Question 1

Luminous Electrical,Inc.performed services of $8,000 on January 24 and invoiced the customer.Luminous received the $8,000 on January 31.Provide the journal entry on January 24 when services were performed.(Ignore explanation. )

Accepted Answer

The answer of Luminous Electrical,Inc.performed services of $8,000 on January...

Question 2

In the case of deferred revenue,the cash is received first,and the revenue is earned later.

Accepted Answer

Deferred revenue refers to the situation where a company receives cash from a customer but has not yet earned the revenue. This is common in industries such as software or subscription services where customers pay upfront for a product or service that will be delivered over a period of time. As the revenue is not yet earned, it is recorded as a liability on the company's balance sheet until the product or service is delivered, at which point it can be recognized as revenue.

Question 3

Unearned Revenue is classified as a(n)________ account.
A)liability
B)asset
C)revenue
D)equity

Accepted Answer

Unearned Revenue is money received from a customer for future goods or services that have not yet been rendered. Therefore, it is considered a liability because the company has an obligation to deliver those goods or services in the future.

Question 4

Bright Lights Electrical,Inc.performed services of $8,000 on January 24 and invoiced the customer.Bright Lights received the $8,000 on January 31.Provide the journal entry on January 31 when the cash was received.(Ignore explanation. )

Accepted Answer

The answer of Bright Lights Electrical,Inc.performed services of $8,000 on...

Question 5

On January 1,Unearned Revenue of Grossman,Inc.had a beginning balance of $1,400.During January,the company earned $700 of the deferred revenue.The company also collected $6,000 from a new customer for services to be performed the following month.At the end of January,the Unearned Revenue account should have a balance of $6,000.

Accepted Answer

Unearned Revenue = $1,400 - $700 + $6,000 = $6,700

Question 6

Dalton Delivery Service is hired on October 31,2016 to perform services,beginning on November 1,2016.The delivery services will be performed for six months at a rate of $3,000 per month.Dalton's fiscal year ends on December 31.What amount of service revenue should be recorded as an adjusting entry on December 31,2016?
A)$3,000
B)0
C)$6,000
D)$9,000

Accepted Answer

According to the revenue recognition principle, revenue is recognized when the services are rendered, which means that Dalton Delivery Service should recognize $3,000 of revenue for the month of November 2016. However, since the services are being performed over a period of six months and part of the services have been performed in December 2016, Dalton should recognize an additional $3,000 for the month of December 2016, bringing the total amount of service revenue to $6,000. Therefore, the adjusting entry for service revenue on December 31, 2016, should be $6,000.

Question 7

On January 1,2015,the Accounts Receivable of Linda,Inc.had a debit balance of $180,000.During January,the company provided services for $700,000 on account.The company collected $230,000 from its customers on account in January.What was the ending balance in the Accounts Receivable account at the end of January?
A)$470,000
B)$880,000
C)$650,000
D)$700,000

Accepted Answer

Ending balance as of January 31,2015,in Accounts Receivable = Opening balance + Debits - Credits
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Question 8

Revenue that has been earned but not yet collected in cash is called a(n)________.
A)accrued revenue
B)deferred expense
C)deferred revenue
D)accrued expense

Accepted Answer

Accrued revenue refers to revenue that has been earned by a company but has not yet been collected. This can happen when a company provides goods or services to a customer but has not yet received payment. Accrued revenue is recognized on the income statement when it is earned, even though it has not yet been received in cash.

Question 9

Healthy Living,a diet magazine,collected $240,000 in subscription revenue on May 31.Each subscriber will receive an issue of the magazine in each of the next 12 months,beginning with the June issue.The company uses the accrual method of accounting.What is the amount of Subscription Revenue that has been earned by the end of December?
A)$100,000
B)$180,000
C)$240,000
D)$140,000

Accepted Answer

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Question 10

The advance cash receipts of future revenues are called ________.
A)accrued revenues
B)deferred expenses
C)deferred revenues
D)accrued expenses

Accepted Answer

Deferred revenues refer to the advance cash receipts of future revenues, where a company receives payment for goods or services that it has not yet provided. This liability is recognized as revenue when the goods or services are provided to the customer. Option A, accrued revenues, refers to revenue that has been earned but not yet received, while option B, deferred expenses, refers to expenses that have been paid in advance but have not yet been incurred. Option D, accrued expenses, refers to expenses that have been incurred but have not yet been paid.

Question 11

An adjusting entry that debits Accounts Receivable is an example of a(n)________.
A)deferred expense
B)accrued revenue
C)accrued expense
D)deferred revenue

Accepted Answer

Accrued revenue is revenue that has been earned but not yet received or recorded, so an adjusting entry that debits Accounts Receivable (an asset account representing amounts owed to the company by customers) is an example of accrued revenue.

Question 12

Unearned revenue is recorded when ________.
A)revenue will be both collected and earned in the future
B)the business has collected cash,but not yet earned the revenue
C)revenue has been collected and earned during the same accounting period
D)the business has earned,but not collected,cash for the revenue

Accepted Answer

Unearned revenue is a liability on the balance sheet because the business has collected cash but has not yet earned the revenue. This is because the earnings process has not been completed and the goods or services still need to be provided to the customer. Once the revenue is earned, it is then recognized as revenue on the income statement.

Question 13

The accounting records of Marcus Service Company include the following selected,unadjusted balances at June 30: Accounts Receivable,$2,700; Office Supplies,$1,800; Prepaid Rent,$3,600; Equipment,$15,000; Accumulated Depreciation - Equipment,$1,800; Salaries Payable,$0; Unearned Revenue,$2,400; Office Supplies Expense,$2,800; Rent Expense,$0; Salaries Expense,$15,000; Service Revenue,$40,500.
The following data developed for adjusting entries are as follows:
a.Service revenue accrued,$1,400
b.Unearned Revenue that has been earned,$800
c.Office Supplies on hand,$700
d.Salaries owed to employees,$1,800
e.One month of prepaid rent has expired,$1,200
f.Depreciation on equipment,$1,500
Journalize the adjusting entries.Omit explanations.

Accepted Answer

The answer of The accounting records of Marcus Service Company...

Question 14

Get in Shape,a healthy living magazine,collected $528,000 in subscription revenue on May 31.Each subscriber will receive an issue of the magazine in each of the next 12 months,beginning with the June issue.The company uses the accrual method of accounting.What is the balance in the Unearned Revenue account as of December 31?
A)$220,000
B)$308,000
C)$528,000
D)$396,000

Accepted Answer

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Question 15

In the case of deferred revenue,the adjusting entry at the end of the period includes a credit to Service Revenue.Assume the deferred revenue is initially recorded as a liability.

Accepted Answer

When a company records deferred revenue as a liability, the adjusting entry at the end of the period will include a credit to Service Revenue to recognize the revenue that has been earned during the period. This reduces the liability and increases the revenue on the income statement.

Question 16

In the case of deferred revenue,the adjusting entry at the end of the period includes a debit to Service Revenue.Assume the deferred revenue is initially recorded as a liability.

Accepted Answer

Service Revenue is credited.

Question 17

Techno Technical Services is working on a six-month job for a client,starting on February 1.It will collect $24,000 from its customer when the job is finished but the revenue is earned evenly over the six months.On March 31,before adjusting entries are made,Techno's Accounts Receivable account had a debit balance of $3,000.After the March 31 monthly adjusting entry has been made,what will be the balance in Accounts Receivable?
A)Debit balance of $4,000
B)Credit balance of $20,000
C)Debit balance of $7,000
D)Debit balance of $24,000

Accepted Answer

11ea86d6_825b_0db6_92b6_05dd59b38833_TB2804_00 Add Accounts Receivable of new job on March 31
 11ea86d6_825b_0db7_92b6_c1392cb1dab2_TB2804_00

Question 18

Allen Company is hired on December 15,2016 to perform services,beginning on December 16,2016.Under this agreement,Allen will earn $4,500 monthly and receive payment on January 15,2017.What amount of service revenue should be recorded for the year ending December 31,2016?
A)0
B)$2,250
C)$4,500
D)There is not enough information to answer this.

Accepted Answer

Allen has earned revenue from December 16 - December 31,2016.$4,500 / 2 = $2,250

Question 19

The liability created when a business collects cash from its customers before completing a service or delivering a product is called ________.
A)accrued revenue
B)accrued expense
C)deferred revenue
D)deferred expense

Accepted Answer

The liability created when a business collects cash from its customers before completing a service or delivering a product is called deferred revenue. This is because the revenue has been deferred until the business completes its service or delivers its product, at which point the revenue can be recognized as earned. Accrued revenue refers to revenue that has been earned but not yet received, while accrued expense refers to expenses that have been incurred but not yet paid. Deferred expense refers to expenses that have been paid in advance but have not yet been used up or expensed.

Question 20

Pluto,Inc.sells tickets in advance for its weekly productions and records the proceeds as Unearned Revenue.At the end of each month,the company makes an adjusting entry to account for the tickets used during the month (ticket revenue. )On March 1,the Unearned Revenue account had a credit balance of $5,000.During March,it sold 600 tickets at $40 each,and 550 tickets were used during the month.What is the balance in Unearned Revenue at the end of March?
A)credit balance of $7,000
B)debit balance of $5,000
C)credit balance of $5,000
D)debit balance of $7,000

Accepted Answer

11ea86d6_825d_309e_92b6_e7117d597e06_TB2804_00 Add value of tickets unused on March 31
 11ea86d6_825d_309f_92b6_a3527e722c65_TB2804_00

Quiz 3: The Adjusting Process

Luminous Electrical,Inc.performed services of $8,000 on January 24 and invoiced the customer.Luminous received the $8,000 on January 31.Provide the journal entry on January 24 when services were performed.(Ignore explanation. )

In the case of deferred revenue,the cash is received first,and the revenue is earned later.

Unearned Revenue is classified as a(n) ________ account.

Bright Lights Electrical,Inc.performed services of $8,000 on January 24 and invoiced the customer.Bright Lights received the $8,000 on January 31.Provide the journal entry on January 31 when the cash was received.(Ignore explanation. )

Revenue that has been earned but not yet collected in cash is called a(n) ________.

The advance cash receipts of future revenues are called ________.

An adjusting entry that debits Accounts Receivable is an example of a(n) ________.

Unearned revenue is recorded when ________.

In the case of deferred revenue,the adjusting entry at the end of the period includes a credit to Service Revenue.Assume the deferred revenue is initially recorded as a liability.

In the case of deferred revenue,the adjusting entry at the end of the period includes a debit to Service Revenue.Assume the deferred revenue is initially recorded as a liability.

Allen Company is hired on December 15,2016 to perform services,beginning on December 16,2016.Under this agreement,Allen will earn $4,500 monthly and receive payment on January 15,2017.What amount of service revenue should be recorded for the year ending December 31,2016?

The liability created when a business collects cash from its customers before completing a service or delivering a product is called ________.