21. Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

a. Service Revenue

b. Equipment

c. Prepaid Insurance

d. Unearned Rent

22. Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

a. debit Insurance Expense, $1,800; credit Prepaid Insurance, $1,800

b. debit Insurance Expense, $1,500; credit Prepaid Insurance, $1,500

c. debit Insurance Expense, $2,100; credit Prepaid Insurance, $2,100

d. debit Prepaid Insurance, $1,800; credit Cash, $1,800

23.The type of account and normal balance of Prepaid Insurance is

a. asset, credit

b. asset, debit

c. contra asset, credit

d. contra asset, debit

24. Which of the following is considered to be unearned revenue?

a. theater tickets sold last month for yesterdays performance

b. theater tickets sold yesterday on credit for yesterdays performance

c. theater tickets that were not sold for the current performance

d. theater tickets sold for next months performance

25. If a shareholder wanted to know how money flowed into and out of the company, which financial statement would the shareholder use?

a. income statement

b. statement of cash flows

c. balance sheet

d. retained earnings statement

26. The adjusting entry to adjust supplies was omitted at the end of the year. This would affect the income statement by having

a. expenses understated and therefore net income overstated

b. revenues understated and therefore net income understated

c. expenses understated and therefore net income understated

d. expenses overstated and therefore net income understated

27. Gracie, Inc. made a prepaid rent payment of $2,800 on January 1. The companys monthly rent is $700. The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is

a. $2,100

b. $700

c. $2,800

d. $1,400

28. Use the adjusted trial balance for Stockton Company below to answer the questions that follow.

Stockton Company
Adjusted Trial Balance
December 31
Cash	7,530
Accounts Receivable	2,100
Prepaid Expenses	700
Equipment	13,700
Accumulated Depreciation		1,100
Accounts Payable		1,900
Notes Payable		4,300
Common Stock		1,000
Retained Earnings		12,940
Dividends	790
Fees Earned		9,250
Wages Expense	2,500
Rent Expense	1,960
Utilities Expense	775
Depreciation Expense	250
Miscellaneous Expense	185
Totals	30,490	30,490

Determine the total assets.

a. $25,130

b. $16,830

c. $22,930

d. $24,030

29. Which of the following accounts will be closed to the retained earnings account at the end of the fiscal year?

a. Rent Expense

b. Fees Earned

c. Income Summary

d. Depreciation Expense

30. The supplies account had a balance of $4,400 at the beginning of the year and was debited during the year for $2,400, representing the total of supplies purchased during the year. If $400 of supplies are on hand at the end of the year, the supplies expense to be reported on the income statement for the year is

a. $400

b. $2,000

c. $6,800

d. $6,400