121. The net income reported on the income statement is $58,000.  However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300.  Net income, as corrected, is 
A. $56,700
B. $58,000
C. $55,800
D. $54,500

122. At the end of the fiscal year, the usual adjusting entry to Prepaid Insurance to record expired insurance was omitted.  Which of the following statements is true? 
A. Total assets at the end of the year will be understated.
B. Stockholders’ equity at the end of the year will be understated.
C. Net income for the year will be overstated.
D. Insurance Expense will be overstated.

123. At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted.  Which of the following statements is true? 
A. Total assets will be understated at the end of the current year.
B. The balance sheet and income statement will be misstated, but the retained earnings statement will be correct for the current year.
C. Net income will be overstated for the current year.
D. Total liabilities and total assets will be understated.

124. At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted.  Which of the following statements is true? 
A. Salary expense for the year was understated.
B. The total of the liabilities at the end of the year was overstated.
C. Net income for the year was understated.
D. Stockholders’ equity at the end of the year was understated.

125. The adjusting entry to adjust supplies was omitted at the end of the year.  This would effect  the  income statement by having   
A. expenses understated and therefore net income overstated
B. revenues understated and therefore net income understated
C. expenses understated and therefore net income understated
D. expenses overstated and therefore net income understated

126. Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the unadjusted trial balance? 
A. Fees Earned
B. Accounts Receivable
C. Unearned Fees
D. Depreciation Expense

127. Which of the accounting steps in the accounting process below would be completed last? 
A. preparing the adjusted trial balance
B. posting
C. preparing the financial statements
D. journalizing

128. When is the adjusted trial balance prepared? 
A. before adjusting journal entries are posted
B. after adjusting journal entries are posted
C. after the adjusting journal entries are journalized
D. before the adjusting journal entries are journalized

129. What is the purpose of the adjusted trial balance? 
A. to verify that all of the adjusting entries have been posted
B. to verify that the net income (loss) is correctly reported
C. to verify that no adjusting journal entry has been omitted
D. to verify the equality of the debit and credit balances

130. All of the following statements regarding vertical analysis are true except 
A. Vertical analysis may be prepared for several periods to analyze changes in relationships over time.
B. In a vertical analysis of a balance sheet, each asset item is stated as a percent of total assets.
C. In a vertical analysis of an income statement, each item is stated as a percent of total expenses. 
D. Major differences between a company’s vertical analysis and industry averages should be investigated.

131. Two income statements for PS Enterprises are shown below:
 

Prepare a vertical analysis of PS Enterprises’ income statements.  Has operating income increased or decreased as a percentage of revenue?
 
A. Yes, increased by 5%
B. Yes, increased by 111%
C. No, decreased by 5%.
D. None are correct.

132. For the year ending December 31, Orion, Inc. mistakenly omitted adjusting entries for $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired.  For the year ending December 31, what is the effect of these errors on revenues, expenses, and net income?
 
A. Revenues are overstated by $4,200.
B. Net income is overstated by $2,300.
C. Expenses are overstated by $6,500.
D. Expenses are understated by $3,500.

133. A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day.  The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a: 
A. debit to Salary Expense of $8,000.
B. debit to Salary Payable of $8,000
C. credit to Salary Expense of $16,000
D. credit to Salary Payable of $16,000

134. A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day.  The last pay day of December is Friday, December 27.  Assuming the next pay period begins on Monday, December 30 and the proper adjusting entry is journalized at the end of the fiscal period (December 31).  The entry for the payment of the payroll on Friday, January 10 includes a:
 
A. debit to Salary Expense of $16,000
B. debit to Salary Expense of $4,000
C. credit to Salary Payable of $16,000
D. credit to Salary Payable of $4,000