Which of the following statements is true

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A company has an asset account, Prepaid Insurance, with a balance of $3,750 at the beginning of the month. The company used $980 of insurance during the month. Which of the following statements is true?

 

Retained earnings and stockholders' equity should decrease because of this transaction.

 

Retained earnings and stockholders' equity should be unchanged by this transaction.

 

The company should credit Insurance Expenses for $980 and debit Prepaid Insurance for $980.

 

The company should credit Accrued Liabilities for $980 and debit Insurance Expenses for $980.

 

Purrfect Pets had $6,000 of supplies at the end of October. During November, the company bought $2,000 of supplies. At the end of November, the company had $1,000 of supplies remaining. Which of the following statements is not true?

 

An expense should be debited for $7,000 in November.

 

During November, the company used $7,000 of supplies.

 

The carrying value of supplies on November 30 should be $1,000.

 

An asset should be debited for $1,000 in November.

 

A company reported the following amounts of wages payable at the beginning and the end of the year 2010:

Wages payable, January 1, 2010 $820
Wages payable, December 31, 2010 $2,640
The income statement for 2010 reported Wages Expense of $57,600.
How much cash was paid for wages during 2010?

 

$57,600

 

$54,140

 

$54,960

 

 

 

Reference no: EM13492745

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