Permanent accounts would not include:
A) Interest Expense.
B) Salaries Payable.
C) Prepaid Rent.
D) Deferred Revenues.
Answer: A
Saturday, October 10, 2020
How many of the above accounts are permanent?
The following table contains financial information for Fisher Inc. before closing entries:
Cash $ 23,000
Common Stock 34,000
Supplies 4,000
Advertising Expense 2,000
Accounts Payable 20,000
Service Revenue 30,000
Salaries Expense 3,000
Prepaid Rent 4,000
Dividends 3,000
Equipment 45,000
How many of the above accounts are permanent?
A) Three.
B) Four.
C) Five.
D) Six.
Answer: D
Which of the following is true concerning temporary and permanent accounts?
Which of the following is true concerning temporary and permanent accounts?
A) Cash is a temporary account.
B) Permanent accounts represent activity over the entire life of the company.
C) Permanent accounts must be closed at the end of every reporting period.
D) Temporary accounts represent activity over the previous three years.
Answer: B
Which of the following is a permanent account?
Which of the following is a permanent account?
A) Dividends.
B) Service Revenue.
C) Advertising Expense.
D) Retained Earnings.
Answer: D
Under accrual-basis accounting, what is the appropriate day to record the expenses related to the gasoline?
Consider the following events for Betterment Incorporated:
January 1 Betterment purchases gasoline for $200 on account.
January 7 Betterment advertises lawn mowing services for $100 per lawn.
January 9 Betterment signs up 8 customers who pay a total of $800 cash.
January 12 Betterment mows the lawns of the 8 customers and all gasoline purchased on January 1 is used.
January 13 Betterment pays for the gasoline purchased on January 1.
Under accrual-basis accounting, what is the appropriate day to record the expenses related to the gasoline?
A) January 1.
B) January 7.
C) January 12.
D) January 13.
Answer: C
Assuming that Sooner Company uses cash-basis accounting, when would the company record the expense related to the supplies?
The following information pertains to Sooner Company:
May 1 Customer ordered an installation service to be done by Sooner Company on May 15.
May 2 Customer paid cash for the installation job to be done on May 15.
May 8 The Sooner Company purchased installation supplies on account for the job.
May 15 The installation job was started and completed.
May 20 Amount owed for supplies purchased on May 8 is paid.
Assuming that Sooner Company uses cash-basis accounting, when would the company record the expense related to the supplies?
A) May 2.
B) May 8.
C) May 15.
D) May 20.
Answer: D
On July 1, 2021, Rents-A-Lot Inc. paid $72,000 for 36 months of advance rent on its warehouse. What would be the amount of rent expense in the 2022 financial statements for Rents-A-Lot under both cash-basis and accrual-basis accounting?
On July 1, 2021, Rents-A-Lot Inc. paid $72,000 for 36 months of advance rent on its warehouse. What would be the amount of rent expense in the 2022 financial statements for Rents-A-Lot under both cash-basis and accrual-basis accounting?
A) Cash-basis = $24,000; Accrual-basis = $24,000.
B) Cash-basis = $72,000; Accrual-basis = $12,000.
C) Cash-basis = $0; Accrual-basis = $24,000.
D) Cash-basis = $0; Accrual-basis = $12,000.
Answer: C
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