1. Big-Mouth Frog Corporation had revenues of $300,000, expenses of $180,000, and dividends of $45,000. When Income Summary is closed to Retained Earnings, the amount of the debit or credit to Retained Earnings is a Answer a. debit of $75,000. b. debit of $120,000. c. credit of $75,000. d. credit of $120,000.

2. Under the cash basis of accounting, revenues are recorded Answer a. when they are earned and realized. b. when they are earned and realizable. c. when they are earned. d. when they are realized.

3. When converting from cash basis to accrual-basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual basis service revenue? Answer a. Subtract ending accounts receivable. b. Subtract beginning unearned service revenue. c. Add ending accounts receivable. d. Add cash sales.

4. he income statement of Dolan Corporation for 2012 included the following items:

Interest revenue $131,000

Salaries and wages expense 170,000

Insurance expense 15,200

The following balances have been excerpted from Dolan Corporation's balance sheets:

December 31, 2012 December 31, 2011

Interest receivable $18,200 $15,000

Salaries and wages payable 17,800 8,400

Prepaid insurance 2,200 3,000

The cash received for interest during 2012 was

Answer a. $112,800. b. $127,800.

c. $131,000.

d. $134,200.

5. Gibson Company paid $6,000 on June 1, 2012 for a two-year insurance policy and recorded the entire amount as Insurance Expense. The December 31, 2012 adjusting entry is Answer a. debit Insurance Expense and credit Prepaid Insurance, $1,750. b. debit Insurance Expense and credit Prepaid Insurance, $4,250. c. debit Prepaid Insurance and credit Insurance Expense, $1,750 d. debit Prepaid Insurance and credit Insurance Expense, $4,250.