PRINCIPLES OF ACCOUNTING I
FUN QUIZ THREE: CHAPTER THREE
I. Multiple Choice. Select the best lettered answer for the number question or best lettered completion for the numbered partial statement. Record the letter next to the number.
1. ___C__ A company spends $15 million dollars for an office building. Over what period should the cost be written off?
a. When the $15 million is expended in cash.
b. All in the first year.
c. Over the useful life of the building.
d. After $15 million in revenue is recognized.
2. __B___ Crue Company had the following transactions during 2014:
Sales of $4,800 on account
Collected $2,000 for services to be performed in 2015
Paid $1,625 cash in salaries
Purchased airline tickets for $250 in December for a trip to take place in 2015
What is Crue’s 2014 net income using accrual accounting?
3. __D___ A law firm received $3,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause
a. expenses to be overstated.
b. net income to be overstated.
c. liabilities to be understated.
d. revenues to be understated.
4. __C___ Lake of Fire Company purchased supplies costing $7,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $1,900 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be
a. Debit Supplies Expense, $1,900; Credit Supplies, $1,900.
b. Debit Supplies, $5,100; Credit Supplies Expense, $5,100.
c. Debit Supplies Expense, $5,100; Credit Supplies, $5,100.
d. Debit Supplies, $1,900; Credit Supplies Expense, $1,900.
ACCT220 Fun Quiz Three: Chapter Three: Continued: Page 2 of 3
5. __D___ What is the proper