2 01. Which of the following statements is false? [1 mark] A The cash basis of accounting recognizes revenues when cash is received from customers. B. The accrual basis of accounting recognizes expenses when they are incurred. C. The cash basis of accounting recognizes expenses when cash is paid D. The accrual basis of accounting recognizes revenue when it is earned E. The cash basis of accounting requires adjustments to match expenses with revenues. 2.2. Which of the following statements is true? [1 mark] A. Closing entries are required at the end of each accounting period to close all ledger accounts B. Closing entries are designed to transfer the end of period balances in the revenue accounts, the expense accounts, and the withdrawals account to owner's capital C Asset, liability, and revenue accounts are not closed while a company continues in business D. The income summary account is used during the adjusting process to hold revenue, expenses, and withdrawals, before the net difference is added to or subtracted from the owner's capital E. The 4 steps in closing are, close: (1) credit balances in revenue accounts to Income Summary, (2) credit balances in expense accounts to Income Summary: (3) Income Summary to Owner's Capital; (4) Withdrawals to Owner's Capital Q3. Which of the following is true? [1 mark) A. Matching principle requires expenses to be recorded in the same accounting period as they are incurred. B. Closing entries are necessary so that owner's capital will begin each period with a zero balance C. When total debits equal the total credits in a trial balance it guarantees no errors were made. D. The last 4 steps in the accounting cycle include analyzing journalizing, posting, and preparing a trial balance. E Temporary accounts accumulate financial data related to one period. Temporary accounts include revenue, expenses, accumulated depreciation, and withdrawals. Q4. Which of the following statements is true? [1 mark] A. On August 31, 2014, a company signed a $10,000 12 month, note payable bearing 6% interest pa. The company's Dec 31, year-end adjusting entry should include a credit of $200 to interest payable. B. Alpha Co owes its employees $5,000 at the year-end on Dec 31, 2014. Payment of the employees' wages on Jan 3, 2015 will include a debit to wages expense, and credits to wages payable and cash. C. Beta Co, purchased $5,000 worth of supplies in August and recorded the purchase in the Supplies account. On Dec 31, the fiscal year-end, $3,200 of the supplies remained. The Dec 31, year-end adjusting entry would include a debit of $2,800 to Supplies. D. On Sept 1, Delta Co. paid $9,000 for a six-month insurance policy, debiting prepaid insurance. After making the appropriate adjusting entry on Dec 31, the prepaid insurance account would have a balance of $6,000. E. On June 30, Gamma Co. received $15,000 cash as a down payment on a 12-month consulting contract. Gamma recorded cash and recognized an appropriate liability. At year end on Dec 31, Gamma will debit consulting revenue for $7,500 TURN OVER as. Use the following information to answer questions 5 & 5b. A company's employees work a 5-day week Monday thru Friday and are paid on the following Monday. The weekly wage bill is $5,500. The company's financial year ends on Dec 31. In 2014 Dec 31, falls at midnight on Wednesday, and payday falls on Monday 5 Jan 2015 Q5a. Journalize the Dec 31, 2014 adjusting entry [1 mark]. Date 2014 Dec 31 Dr. Cr 05b. Journalize payment of the employee's wages on Monday Jan 5, 2015 [1 mark). Date 2015 Dr. Jan 5 Cr. Q6. Use the following information to answer Q6 & 6b. On August 31, 2019, ABC Co, paid $27,000 cash being two year's rent in advance to Realty Properties. Q6a. Journalize the Dec 31, 2019 adjusting entry for ABC Co [1 mark) Date Dr. Cr. Q6b. Journalize the Dec 31, 2019 adjusting entry for Realty Properties (1 mark]. Date Dr. Cr. Q7. On Jan 1, 2018, a company had supplies of $567. During the year, the company purchased $2,100 more supplies. A physical count on Dec 31, 2019 showed $215 supplies remaining. Journalize the Dec 31, 2019 adjusting entry[1 mark]. Date Dr. Cr. 08. Use the following information to answer 082 & 8b. On June 30, 2019, ABC Co. paid $145,000 for a fork-lift truck. ABC estimate the truck has an 8-year life and a residual value of $15,000 qsa. Journalize the Dec 31, 2019 adjusting entry [1 mark) Date 2019 Dr. 08b. Determine the book value of the truck as at Dec 31, 2020 (1 mark]. Show plausible cakulations to get credit Answer: The truck's book value is $ 09. On Oct 1, 2019, Acme Company sold equipment to a customer with a sales price of $125,000. The customer paid $75,000 and signed a note promising to pay the balance in 12 months. The note carried an interest rate of 10%. Provide the customer's adjusting entry for Dec 31, 2019 [1 mark]. Date 2019 Dr. Cr. TURN OVER Gto. Use the following Adjusted Trial Balance for Sara Web Services to answer questions 10 & 10 $ $ 1,170 1.930 600 20,600 5,400 13,925 4.800 Cash Supplies Prepaid Insurance Equipment Accumulated Depreciation Sara Capital Sara Withdrawals Revenue Unearned Revenue Salary Expense Depreciation Expense Rent Expense Supplies Expense Utilities Expense Insurance Expense Totals 21,720 325 6,920 2,000 1,200 800 950 400 $41,370 $41,370 Q10a. Provide the closing entries for Sara Web Services (5 marks] Dr. Cr. Q10b. Provide the post-closing trial balance for Sara Web Services [3 marks). Dr. Cr. THIS IS THE LAST PAGE