1. A company forgot to record accrued and unpaid employee wages of $350,000 at period-end. This oversight would
a. Understate net income by $350,000.
b. Overstate net income by $350,000.
c. Have no effect on net income.
d. Overstate assets by $350,000.
e. Understate assets by $350,000.
2. Prior to recording adjusting entries, the Supplies account has a $450 debit balance. A physical count of supplies shows $125 of unused supplies still available. The required adjusting entry is:
a. Debit Supplies $125; Credit Supplies Expense $125.
b. Debit Supplies $325; Credit Supplies Expense $325.
c. Debit Supplies Expense $325; Credit Supplies $325.
d. Debit Supplies Expense $325; Credit Supplies $125.
e. Debit Supplies Expense $125; Credit Supplies $125.
3. On May 1, 2011, a two-year insurance policy was purchased for $24,000 with coverage to begin immediately. What is the amount of insurance expense that appears on the company’s income statement for the year ended December 31, 2011?
a. $4,000
b. $8,000
c. $12,000
d. $20,000
e. $24,000
4. On November 1, 2011, Stockton Co. receives $3,600 cash from Hans Co. for consulting services to be provided evenly over the period November 1, 2011, to April 30, 2012—at which time Stockton credited $3,600 to Unearned Consulting Fees. The adjusting entry on December 31, 2011 (Stockton’s year-end) would include a
a. Debit to Unearned Consulting Fees for $1,200.
b. Debit to Unearned Consulting Fees for $2,400.
c. Credit to Consulting Fees Earned for $2,400.
d. Debit to Consulting Fees Earned for $1,200.
e. Credit to Cash for $3,600.
5. If a company had $15,000 in net income for the year, and its sales were $300,000 for the same year, what is its profit margin?
a. 20%
b. 2,000%
c. $285,000
d. $315,000
e. 5%