Q: Which of the following is the correct formula for calculating interest expense for a note payable of $20,000 at 5.5% annual rate for one month?

$$\20$$,000 \times 0.055 \times \frac{1}{12}$

Question 1

Stock Inc. received $40,000 from a customer for a 6-month note at 12% annual interest on December 31. What is the correct adjusting journal entry for interest revenue at year-end?

Accepted Answer

Debit Interest Receivable $$400; Credit Interest Revenue 400$$

Question 2

On December 31, Stock Inc. has $$9,000 of unearned revenue from advance ticket sales. By year-end, 1$$,000 has been earned. What is the correct adjusting entry?

Accepted Answer

Debit Unearned Revenue $$1,000; Credit Ticket Revenue 1$$,000

Question 3

A company pays $1,200 for a 1-year insurance policy on March 1. What is the insurance expense recognized by December 31?

Accepted Answer

$900

Question 4

Which of the following accounts would NOT appear on a post-closing trial balance?

Accepted Answer

Admission Ticket Revenues

Question 5

Betty Higgins purchased a truck for $$25,000, paying 5$$,000 cash and borrowing $20,000. What is the journal entry for this transaction?

Accepted Answer

Debit Truck $$25,000; Credit Cash 5$$,000; Credit Notes Payable $20,000

Question 6

If Betty Higgins paid $1,200 for a 1-year insurance policy on July 1, what is the insurance expense for July?

Accepted Answer

$100

Question 7

Which formula correctly calculates depreciation expense for the truck purchased by Betty Higgins, assuming straight-line depreciation over 5 years and a $5,000 residual value?

Accepted Answer

$$\frac{\25$$,000 - \$$5,000}{5}$$

Question 8

On July 31, Betty Higgins had $$1,500 of supplies on hand, with 2$$,200 purchased during July. What is the supplies expense for July if the beginning balance was $0?

Accepted Answer

$700

Question 9

Which closing entry is required for the account 'Admission Ticket Revenues' at year-end?

Accepted Answer

Debit Admission Ticket Revenues; Credit Income Summary

Question 10

If the company collected $12,000 cash for services to be performed next year, how should this be recorded at year-end?

Accepted Answer

Debit Cash $$12,000; Credit Unearned Revenue 12$$,000

Question 11

Which account is closed to the owner's capital account at the end of the period?

Accepted Answer

Income Summary

Question 12

If employees earned $800 in August, but will be paid in September, what is the adjusting entry at August 31?

Accepted Answer

Debit Salaries Expense $$800; Credit Salaries Payable 800$$

Question 13

Which of the following is the correct formula for calculating interest expense for a note payable of $20,000 at 5.5% annual rate for one month?

Accepted Answer

$$\20$$,000 	imes 0.055 	imes \frac{1}{12}$

Question 14

Which account is NOT closed at the end of the accounting period?

Accepted Answer

Accounts Payable

Question 15

After closing entries are posted, which account will have a zero balance?

Accepted Answer

Income Summary

Question 16

Which of the following best describes the purpose of adjusting journal entries?

Accepted Answer

To update account balances before preparing financial statements

Question 17

If Betty Higgins withdrew $500 cash for personal use, what is the correct journal entry?

Accepted Answer

Debit Betty Higgins, Withdrawals $$500; Credit Cash 500$$

Question 18

Which of the following is a real account that appears on the post-closing trial balance?

Accepted Answer

Accounts Receivable

Question 19

Which entry is required to close the expense accounts at year-end?

Accepted Answer

Debit Income Summary; Credit Expense Accounts

Question 20

If the company earned $2,000 in service revenue but has not yet billed the customer by year-end, what is the correct adjusting entry?

Accepted Answer

Debit Accounts Receivable $$2,000; Credit Service Revenue 2$$,000

Measuring Business Income and Completing the Accounting Cycle: Study Notes

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