is: 32 In July a company pays two years' advertising in advance. The December 31 adjusting entry a. A debit to Prepaid Advertising and a credit to advertising Expense. b. A debit to Advertising Expense and a credit to Prepaid Advertising c A debit to Prepaid Advertising and a credit to Cash. d. A debit to Advertising Expense and a credit to Cash 33. When a magazine company receives advance payment for a subscription, it would, under the accrual basis of accounting a. Debit cash and Credit Prepaid Subscriptions b. Debit Unearned Subscriptions Revenue and Credit Cash. c. Debit Prepaid Subscriptions and credit Cash d. Debit Cash and credit Unearned Subscriptions Revenue 34. Unearned service revenue is what type of account? a. Asset b. Unearned liability c. Revenue d. Contra asset 35. Which of the following depreciation methods allocate a varying amount of depreciation to expense each year based on an asset's usage? a. the straight-line ethod b. the annuity method c the units-of-production method d the double-declining-balance method 36. Which of the following appears on the multiple-step income statement? a. Cost of Goods Sold b. Inventory c. Cash d. Accumulated depreciation 37. Which of following accounts is not a liability? a. Account payable b. Interest payable c.. Unearned revenue d. All of the above are liabilities 38. To recognize accrued interest on a note payable the following adjusting entry is m December 31: a. A debit to Interest Receivable and a credit to Interest Revenue. b. A debit to Interest Expense and a credit to Cash. c. A debit to Interest Expense and a credit to interest Payable. d. A debit to Interest Payable and a credit to Cash. 5 Page