1) Which of the following would cause an asset to be debited and a liability credited?
A) Recorded the adjustment for the expiration of the insurance policy
B) Recorded the adjustment for the expiration of rent
C) Purchased supplies on account
D) None of these would have that effect.
2) Which of the following would cause a liability to be credited and an expense debited?
A) Recorded the adjustment for the accrual of wages
B) It is the end of the month and no utility bill has been received
C) Recorded an accrued expense
D) All of the above would have that effect.
3) The adjusting entries are journalized:
A) whenever time permits.
B) before preparing fi nancial reports.
C) after preparing fi nancial reports.
D) at the beginning of the accounting period.
4) Which of the following accounts would be considered a permanent account?
A) Service Fees
B) Salaries Expense
C) Salaries Payable
D) Depreciation Expense
5) An important purpose of closing entries is to:
A) set nominal account balances to zero to begin the next period.
B) adjust the accounts in the ledger.
C) help in preparing fi nancial statement.
D) set real account balances to zero to begin the next period.
6) Which of the following accounts will not be closed to Income Summary at the end of the fi scal year?
A) Word Processing Fees
B) Smith, Withdrawals
C) Salaries Expense
D) Supplies Expense