1.On December 31, 2021, a company reported pretax income of $120,000 prior to recording the following adjusting entries for:

Depreciation expense: $31,000.

Accrued service revenues: $29,000.

Accrued expenses: $12,000.

Used insurance: $9,000; the insurance was initially recorded as prepaid.

Rent revenue earned: $7,000; the rent was initially prepaid by the tenant and credited to deferred rent revenue.

How much is the company's pretax income after adjusting entries?

Multiple Choice

• $128,000
• $104,000.
• $113,000.
• $106,000.

2.What is the effect on the financial statements when a company fails to adjust the deferred revenue account for revenues earned at year-end that were pre-paid?

Multiple Choice

• Revenues are understated and liabilities are understated.
• Net income is understated and assets are understated.
• Net income is understated and liabilities are overstated.
• Revenues are understated and stockholders' equity is overstated.

3.Which of the following situation willnotlikely result in an end of the period adjustment?

Multiple Choice

• Asset purchased in advance of the use of this asset in operations.
• A bill is received for expenses for the current month and is due next month.
• Cash is received in advance of a delivery of a good or service.
• Expenses are incurred and paid for in the current month.