Which of the following statements is incorrect?

Multiple Choice

• An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments.

• Interim financial reports can be based on one-month or three-month accounting periods.

• The fiscal year is any 12 consecutive months (or 52 weeks) used by a business as its annual accounting period.

• Property, plant, and equipment are referred to as plant assets.

• An income statement reports revenues earned less expenses incurred.

On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On July 1 Olive should record:

Multiple Choice

• A debit to an expense and credit to Cash for $7,500.

• A debit to Cash for $7,500 and a credit to an expense for $7,500.

• A debit to an expense and credit to a prepaid expense for $7,500.

• A credit to a prepaid expense and a debit to Cash for $7,500.

• A debit to a prepaid expense and a credit to Cash for $7,500.

Which of the following is classified as a current asset?

Multiple Choice

• Office equipment.

• Office supplies.

• Land.

• Unearned revenue.

• Patent.