1. Assume that a lawyer bills her clients $15,000 on June 30, 2007, for services rendered during June. The lawyer collects $8,500 of the billings during July and the remainder in August. Under the accrual basis of accounting, when would the lawyer record the revenue for the fees?
A. June, $15,000; July, $0; and August, $0
B. June, $0; July, $6,500; and August, $8,500
C. June, $8,500; July, $6,500; and August, $0
D. June, $0; July, $8,500; and August, $6,500
2. On January 24, 2007, Niche Consulting collected $5,700 it had billed its clients for services rendered on December 31, 2006. How would you record the January 24 transaction, using the accrual basis?
A. Increase Cash, $5,700; decrease Fees Earned, $5,700
B. Increase Accounts Receivable, $5,700; increase Fees Earned, $5,700
C. Increase Cash, $5,700; decrease Accounts Receivable, $5,700
D. Increase Cash, $5,700; increase Fees Earned, $5,700
3. Which of the following items represents a deferral?
A. Prepaid insurance
B. Wages payable
C. Fees earned
D. Accumulated depreciation
4. If the supplies account indicated a balance of $2,250 before adjustment on May 31 and supplies on hand at May 31 totaled $950, the adjustment would be:
A. increase Supplies, $950; decrease Supplies Expense, $950.
B. increase Supplies, $1,300; decrease Supplies Expense, $1,300.
C. increase Supplies Expense, $950; decrease Supplies,$950.
D. increase Supplies Expense, $1,300; decrease Supplies, $1,300.
5. The balance in the unearned rent account for Jones Co. as of December 31 is $1,200. If Jones Co. failed to record the adjusting entry for $600 of rent earned during December, the effect on the balance sheet and income statement for December would be:
A. assets understated by $600; net income overstated by $600.
B. liabilities understated by $600; net income understated by $600.
C. liabilities overstated by $600; net income understated by $600.
D. liabilities overstated by $600; net income overstated by $600.