EPYorS Section s-CORRECTING CURRENT PERIOD DEFERRAL 1. Which of the following is a deferral error? a. b. c. d. Failure to calculate and record interest expense owed on a note payable Debiting A Failure to book revenue earned but not received as of year end Failure to adjust Unearned Revenue at year end ccounts Payable and crediting Revenue when billing a customer 2. You ur company purchases $2,000 of supplies and books the amount as Supplies on Hand. At end, a physical count shows $700 of supplies on hand. If the adjusting entry debits year upplies Expense and credits Supplies On Hand for $700: a. net income will be understated b. assets will be overstated c. liabilities will be understated d. none of the above 3. On March 31, 20X8, your calendar year company takes out a 3-year insurance policy witha premium of $5,000 a year and pays the entire $15,000 in advance, booking it as prepaid insurance. On December 31, 20X8, you discover that the adjusting entry debited Insurance Expense and credited Prepaid Insurance for $5,000. Your correcting journal entry will: a. debit Insurance Expense for $3,750 b. debit Prepaid Insurance for $5,000 c. credit Insurance Expense for $1,250 d. credit Insurance Expense for $3,750 On March 31, 20X8, your calendar year company takes out a 3-year insurance policy with a premium of $4,000 a year and pays the entire $12,000 in advance, booking it as prepaid insurance. At year-end 20X8, you discover that the adjusting entry debits Insurance Expense and credits Prepaid Insurance for $4,000. If you do not correct this a. net income will be understated b. assets will be overstated c. liabilities will be understated d. none of the above 4. On November 1, 20X3, your calendar year company receives $40,000 for space it is subletting for 5 months at $8,000 a month, from November 1, 20X3 through March 31, 20X4, and books the amount as Rent Revenue. On December 31, 20X3, you discover the following adjusting entry: 5. Rent Revenue 32,000 Rent Received in Advance 32,000 To correct this error you must: a. debit Rent Revenue and credit Rent Received in Advance for $8,000 b. debit Rent Received in Advance and credit Rent Revenue for $8,000 c. debit Rent Revenue and credit Rent Received in Advance for $16,000 d. debit Rent Received in Advance and credit Rent Revenue for $16,000