financial accounting questions 9

financial accounting questions 5 multiple choice Q

1-The premium on a three-year insurance policy expiring on December 31, 20×11, was paid in total on January 1, 20×9. The original payment was initially debited to a prepaid asset account. The appropriate journal entry has been recorded on December 31, 20×9. The balance in the prepaid asset account on December 31, 20×9 should be

Select one:

a. Zero

b. Higher than if the original payment had been debited initially to an expense account

c. The same as the original payment

d. The same as it would have been if the original payment had been debited initially to an expense account

BC Incorporated is in the process of closing their books at year-end. The following information is reported on the income statement:

Salary Expense

$27

Interest Expense

$15

Revenue

$919

Rent Expense

$32

Which of the following are correct closing entries:

Select one:

a. A credit to retained earnings of $961

b. A debit to retained earnings of $ 919

c. A debit to retained earnings of $845

d. A credit to retained earnings of $ 845

On May 1, 20×5, you take out a loan in the amount of $ 580506 payable in two years. The interest rate charged on the loan, payable annually is 5%. The December 31, 20×5 adjusting entry will include a debit to:

Select one:

a. Interest expense in the amount of $58051

b. Interest payable in the amount of $19350

c. Interest expense in the amount of $29025

Knight Company began operations on July 1, 20×5 and prepares monthly financial statements. It has the following partial unadjusted trial balance at July 31, 20×5:

Debit

Credit

Prepaid Insurance

$5716

Unearned Service Revenue

$2,900

The balance in the prepaid insurance account relates to a 1-year insurance policy, effective July 1, 20×5. Which of the following would be the correct adjusting journal entry at July 31, 20×5 with respect to this insurance policy?

Select one:

a. Debit Prepaid Insurance $476 and Credit Insurance Expense $476

b. Debit Prepaid Insurance $5716 and Credit Cash $5716

c. Debit Insurance Expense $5716 and Credit Cash $5716

d. Debit Insurance Expense $476 and Credit Prepaid Insurance $476

On October 31, 20×2 Cooper Limited purchased a $6893, 2.5 year insurance policy for their automobile. The accountant debited the full amount to prepaid insurance. Now, at year-end December 31, 20×2, the following adjustment is required:

Select one:

a. A credit of $ 689 to prepaid insurance and a debit to insurance expense

b. A credit of $ 1149 to insurance expense and a debit to prepaid insurance

c. A credit of $ 460 to prepaid insurance and a debit to insurance expense

d. A debit of $ 460 to prepaid insurance and a credit to insurance expense

d. Interest expense in the amount of $19350

 

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