As prepaid expenses expire with the passage of time, the correct adjusting entry will be a:

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Question 1.1. As prepaid expenses expire with the passage of time, the correct adjusting entry will be a:

debit to an asset account and a credit to an expense account.

debit to an expense account and a credit to an asset account.

debit to an asset account and a credit to an asset account.

debit to an expense account and a credit to an expense account.

Question 2.2. An investment by the stockholders in a business increases

assets and stockholders' equity.

assets and liabilities.

liabilities and stockholders' equity.

assets only.

Question 3.3. Which of the following describes the classification and normal balance of the Retained Earnings account?

Asset, debit

Stockholders' equity, credit

Revenues, credit

Expense, debit

Question 4.4. If total liabilities decreased by $4,000, then

stockholders' equity must have decreased by $4,000.

assets must have decreased by $4,000, or stockholders' equity must have increased by $4,000.

assets and stockholders' equity each increased by $2,000.

assets must have increased by $4,000.

Question 5.5. If expenses are paid in cash, then

assets will increase.

liabilities will decrease.

stockholders' equity will increase.

assets will decrease.

Question 6.6. The Harris Company purchased a computer for $3,000 on December 1. It is estimated that annual depreciation on the computer will be $600. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

debit Depreciation Expense, $600; credit Accumulated Depreciation, $600.

debit Depreciation Expense, $50; credit Accumulated Depreciation, $50.

debit Depreciation Expense, $2,400; credit Accumulated Depreciation, $2,400.

debit Office Equipment, $3,000; credit Accumulated Depreciation, $3,000.

Question 7.7. All of the following are required steps in the accounting cycle except:

journalizing and posting closing entries.

preparing an adjusted trial balance.

preparing a post-closing trial balance.

preparing a work sheet.

Question 8.8. An adjusting entry:

affects two balance sheet accounts.

affects two income statement accounts.

affects a balance sheet account and an income statement account.

is always a compound entry.

Question 9.9. Assets normally show

credit balances.

debit balances.

debit and credit balances.

debit or credit balances.

Question 10.10. Given the following adjusted trial balance:

Debit Credit

Cash $781

Accounts receivable1,049

Inventory1,562

Prepaid rent 43

Property, plant & equipment150

Accumulated depreciation26

Accounts payable41

Unearned revenue61

Common stock103

Retained earnings3,305

Service revenue134

Interest revenue28

Salary expense 80

Travel expense 33 _____

Total $3,698 $3,698

After closing entries have been posted, the balance in retained earnings will be:

$3,256

$3,170

$3,440

$3,354