Jupiter Corporation paid $9,600 onApril 1, 2020for two years of advertising on a local radio. The ads started April 1, 2020 and will run until March 31, 2022. Jupiter Corporation fiscal year ends December 31. The company records adjusting entries only at year end.

1.What balance is shown forAdvertising Expenseon Jupiter Corporation's fiscal year2020Income Statement?

a.$9,600

b.$6,000

c.$4,800

d.$3,600

e.$1,200

2.What balance is shown forPrepaid Advertisingon Jupiter Corporation'sDecember 31,2020Balance Sheet?

a.$9,600

b.$6,000

c.$4,800

d.$3,600

e.$1,200

3.What balance is shown forAdvertising Expenseon Jupiter Corporation's fiscal year2021Income Statement?

a.$9,600

b.$6,000

c.$4,800

d.$3,600

e.$1,200

4.What balance is shown forPrepaid Advertisingon Jupiter Corporation'sDecember 31,2021Balance Sheet?

a.$9,600

b.$6,000

c.$4,800

d.$3,600

e.$1,200

5.Which of the statements isTRUE?

a.A company will always record a revenue at the time cash is received.

b.Depreciation Expense is a contra asset account.

c.A company will always record an expense at the time cash is paid.

d.A company will sometimes record an expense at the time cash is paid.

6.If a company fails to make an adjusting entry at the end of the period for depreciation of equipment, this will result in:

a.Total Liabilities being understated on the Balance Sheet.

b.Total Assets being overstated on the Balance Sheet.

c.Total Assets being understated on the Balance Sheet.

d.Total Liabilities being overstated on the Balance Sheet.

7.Failure to record an adjusting entry for utility expense incurred but not yet paid at the year end will result in an:

a.overstatement of net income.

b.understatement of assets.

c.overstatement of liabilities.

d.understatement of stockholders' equity.

8.Which of the following isNOTan application of accrual accounting?

a.Recognizing revenues when earned and expenses when incurred.

b.Recording revenues and expenses on the date of cash receipt or cash payment.

c.Applying the matching rule.

d.Adjusting the accounts.

9.When a company records revenue, this transaction could alsodecrease:

a.an asset.

b.an expense.

c.a liability.

d.stockholders' equity.