Unformatted text preview: nally purchased
b Purchasing insurance for the next six months
c Recording depreciation on equipment
d Collecting an accounts receivable
e Receiving unearned revenue 19 Which of the following decreases stockholders' equity?
a Recording a utility invoice for this period that will be paid next year
b Purchasing inventory on account
c Receiving unearned revenue
d Issuing and selling more of the company's common stock
e Purchasing insurance for the next six months 20 The bookkeeper for your company made a mistake and forgot to accrue interest expense at the end of the year. This mistake would
cause which of the following in the financial statements?
a Assets are overstated and expenses are understated.
b Liabilities are overstated and retained earnings are understated.
c Both liabilities and net income are overstated.
d Liabilities are understated and net income is overstated.
e Both assets and liabilities are understated. 21 Which of the following is true regarding unearned revenue?
a Liabilities are reduced when the un...
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