12.The primary difference between prepaid and accrued expenses is that prepaid expenses have: a. b. c. d. Been incurred and accrued expenses have not. Not been paid and accrued expenses have Been paid and accrued expenses have not. Not been recorded and accrued expenses have. 13.Alegal fim received $2,000 cash for legal services to be rendered in the future. The full amount was credited to Unearned Service Revenue. If the legal services have now been provided by the end of the accounting period but no adjusting entry was made, this would cause a. Expenses to be overstated. b. C. Net income (profit) to be overstated. Liabilities to be understated. d. Revenues to be understated. Question No. 1 (continued) (80 marks) 14 A the end of the current year, the required adjusting entry for depreciation on equipment had been omitted. Which of the following statements is true regarding the current year's financial statements? a. b. c. Profit will be overstated. Total assets will be understated. The Statement of Financial Position and the Income Statement will be misstated but the Statement of Changes in Equity will be correct. Retained d. eamings will be understated. 15 Goods that are purchased for future use in the business, such as supplies, are recorded as: a. b. c. d. Assets. Accrued revenues. Uneamed revenues. None of the above 16. If supplies are recorded as assets when purchased, the credit to supplies in the adjusting entry is for the amount of supplies: a. Remaining. c. Used d. None of the above 17. The primary difference between a periodic and a perpetual inventory system is that a periodic system: a. Keeps a detailed record showing the inventory on hand at all times. b. Provides better control over inventories c. Records the cost of goods sold on the date the sale is made d. Determines the cost of goods sold at the end of the accounting period. 18. The abbreviation "FOB" stands for: a. b. c. d. Free on board. Freight on board. Free only to buyer. Freight charge on buyer