(Multiple Choice)
1. The Unearned Revenue account of Lorelai Incorporated began 2012 with a normal balance of $5,000 and ended 2012 with a normal balance of $15,000. During 2012, the Unearned Revenue account was credited for $22,000 that Lorelai will earn later. Based on these facts, how much revenue did Lorelai earn in 2012?
a. $5,000
b. $22,000
c. $27,000
d. $12,000

2. What is the effect on the financial statements of recording depreciation on equipment?
a. Net income and assets are decreased, but stockholders€™ equity is not affected.
b. Net income, assets, and stockholders€™ equity are all decreased.
c. Assets are decreased, but net income and stockholders€™ equity are not affected.
d. Net income is not affected, but assets and stockholders€™ equity are decreased.

3. For 2012, Bryant Company had revenues in excess of expenses. Which statement describes Bryant€™s closing entries at the end of 2012?
a. Revenues will be debited, expenses will be credited, and retained earnings will be credited.
b. Revenues will be credited, expenses will be debited, and retained earnings will be debited.
c. Revenues will be credited, expenses will be debited, and retained earnings will be credited.
d. Revenues will be debited, expenses will be credited, and retained earnings will be debited.

4. Which of the following accounts would not be included in the closing entries?
a. Depreciation Expense
b. Accumulated Depreciation
c. Service Revenue
d. Retained earnings

5. A major purpose of preparing closing entries is to
a. zero out the liability accounts.
b. close out the Supplies account.
c. adjust the asset accounts to their correct current balances.
d. update the Retained Earnings account.

6. Selected data for the Austin Company follow:

Based on these facts, what are Austin€™s current ratio and debt ratio?
Current ratio Debt ratio
a. 1.108 to 1 0.222 to 1
b. 8.693 to 1 0.845 to 1
c. 1.580 to 1 0.633 to 1
d. 1.183 to 1 0.633 to 1

7. Unadjusted net income equals $8,000. Calculate what net income will be after the following adjustments:
1. Salaries payable to employees, $510
2. Interest due on note payable at the bank, $125
3. Unearned revenue that has been earned, $800
4. Supplies used, $200

8. Salary Payable at the beginning of the month totals $20,000. During the month salaries of $122,000 were accrued as expense. If ending Salary Payable is $6,000, what amount of cash did the company pay for salaries during the month?
a. $130,000
b. $142,000
c. $122,000
d.$136,000

Transcribed Image Text:

S 29,700 Current liabilities ....$ 25,100 Long-term liabilities.. 113,000 Total expense.. ES Long-term assets....188,500 Total revenues 176,000