Enter the letter corresponding to the response that best completes each of the following statements or questions.

1			The journal entry to record the borrowing of cash and the signing of a note payable involves:
			A)	A debit to note payable and a credit to cash.
			B)	Debits to cash and interest expense and a credit to cash.
			C)	A debit to cash and a credit to note payable.
			D)	None of the above.
2			Which of the following is most likely an accrued liability?
			A)	Depreciation.
			B)	Interest.
			C)	Cost of goods sold.
			D)	Office supplies.
3			A prepaid expense is an expense:
			A)	Incurred before the cash is paid.
			B)	Incurred and paid.
			C)	Paid but not yet incurred.
			D)	None of the above.
4			The Esquire Clothing Company borrowed a sum of cash on October 1, 2006, and signed a note payable. The annual interest rate was 12% and the company's year 2006 income statement reported interest expense of $1,260 related to this note. What was the amount borrowed?
			A)	$22,000
			B)	$31,500
			C)	$10,500
			D)	$42,000
5			Which of the following adjusting entries creates a decrease in assets?
			A)	Recording the earned portion of revenue collected in advance.
			B)	Recording depreciation expense.
			C)	Accruing unrecorded salaries expense.
			D)	Accruing unrecorded interest revenue.
6			Which of the following adjusting entries creates an increase in liabilities?
			A)	Accruing unrecorded interest expense.
			B)	Recording the amount of expired prepaid insurance.
			C)	Accruing unrecorded interest revenue.
			D)	Recording depreciation expense.
7			If the required adjusting entry for depreciation expense is omitted:
			A)	Assets will be overstated and income understated.
			B)	Assets will be overstated and income overstated.
			C)	Assets will be understated and income overstated.
			D)	Assets will be understated and income understated.
8			The accumulated depreciation account is a contra (valuation) account to:
			A)	Owner's equity account.
			B)	Expense account.
			C)	Asset account.
			D)	Liability account.
9			The correct amount of prepaid insurance shown on a company's December 31, 2006, balance sheet was $900. On July 1, 2007, the company paid an additional insurance premium of $600. In the December 31, 2007, balance sheet, the amount of prepaid insurance was correctly shown as $500. The amount of insurance expense that should appear in the company's 2007 income statement is:
			A)	$1,500.
			B)	$1,400.
			C)	$1,000.
			D)	$600.
10			The Wazoo Times Newspaper Company showed a $11,200 liability on its 2006 balance sheet for subscription revenue received in advance. During 2007, $62,000 was received from customers for subscriptions and the 2007 income statement reported subscription revenue of $63,700. What is the liability amount for subscription revenue received in advance that will appear in the 2007 balance sheet?
			A)	$0
			B)	$11,200
			C)	$12,900
			D)	$9,500
11			On a classified balance sheet, allowance for uncollectible accounts would be classified among:
			A)	Noncurrent assets.
			B)	Current liabilities.
			C)	Current assets.
			D)	Noncurrent liabilities.
12			On a statement of cash flows, cash received from the issuance of common stock would be classified as a:
			A)	Financing activity.
			B)	Investing activity.
			C)	Operating activity.
			D)	Non-cash activity.
13			The closing process involves:
			A)	Recording year-end adjusting entries.
			B)	Transferring revenue and expense balances to retained earnings.
			C)	Closing out the permanent account balances.
			D)	None of the above.
14			If revenues exceed expenses for the accounting period, the income summary account:
			A)	Will have a debit balance after closing.
			B)	Will have a debit balance prior to closing.
			C)	Will have a credit balance prior to closing.
			D)	None of the above.