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Question 23

If a resource has been consumed but a bill has not been received at the end of the accounting period, then

		an expense should be recorded when the bill is received.
		an expense should be recorded when the cash is paid out.
		an adjusting entry should be made recognizing the expense.
		it is optional whether to record the expense before the bill is received.

3 points

Question 24

Prepaid expenses are

		paid and recorded in an asset account before they are used or consumed.
		paid and recorded in an asset account after they are used or consumed.
		incurred but not yet paid or recorded.
		incurred and already paid or recorded.

3 points

Question 25

If a business has received cash in advance of services performed and credits a liability account, the adjusting entry needed after the services are performed will be

		debit Unearned Service Revenue and credit Cash.
		debit Unearned Service Revenue and credit Service Revenue.
		debit Unearned Service Revenue and credit Prepaid Expense.
		debit Unearned Service Revenue and credit Accounts Receivable.

3 points

Question 26

The preparation of adjusting entries is

		straight forward because the accounts that need adjustment will be out of balance.
		often an involved process requiring the skills of a professional.
		only required for accounts that do not have a normal balance.
		optional when financial statements are prepared.

3 points

Question 27

On January 1 of the current year, Doolittle Company purchased furniture for $7,560. The company expects to use the furniture for 3 years. The asset has no salvage value. The book value of the furniture at December 31of this year is

		$0.
		$2,520.
		$5,040.
		$7,560.

3 points

Question 28

Husker Du Supplies Inc. purchased a 12-month insurance policy on March 1 of the current year for $1,800. At March 31, the adjusting journal entry to record expiration of this asset will include a

		debit to Prepaid Insurance and a credit to Cash for $1,800.
		debit to Prepaid Insurance and a credit to Insurance Expense for $200.
		debit to Insurance Expense and a credit to Prepaid Insurance for $150.
		debit to Insurance Expense and a credit to Cash for $150.

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