1.

Jane Company collected $5,000 cash in advance during December 2004 for services to be performed in December 2004 and January 2005. At the end of December 2004 an adjusting entry was made to debit Unearned Revenue and credit Service Revenue for $2,500. If the adjusting entry were not made:

		Total assets at 12/31/04 would be overstated.
		Total assets at 12/31/04 would be understated.
		Total liabilities at 12/31/04 would be overstated.
		Total liabilities at 12/31/04 would be understated.
		None of the above.

2.

Pal Company made an advance payment of $3,500 for seven months' rent on November 1, 2004 and debited an asset account. The December 31 adjusting entry for rent expense should be:

		a debit to Rent Expense for $2,500.
		a debit to Rent Expense for $1,000.
		a credit to Prepaid Rent for $3,500.
		a credit to Unearned Rent for $1,000.
		a debit to Unearned Rent for $1,000.

3.

Big Service Company received its electric bill for December on December 31 but failed to make an entry. As a result:

		assets are overstated.
		net income is overstated.
		liabilities are overstated.
		owners' equity is understated.
		None of the above.

4.

There was no adjustment made for accrued wages on December 31, 2004. This was an error. The amount of wages earned in December but not payable until the first week in January, 2005, was $600. If this error is not discovered before statements for 2004 are prepared:

		assets as of 12/31/2004 will be overstated.
		liabilities as of 12/31/2004 will be overstated.
		2004 net income will be overstated by $600.
		2004 net income will be understated by $600.
		none of the above.