Choose the answer that best describes the proper adjusting entry:
1. Depreciation on Building is estimated to be $5,000.
a. debit to accumulated depreciation for $5,000
b. credit to accumulated depreciation for $5,000
c. credit to depreciation expense $5,000
d. credit to buildings for $5,000
2. A one-year insurance policy was purchased for $2,000. Three months have expired.
a. debit to prepaid insurance for $500
b. credit to prepaid insurance for $500
c. credit to insurance expense for $1,500
d. debit to insurance expense for $1,500
3. Accrued interest on note payable amounts to $100.
a. credit to interest receivable for $100
b. credit to interest expense for $100
c. debit to interest expense for $100
d. debit to interest payable for $100
4. Company received an advance payment for $3,600. ¼ of this amount was earned to date.
a. debit to unearned revenue for $2,700
b. debit to earned revenue for $900
c. credit to earned revenue for $900
d. credit unearned revenue for $2,700
5. The supplies amount showed a beginning balance of $200. During the year, $800 of new supplies were purchased and $300 is left on hand at the end of the period.
a. debit to supplies expense for $300
b. credit to supplies expense for $800
c. debit to supplies expense for $700
d. credit to supplies for $300
II. The following represent items that pertain to the classified balance sheet. Choose the letter that best describes in which classification the account item would best be listed in.
6. Wages payable would be recorded in which balance sheet section.
a. current liabilities
b. current liabilities
c. noncurrent assets
d. noncurrent liabilities
7. Trademarks would be classified as.
a. noncurrent assets
b. current assets
c. current assets
d. noncurrent assets
8. The purpose of the classified balance sheet is to help evaluate:
a. solvency
b. going concern
c. liquidity
d. return on investment
