Question
Q1) In October, your calendar year company pays $1,200 for 1 years rent that you recorded in Rent Expense. If you do not record an
Q1) In October, your calendar year company pays $1,200 for 1 years rent that you recorded in Rent Expense. If you do not record an adjusting entry at year-end, how will the financial statements be affected?
a) net income will be understated; assets will be understated
b) net income will be understated; assets will be overstated
c) financial statements will not be affected
d) net income will be overstated; assets will be understated
e) net income will be overstated; assets will be overstated
Q2: On December 1, an accrual basis company takes on an 18-month job and receives a $10,000 advance that is recorded in Unearned Revenue. At year end, 10% of the job has been completed. If no adjusting entry is made at year end, how will the financial statements be affected?
a) net income will be overstated; assets will not be affected; liabilities will be understated
b) net income will be understated; assets will not be affected; liabilities will be overstated
c) net income will be understated; assets will be understated; liabilities will not be affected
d) net income will be overstated; assets will be overstated; liabilities will not be affected
Q3: Your firm buys $27,000 of office supplies and debits Supplies Expense. At year end, $6,000 of supplies are still on hand. If your company uses the accrual basis, what adjusting entry will you record at year end?
a) debit Supplies Expense for $6,000; credit Supplies for $6,000
b) debit Supplies Expense for $21,000; credit Supplies for $21,000
c) debit Supplies Expense for $21,000; credit Supplies for $21,000
d) debit Supplies for $21,000; credit Supplies Expense for $21,000
Please Provide Valid answers with complete solution, don't answer if you don't exactly know any of these
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