Generally Accepted Accounting Principles and Office Supplies

1..
A company earned $3,960 in net income for October. Its net sales for October were $22,000. Its profit margin is:

1.8%.

18%.

180%.

556%.

$18,040

2.

On June 30 of the current calendar year, Apricot Co. paid $8,200 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry on December 31 for Apricot would include:

A debit to an expense for $6,150.

A debit to a prepaid expense for $6,150.

A debit to an expense for $2,050.

A debit to a prepaid expense for $2,050.

A credit to a liability for $2,050.

3.

Prior to recording adjusting entries, the Office Supplies account had a $350 debit balance. A physical count of the supplies showed $114 of unused supplies available. The required adjusting entry is:

Debit Office Supplies $114 and credit Office Supplies Expense $114.

Debit Office Supplies Expense $114 and credit Office Supplies $114.

Debit Office Supplies Expense $236 and credit Office Supplies $236.

Debit Office Supplies $236 and credit Office Supplies Expense $236.

Debit Office Supplies $114 and credit Supplies Expense $236.

4.
On April 1, a company paid the $2,052 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31? (Round your answer to 1 decimal places.)

$2,052.00.

$684.00.

$1,539.00.

$513.00.

$57.00.

5.

A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year?

$75.

$125.

$175.

$250.

$325.

6.

On January 1 a company purchased a five-year insurance