Question

39. Which of the following is an example of an accrual error? a. failure to adjust Prepaid Insurance to its proper balance at year end b. failure to adjust Inventory to its proper balance at year end c. failure to record depreciation at year end d. none of the above 40. Which of the following is an example of a deferral error? a. initially recording advance payment of an insurance premium to Prepaid Insurance instead of Insurance Expense b. failure to record interest expense incurred but not yet paid c. failure to adjust Unearned Revenue to its proper balance at year end d. none of the above 41. On April 1, 20X0, your company finances partial payment of the sale of machinery to a customer for a $20,000, 3-year, 8% note receivable. Inter- est is payable annually on April 1. On December 31, 20X0, an adjusting entry debits Interest Receivable and credits Interest Revenue for $1,600. The entry necessary to correct the error before the books are closed would include... a. a $400 debit to Interest Revenue b. a $400 credit to Interest Expense c. a $400 credit to Unearned Interest Receivable d. a $400 credit to Sales 42. Which of the following statements about accrual and deferral errors is correct? a. Accrual errors affect only balance sheet accounts. b. Deferral errors affect only income statement accounts. c. Accrual and deferral errors affect both income statement and balance sheet accounts. d. All above statements are correct.

          39. Which of the following is an example of an accrual error?
a. failure to adjust Prepaid Insurance to its proper balance at
year end
b. failure to adjust Inventory to its proper balance at year end
c. failure to record depreciation at year end
d. none of the above
40. Which of the following is an example of a deferral error?
a. initially recording advance payment of an insurance premium to
Prepaid Insurance instead of Insurance Expense
b. failure to record interest expense incurred but not yet paid
c. failure to adjust Unearned Revenue to its proper balance at
year end
d. none of the above
41. On April 1, 20X0, your company finances partial payment of the sale of
machinery to a customer for a $20,000, 3-year, 8% note receivable. Inter-
est is payable annually on April 1. On December 31, 20X0, an adjusting
entry debits Interest Receivable and credits Interest Revenue for $1,600.
The entry necessary to correct the error before the books are closed would
include...
a. a $400 debit to Interest Revenue
b. a $400 credit to Interest Expense
c. a $400 credit to Unearned Interest Receivable
d. a $400 credit to Sales
42. Which of the following statements about accrual and deferral errors is
correct?
a. Accrual errors affect only balance sheet accounts.
b. Deferral errors affect only income statement accounts.
c. Accrual and deferral errors affect both income statement and
balance sheet accounts.
d. All above statements are correct.

39. Which of the following is an example of an accrual error?
a. failure to adjust Prepaid Insurance to its proper balance at
year end
b. failure to adjust Inventory to its proper balance at year end
c. failure to record depreciation at year end
d. none of the above
40. Which of the following is an example of a deferral error?
a. initially recording advance payment of an insurance premium to
Prepaid Insurance instead of Insurance Expense
b. failure to record interest expense incurred but not yet paid
c. failure to adjust Unearned Revenue to its proper balance at
year end
d. none of the above
41. On April 1, 20X0, your company finances partial payment of the sale of
machinery to a customer for a 20,000, 3-year, 8% note receivable. Inter-
est is payable annually on April 1. On December 31, 20X0, an adjusting
entry debits Interest Receivable and credits Interest Revenue for1,600.
The entry necessary to correct the error before the books are closed would
include...
a. a 400 debit to Interest Revenue
b. a400 credit to Interest Expense
c. a 400 credit to Unearned Interest Receivable
d. a400 credit to Sales
42. Which of the following statements about accrual and deferral errors is
correct?
a. Accrual errors affect only balance sheet accounts.
b. Deferral errors affect only income statement accounts.
c. Accrual and deferral errors affect both income statement and
balance sheet accounts.
d. All above statements are correct.

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