Which one of the following accounts is not closed at the end of an
a. Owner's Equity account.
b. Interest Income.
c. Fees Earned account.
d. Insurance Expense account.
2. Schrock Company debited Prepaid Insurance for $720 on July 1, 1993
for a one-year fire insurance policy.
If the company prepares
monthly financial statements, failure to make an adjusting entry on
July 31, for the amount of insurance that has expired would cause
a. assets to be overstated by $720 and expenses to be understated by
b. expenses to be overstated by $60 and assets to be understated by
c. assets to be overstated by $60 and expenses to be understated by
d. expenses to be overstated by $720 and assets to be understated by
Sawyer Company reported net income of $20,000 for the year ended
December 31, 1999.
During the year, inventories decreased by $7,000,
accounts payable decreased by $8,000, depreciation expense was
$10,000 and a gain on disposal of equipment of $6,500 was recorded.
Net cash provided by operations in 1999 using the indirect method was
4. The purchase of office equipment for $10,000 cash
a. is a cash outflow from financing activities.
b. is a cash outflow from operating activities.
c. is a cash outflow from investing activities.
d. does not affect cash flows.
In 1997, the Erin Company had credit sales of $825,000 and granted sales discounts of
On December 31, 1997 the Accounts Receivable balance was $248,000 and
the unadjusted Allowance for Doubtful Accounts balance was $400 (credit).
management reviewed the accounts receivable and determined that $12,400 would
The adjusting entry to record bad debts would include a debit to
Bad Debt Expense for:
There would be no entry to bad debt expense