry is bllQi‘iWéi ill??? YEW. zgoo ' 2900 a. debit Rent Revenue and credit Uneamed Rent, $2,500. 0 b. debit Rent Revenue and credit Uneamed Rent, $3,500. 52-“ (of? debit Uneamed Rent and credit Rent Revenue, $2,500. “d. debit Cash and credit Uneamed Rent, $3,500. Why are certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting cycles? a. To reduce the federal income tax liability b. To aid management in cash—flow analysis CCT/TO match the costs of production with revenues as earned d. To adhere to the accounting constraint of conservatism owl If, during an accounting period, an expense item has been incurred and consumed but not yet paid for or recorded, then the end—of—period adjusting entry would involve a. a liability account and an asset account. b. an asset or contra-asset account and an expense account. Cg: a liability account and an expense account. d. a receivable account and a revenue account. When an item of expense is paid and recorded in advance, it is normally called flea QaJrepaid expense. b. accrued expense. . estimated expense. d/Cash expense. ...
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