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     31.     A journal entry to record a receipt of rent revenue in advance will include a
          a.     debit to rent revenue.
          b.     credit to rent revenue.
          c.     credit to cash.
          d.     credit to unearned rent.

     32.     Adjustments are often prepared
          a.     after the balance sheet date, but dated as of the balance sheet date.
          b.     after the balance sheet date, and dated after the balance sheet date.
          c.     before the balance sheet date, but dated as of the balance sheet date.
          d.     before the balance sheet date, and dated after the balance sheet date.

     33.     At the time a company prepays a cost
          a.     it debits an asset account to show the service or benefit it will receive in the future.
          b.     it debits an expense account to match the expense against revenues earned.
          c.     its credits a liability account to show the obligation to pay for the service in the future.
          d.     more than one of the above.
     
     34.     How do these prepaid expenses expire?
                Rent      Supplies
          a.     With the passage of time          Through use and consumption
          b.     With the passage of time     With the passage of time
          c.     Through use and consumption     Through use and consumption
          d.     Through use and consumption     With the passage of time
          
     35.     Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry for
          a.     an unearned revenue.
          b.     a prepaid expense.
          c.     an accrued revenue.
          d.     an accrued expense.

     36.     Unearned revenue on the books of one company is likely to be
          a.     a prepaid expense on the books of the company that made the advance payment.
          b.     an unearned revenue on the books of the company that made the advance payment.
          c.     an accrued expense on the books of the company that made the advance payment.
          d.     an accrued revenue on the books of the company that made the advance payment.

37.     To compute interest expense for an adjusting entry, the formula is principal X rate X a fraction. The numerator and denominator of the fraction are:
                     Numerator     Denomintor
          a.     Length of time note has been outstanding     12 months
          b.     Length of note     12 months
          c.     Length of time until note matures     Length of note
          d.     Length of time note has been outstanding     Length of note
          
     38.     Adjusting entries are necessary to
                    1.     obtain a proper matching of revenue and expense.
                    2.     achieve an accurate statement of assets and equities.
                    3.     adjust assets and liabilities to their fair market value.
          a.     1
          b.     2
          c.     3
          d.     1 and 2

     39.     Why are certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting cycles?
          a.     To reduce the federal income tax liability
          b.     To aid management in cash-flow analysis
          c.     To match the costs of production with revenues as earned
          d.     To adhere to the accounting constraint of conservatism

     40.     When an item of expense is paid and recorded in advance, it is normally called a(n)
          a.     prepaid expense.
          b.     accrued expense.
          c.     estimated expense.
          d.     cash expense.

     41.     When an item of revenue or expense has been earned or incurred but not yet collected or paid, it is normally called a(n)



          a.     prepaid
          b.     adjusted
          c.     estimated
          d.     none of these

     42.     When an item of revenue is collected and recorded in advance, it is normally called a(n)



          a.     accrued
          b.     prepaid
          c.     unearned
          d.     cash

     43.     An accrued expense can best be described as an amount
          a.     paid and currently matched with earnings.
          b.     paid and not currently matched with earnings.
          c.     not paid and not currently matched with earnings.
          d.     not paid and currently matched with earnings.

     44.     If, during an accounting period, an expense item has been incurred and consumed but not yet paid for or recorded, then the end-of-period adjusting entry would involve
          a.     a liability account and an asset account.
          b.     an asset or contra asset account and an expense account.
          c.     a liability account and an expense account.
          d.     a receivable account and a revenue account.

     45.     Which of the following must be considered in estimating depreciation on an asset for an accounting period?
          a.     The original cost of the asset
          b.     Its useful life
          c.     The decline of its fair market value
          d.     Both the original cost of the asset and its useful life.

     46.     Which of the following would not be a correct form for an adjusting entry?
          a.     A debit to a revenue and a credit to a liability
          b.     A debit to an expense and a credit to a liability
          c.     A debit to a liability and a credit to a revenue
          d.     A debit to an asset and a credit to a liability

     47.     Year-end net assets would be overstated and current expenses would be understated as a result of failure to record which of the following adjusting entries?
          a.     Expiration of prepaid insurance
          b.     Depreciation of fixed assets
          c.     Accrued wages payable
          d.     All of these

     48.     A prepaid expense can best be described as an amount
          a.     paid and currently matched with revenues.
          b.     paid and not currently matched with revenues.
          c.     not paid and currently matched with revenues.
          d.     not paid and not currently matched with revenues.

     49.     An accrued revenue can best be described as an amount
          a.     collected and currently matched with expenses.
          b.     collected and not currently matched with expenses.
          c.     not collected and currently matched with expenses.
          d.     not collected and not currently matched with expenses.

     50.     An unearned revenue can best be described as an amount
          a.     collected and currently matched with expenses.
          b.     collected and not currently matched with expenses.
          c.     not collected and currently matched with expenses.
          d.     not collected and not currently matched with expenses.

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