____ 37. Adjusting entries are

a.	the same as correcting entries
b.	needed to bring accounts up to date and match revenue and expense
c.	optional under generally accepted accounting principles
d.	rarely needed in large companies

____ 38. At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?

a.	Total assets will be understated at the end of the current year.
b.	The balance sheet and income statement will be misstated but the statement of owner's equity will be correct for the current year.
c.	Net income will be overstated for the current year.
d.	Total liabilities and total assets will be understated.

____ 39. The total assets and the total liabilities of a business at the beginning and at the end of the year appear below. During the year, the owner had withdrawn $50,000 for personal use and had made an additional investment of $35,000 in the business.

	Assets	Liabilities
Beginning of year	$295,000	$190,000
End of year	375,000	220,000

The amount of net income for the year was

a.	$85,000
b.	$40,000
c.	$135,000
d.	$65,000

____ 40. Accrued expenses have

a.	not yet been incurred, paid, or recorded
b.	been incurred, not paid, but have been recorded
c.	been incurred, not paid, and not recorded
d.	been paid but have not yet been incurred

____ 41. Office supplies were sold by J's Appliance Repair at cost to another repair shop, with cash received. Which of the following entries for J's Appliance Repair records this transaction?

a.	Office Supplies, debit; Cash, credit
b.	Office Supplies, debit; Accounts Payable, credit
c.	Cash, debit; Office Supplies, credit
d.	Accounts Payable, debit; Office Supplies, credit

____ 42. Randomly listed below are the steps in the accounting cycle:

(1)	prepare the financial statements
(2)	post the journal entries to the ledger
(3)	record journal entries
(4)	prepare a trial balance

What is the proper order of these steps?

a.	(3), (2), (4), (1)
b.	(2), (3), (4), (1)
c.	(3), (2), (1), (4)
d.	(4), (3), (2), (1)

____ 43. The balance in the prepaid rent account before adjustment at the end of the year is $45,000, which represents three months' rent paid on December 1. The adjusting entry required on December 31 is

a.	debit Rent Expense, $15,000; credit Prepaid Rent, $15,000
b.	debit Prepaid Rent, $10,000; credit Rent Expense, $5,000
c.	debit Rent Expense, $10,000; credit Prepaid Rent, $5,000
d.	debit Prepaid Rent, $5,000; credit Rent Expense, $5,000

____ 44. If total liabilities decreased by $55,000 during a period of time and owner's equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is

a.	$65,000 increase
b.	$5,000 decrease
c.	$5,000 increase
d.	$65,000 decrease

____ 45. The supplies account has a balance of $2,000 at the beginning of the year and was debited during the year for $2,800, representing the total of supplies purchased during the year. If $1,750 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.	$750
b.	$3,550
c.	$3,800
d.	$3,050