Malone Co. recorded a payment of cash on account to a creditor by debiting Accou

Question

Malone Co. recorded a payment of cash on account to a creditor by debiting Accounts Receivable and crediting Cash. The correcting entry is

debit Accounts Payable and credit Accounts Receivable.

Some other correcting entry is necessary.

debit Cash and credit Accounts Receivable.

debit Accounts Payable and credit Cash.

Assuming that there is a net loss for the period, debits equal credits in all but which section of the worksheet?

Adjusted trial balance columns

Income statement columns

Adjustments columns

Trial balance columns

For which of the following types of adjusting entries are liabilities understated and expenses understated before the adjusting entry is made?

Unearned Revenues

Prepaid Expenses

Accrued Expenses

Accrued Revenues

A law firm received $2,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Legal Fees. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause

liabilities to be understated.

expenses to be overstated.

net income to be overstated.

revenues to be understated

An accrued revenue account represents revenue that has

not been earned or received.

been received but not earned.

been earned but not received.

been earned and received.

What type of relationship exists with a prepaid expense adjusting entry?

Expense/liability

Asset/revenue

Asset/expense

Liability/revenue

The book value of a depreciable asset is defined as the asset's

replacement cost.

cost less accumulated depreciation.

current market value.

cost.

Greer Company signed a $9,000 six-month note payable on October 1 that bears interest at a rate of 6%. The total interest to be accrued on this note at December 31 is

$90.

$135.

$30.

$360.

debit Accounts Payable and credit Accounts Receivable.

Some other correcting entry is necessary.

debit Cash and credit Accounts Receivable.

debit Accounts Payable and credit Cash.

Explanation / Answer

1. A, debit Accounts Payable and credit account receivables.

2.B. income statements column

3. c. Accrued expenses

4. D revenue to be understated

5.B.been earned but not received

6. C. Asset ,expense

7. B.cost less accumulated depreciation

8.B. $135 ( 9000×6%×3/12)

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