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1. T.M Company forgot to record depreciation of $15,000 for the period. This would cause:

a) all of these statements are correct

b) assets to be overstated by $15,000 for the period

c) expenses to be understated by $15,000 for the period

d) net income to be overstated by $15,000 for the period

2. K.S Company forgot to record supplies used during the period of $15,000. This would cause:

a) net income to be overstated by $15,000

b) a freak-out!

c) net income to be understated by $15,000 for the period

d) liabilities to be understated by $15,000 for the period

3. The Retained Earnings account has a credit balance of $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800 and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

a) $23,400

b) $15,400

c) $32,400

d) $17,000

4. The Retained Earnings account has a credit balance of $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800. dividends are $9,000, and common stock is $30,000. What is the ending balance in the Retained Earnings account after all closing entries are made?

a) $53,400

b) $32,400

c) $17,000

d) $23,400

5. Copa Company had the following transactions during the year:

• Completed sales amounting to $80,800, of which $65,000 was collected in cash.
• Collected $10,000 cash for services to be provided next year.
• Incurred expenses of $55,000 of which $35,000 was paid in cash.
• Purchased an insurance policy for $6,000 cash to begin next year

If Copa Company uses the cash-basis of accounting, their net income for the year is:

a) $25,000

b) $34,000

c) $30,000

d) $35,000

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