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a major purpose of preparing closing entries is to

Kelsey Allerton began a music business in July 2016.

Allerton prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Allerton

​Company’s only activities during July through​ October:

Jul 14Bought music on account for $ 25, with payment to the supplier due in 90 days.
Aug3Sep16Oct 22Performed a job on account for Jimmy Jones for $40, collectible from Jones in 30 days, Used up all the music purchased on July 14.Collected the $40 receivable from JonesPaidthe $25 owes to the supplier from the July 14 transaction.

In which month should Allerton record the cost of the music as an​ expense?

A. August

B. July

C. September

D. October

2) On January 1 of the current​ year, Bamber Company paid $ 1,500in rent to cover six months

(Januarylong dash June). Bamber recorded this transaction as​ follows:

Journal Entry
DateAccountsDebitCredit
Jan1Prepaid Rent1,500 
  Cash 1,500

Bamber adjusts the accounts at the end of each month. Based on these​ facts, the adjusting entry at the end of January should include

A. a debit to Prepaid Rent for $ 250

B. a credit to Prepaid Rent for $ 1,250

C. a debit to Prepaid Rent for $ 1,250

D. a credit to Prepaid Rent for $ 250

.

3) On January 1 of the current​ year, Bamber Company paid $ 1,500 in rent to cover six months​ (January -​ June). Bamber recorded this transaction as​ follows:

Journal Entry
DateAccountsDebitCredit
Jan1Prepaid Rent1,500 
  Cash 1,500

Bamber adjusts the accounts at the end of each month. Bamber’s adjusting entry at the end of February should include a debit to Rent Expense in the amount of

A. $0

B. $ 1,500

C. $ 500

D. $ 250

4) An adjusting entry recorded June salary expense that will be paid in July. Which statement best describes the effect of this adjusting entry on the​ company’s accounting​ equation?

A. Assets are not​ affected, liabilities are​ increased, and​ stockholders’ equity is increased.

B. Assets are​ decreased, liabilities are not​ affected, and​ stockholders’ equity is decreased.

C. Assets are​ decreased, liabilities are​ increased, and​ stockholders’ equity is decreased.

D. Assets are not​ affected, liabilities are​ increased, and​ stockholders’ equity is decreased.

5) What is the effect on the financial statements of recording depreciation on​ equipment?

A. Net income is not​ affected, but assets and​ stockholders’ equity are decreased.

B. Net​ income, assets, and​ stockholders’ equity are all decreased.

C. Net income and assets are​ decreased, but​ stockholders’ equity is not affected.

D. Assets are​ decreased, but net income and​ stockholders’ equity are not affected.

6) For 2016, NestorCompany had revenues in excess of expenses. Which statement describes Nestor’s closing entries at the end of 2016 (assume there is only one closing entry for both revenue and​ expenses)?

A. Revenues will be​ debited, expenses will be​ credited, and retained earnings will be debited.

B. Revenues will be​ debited, expenses will be​ credited, and retained earnings will be credited.

C. Revenues will be​ credited, expenses will be​ debited, and retained earnings will be credited.

D. Revenues will be​ credited, expenses will be​ debited, and retained earnings will be debited.

7) A major purpose of preparing closing entries is to

A. zero out the liability accounts.

B. adjust the asset accounts to their correct current balances.

C. close out the Supplies account.

D. update the Retained Earnings account.

8) Selected data for the Dublin Company​ follow:

 Current assets . . . . . . . .$25,200Current liabilities . . . . . .$21,000 
 Long-term assets . . . . . .175,000Long-term liabilites . . . .102,000
 Total revenues . . . . . . . .194,000Total expenses . . . . . . .160,000

Based on these​ facts, what are Dublin’’s current ratio and debt​ ratio? ​(Ratios have been rounded to three decimal​ places.)         

Current ratio                             Debt ratio                                  

A. 1.213 0.206

B. 1.200 0.614

C. 1.628 0.614

D. 9,533 0.833                                              

9) Unadjusted net income equals $ 6, 000

.

Calculate what net income will be after the following​ adjustments:

1.Salaries payable to​ employees, $ 550
2.Interest due on note payable at the​ bank, $ 125
3.Unearned revenue that has been​ earned, $ 600
4.Supplies​ used, $ 225
Adjusted net income amountsto.$______________.

10) Salary Payable at the beginning of the month totals $ 24,000. During the​ month, salaries of

$ 128,000 were accrued as expense. If ending Salary Payable is $ 14,000, what amount of cash did the company pay for salaries during the​ month?

A. $ 166,000

B. $ 143,000

C. $ 90,000

D. $ 138,000

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