12 Birch Inc. has made the following purchases of land: Oak Acres $12,000 Bought in 2016 Hickory Estates $9,000 Bought in 2018 During 2019, Birch sold one third of Oak Acres for $5,000. What is the balance in Birch's land account? $16,000 b $13,000 c $14,000 d $17,000 e None of the 13 Which of the following is a true statement? a Salaries expense is a liability account b Total assets are increased when a payment is made for prepaid insurance. c Inventory is recorded as an expense on the date of sale. d Assets are increased when inventory is purchased for cash. e Liabilities are increased when an end-of-the-period adjustment is made for interest. 14 Redbud had the following totals for 2019 Sales $82,000 Salary expense $24,000 Insurance expense $8,000 Cost of goods sold $30,000 Loss on land sale $2,000 What is Redbud's gross profit? a $18,000 b $52,000 c $20,000 d $50,000 e None of the 15 The bookkeeper at Pagoda Company forgot to record the end-of-the-period adjustment for depreciation for 2019. Which of the following is true as a result of this error? a Assets are overstated and liabilities are understated. b Both assets and net income are understated. C Assets are overstated and net income is understated. d Both liabilities and expenses are understated. e Assets are overstated and expenses are understated. 16 If you were investing in a company and were particularly interested in the company's ability to pay its upcoming debts, which of the following ratios would be of most interest to you? a Return on equity b Earnings per share c Current ratio d Inventory turnover e Debt-to-equity