For the questions below please describe why the correct answer right

1. True or False. Liabilities can be recorded if they arise from a past, current or a future business transaction such as anticipated costs for a future service job.

Correct Answer: False

2. Which of the following is an investing activity?

Correct Answer: Lending money to employees

3. An architecture firm earned $2,00 for architectural services provided with the fee to be paid in the future. No entry was made at the time of the services were provided. If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause:

Correct answer: Net income to be understated

4. The form of business organization that is the easiest to establish.

Correct Answer: Sole Proprietorship

5. To adjust a prepaid expense account balance at a period end the journal entry would most likely:

Correct Answer: Result in an additional expense being recorded.

6. Separation of duties refers to:

Correct Answer: Individuals who have physical responsibility for assets do not have access to accounting records.

7. A Corporation compiled the following financial information as of December 31 2020. Revenue $140,000 Common Stock $30,000, Equipment $40,000, Expenses $130,000, Cash $35,000, Dividends $5,000, Supplies $5,000 Accounts payable $20,000, Accounts receivable $15,000, Retained Earnings January 1, 2020 $70,000. What is total stockholders equity at the end of the year?

Correct Answer: $105,000.

9. A company provided the services for the $80,000 cash received in a prior period in advance from customers. Which of the following statements correctly shows the effect of this transaction on the accounting equation?

Correct Answer: Assets will remain unchanged, liabilities will decrease by $80,000, and stockholders' equity will increase by $80,000.