Chapter 5 TAPQ TF and MCTAPQ1. A company failed to record the adjusting journal entry for rent received in adnvance that was earned duringthe period. What is the effect on TR, TE, NI, TA, TL, and TOE?2. Cashed received for rent=$20,000Cash paid for rent=$14,000 Prepaid rent decrease=$600Rent receivable increase=$370Rent payable decrease=$820Unearned rent increase=$650What is accrual basis rent revenue?What is Accrual basis rent expense?TF1. ____ Determining when to recognize revenue can be difficult for accountants.2. ____ Only permanent accounts are closed at the end of the financial accounting process each year.3. ____ According to U.S. GAAP, revenue cannot be recorded until cash is collected.4. ____ Some changes to account balances occur because of the passage of time.5. ____ Accounting is a profession where judgment is rarely needed because so many rules exist that must be followed.6. ____ Assets, liabilities and stockholders’ equity accounts will all start each new accounting period with the same balance they had at the end of the previous period.7. ____ An accrued revenue is one that is earned gradually over time.8. ____ Companies have some discretion in how and when they record accruals such as rent expense or interest expense.9. ____ The purpose of adjusting entries is to reduce the balance in temporary accounts to zero at the end of the reporting cycle.10. ____ Only one trial balance is prepared during each separate accounting period.11. ____ Employees for the Saginaw Corporation earn a salary of $8,000 per day, an amount that the accounting system recognizes automatically at the end of each day. If no salary is paid for the last nine daysof the year, an adjusting entry is required before financial statements can be prepared.12. ____ In producing financial statements for the Night Corporation, rent expense is accidentally reported as an asset rather than an expense. As a result, reported net income will be overstated for that period.13. ____ In producing financial statements for the Day Corporation, rent expense is accidentally reported as an asset rather than an expense. As a result, the balance sheet will not balance.14. ____ A company owes $9,000 in interest on a note payable at the end of the current year. The accountant accidentally overlooks that information and no adjusting entry is made. As a result, the balance sheet will not balance.15. ____ A company owes $9,000 in interest on a note payable at the end of the current year. The accountant accidentally overlooks that information and no adjusting entry is made. As a result, reported net income will be overstated for that period.Jessica HujberSeptember 12, 2014Business1. Which of the following accounts is closed at the end of the year after financial statements are produced?1. Accounts receivable2. Accounts payable3. Cost of goods sold4. Unearned revenue2. Jenkins Company received $600 from a client in December for work to be performed by Jenkins over the following months. That cash collection was properly recorded at that time. The accountant for Jenkins believes that this work is really three separate jobs. What adjusting entry is recorded by this accountant on December 31 if one of these jobs is substantially completed by that time?1. Figure 5.9 2. Figure 5.10 3. Figure 5.11 4. Figure 5.12 3. Which of the following accounts increases retained earnings when closing entries are prepared?1. Dividends2. Sales revenue3. Loss of sale of land4. Rent expense4. Which of the following is the sequence of the accounting process?1. Analyze, Record, Adjust, Report2. Record, Report, Adjust, Analyze3. Adjust, Report, Record, Analyze4. Report, Analyze, Record, Adjust5. On September 1, Year Three, the LaToya Corporation paid $42,000 for insurance for the next six months. The appropriate journal entry was made at that time. On December 31, LaToya’s accountant forgot to makethe adjusting entry that was needed. Which of the following is true about the Year Three financial statements?1. Assets are understated by $42,000.2. Net income is understated by $14,000.3. Expenses are overstated by $42,000.4. Net income is overstated by $28,000.Multiple choice6. Starting on December 21, Year One, the Shakespeare Corporation begins to incur an expense of $1,000 per day. On January 21, Year Two, the company makes a payment of $31,000 for the previous thirty-one days. Assume the company failed to make an adjusting entry at December 31, Year One. Which of the following is true for the Year One financial statements?1. Net income is understated, and the total of the liabilities is understated.2. Net income is overstated, and the total of the liabilities is understated.3. Net income is understated, and the total of the liabilities is overstated.4. Net income is overstated, and the total of the liabilities is overstated.7. Starting on December 21, Year One, the Shakespeare Corporation begins to incur an expense of $1,000 per day. On January 21, Year Two, the company makes a payment of $31,000. The company made the proper adjusting entry at December 31. When the payment was eventually made, what account or accounts were debited?1. Expense was debited for $31,000.2. A liability was debited for $31,000.3. Expense was debited for $11,000, and a liability was debited for $20,000.4. Expense was debited for $20,000, and a liability was debited for $11,000.8. Starting on December 21, Year One, the Shakespeare Corporation begins to incur an expense of $1,000 per day. On January 21, Year Two, the company makes a payment of $31,000 for the previous thirty-one days. Assume the company failed to make the proper year-end adjusting entry. However, when payment was made, the journal entry was prepared as if the adjusting entry had been made (the accountant did not realizethe adjusting entry was not made). After recording the erroneous journal entry, which of the following is true?1. Recorded expense in Year Two is too low.2. Recorded expense in Year Two is too high.3. Recorded liability balance is now too low.4. Recorded liability balance is now too high.9. The Cone Company has prepared a trial balance that includes the following: accounts receivable—$19,000,inventory—$30,000, cost of goods sold—$72,000, sales revenue—$191,000, prepaid rent—$8,000, salary payable—$12,000, rent expense—$23,000, salary expense—$34,000, and dividends paid—$7,000. What should be reported as net income for the period?1. $50,0002. $55,0003. $62,0004. $70,00010. A