13) The accountant of Omega, Inc. failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned. Assume the deferred revenue was initially recorded as a liability. Which of the following statements is true?

A) The total revenue will be overstated.

B) The total revenue will be understated.

C) The total expenses will be overstated.

D) The total expenses will be understated.

14) The accountant for Watson Electrical Repair, Inc. failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year. Which of the following statements is true?

A) The total revenue will be overstated.

B) The total revenue will be understated.

C) The total expenses will be overstated.

D) The total expenses will be understated.

15) The accountant of Peyton Financial Services failed to make an adjusting entry to record $7,000 of depreciation expense. Which of the following statements is true?

A) The total revenue will be overstated.

B) The total revenue will be understated.

C) The total expenses will be overstated.

D) The total expenses will be understated.

16) At the end of the current year, the accountant for Computer Graphics, Inc. forgot to make an adjusting entry to accrue Wages Payable for the company's employees for the last week in December. The wages will be paid to the employees in January. Which of the following is an effect of this error?

A) Net income is overstated.

B) Liabilities are overstated.

C) Net income is understated.

D) Expenses are overstated.

17) The accountant for Diamond Jewelry Repair Services, Inc. forgot to make an adjusting entry for Depreciation Expense for the current year. Which of the following is an effect of this error?

A) Revenues are understated.

B) Total assets are understated.

C) Net income is overstated.

D) Total liabilities are understated.

18) The accountant for Main Street Jewelry Repair Services, Inc. forgot to make an adjusting entry for Depreciation Expense for the current year. Which of the following is an effect of this error?

A) Total assets are understated.

B) Revenues are overstated.

C) Total assets are overstated.

D) Net income is understated.

19) What is the effect of the adjusting entry for Depreciation Expense?

A) It increases total liabilities and increases total expenses.

B) It increases total assets and increases total expenses.

C) It decreases total assets and increases total expenses.

D) It decreases total liabilities and increases total expenses.

8) Taylor Company prepaid six months of office rent totaling $9,000 on December 1 of the current year. Assuming Taylor records deferred expenses using the alternative treatment, what would be the adjusting entry on December 31?

A) Debit Prepaid Rent and credit Rent Expense for $1,500.

B) Debit Prepaid Rent and credit Rent Expense for $7,500.

C) Debit Cash and credit Unearned Rent for $9,000.

D) Debit Rent Expense and credit Cash for $9,000.

9) Taylor Company prepaid three months of insurance totaling $2,400 on December 1 of the current year. Assuming Taylor records deferred expenses using the alternative treatment, what would be the adjusting entry on December 31?

A) Debit Prepaid Insurance and credit Insurance Expense for $1,600.

B) Debit Insurance Expense and credit Cash for $800.

C) Debit Cash and credit Insurance Expense for $800.

D) Debit Insurance Expense and credit Prepaid Insurance for $1,600.

10) Using the alternative treatment, if an asset is classified as short lived it means that it will expire

A) in two years or less.

B) in the current accounting period within one year or less.

C) in the next accounting period.

D) when the company decides.

11) Using the alternative treatment, a deferred expense is recorded initially as a(n) ________.

A) asset

B) expense

C) revenue

D) all of the above

12) Using the alternative treatment, if an amount is still left as unexpired rent, it must be adjusted and transferred from rent expense to ________.

A) Cash

B) Rent Payable

C) Accounts Payable

D) Prepaid Rent

14) On March 1, 2025, LeClaire, Inc. paid $60,000 for office rent covering the three-month period ending May 31, 2025. Journalize the adjusting entry on March 31 by using the alternative treatment of deferred expenses. Omit explanation.