After all account balances have been transferred from the Adjusted Trial Balance

Question

After all account balances have been transferred from the Adjusted Trial Balance section of the worksheet to the financial statement sections, the Income Statement section of the worksheet includes the following totals. The Credit column total is $120,000 and the total of the Debit column is $80,000. The Income Statement section of the worksheet: Multiple Choice  

is now complete.   

would be completed by entering $40,000 in the Credit column with the words “Net Income” in the Account Name column.   

would be completed by entering $40,000 in the Debit column with the words “Net Income” in the Account Name column.

The book value of long-term assets is reported on: Multiple Choice

the balance sheet.

the worksheet.

the income statement.

the statement of owner's equity.

The adjusting entry to account for use of prepaid insurance consists of: Multiple Choice

a debit to Insurance Expense and a credit to Cash.

a debit to Insurance Expense and a credit to Accumulated Depreciation.

a debit to Insurance Expense and a credit to Prepaid Insurance.

a debit to Prepaid Insurance and a credit to Accumulated Depreciation.

Explanation / Answer

1. Debits and credits in an income statement is always equal in a complete income statement. So, if the total of credits in income statement is $120,000 and debits is $80,000

Then the income statement would be complete by entering $40,000 in the debit column with the words "Net Income" in the Account Name column.

hence, the correct answer is

(b) would be completed by entering $40,000 in the Debit column with the words “Net Income” in the Account Name column.

2. The assets, Liabilities and equity are reported in Balance Sheet.

Hence, the long term assets shall be reported in the Balance Sheet.

Hence, the correct answer is (a) Balance sheet.

3. Whenever thr prepaid insurance is paid, the journal is - debit prepaid insurance and credit cash.

Then, at the year end, the adjusting entry for insurance expense is -

Debit to insurance expense and credit to prepaid insurance

hence, the correct answer is (c) a debit to Insurance Expense and a credit to Prepaid Insurance.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.