Question 1

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

Accepted Answer

Unearned Revenue represents payments received in advance for goods or services that haven't been provided yet. These payments are a liability to the company, as it owes the customer goods or services in the future. Hence, it is classified as a liability account.

Question 2

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 $3,200 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)$3,200
B)0
C)$6,400
D)$9,600

Accepted Answer

B)Dalton has earned revenue for November and December 2016 - $3,200 × 2 = $6,400

Question 3

On January 1,Unearned Revenue of Grossman Company had a beginning balance of $1,400.During January,the company earned $700 of the deferred revenue.The company also collected $4,000 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 $4,000.

Accepted Answer

Unearned Revenue = $1,400 - $700 + $4,000 = $4,700

Question 4

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

Accepted Answer

Deferred revenue refers to a situation where cash is received from a customer for goods or services that are yet to be delivered. The revenue is recognized and recorded in the books only when the goods or services are provided as per the agreed terms. Hence, cash is received first, and revenue is earned later.

Question 5

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 deferred revenue is initially recorded as a liability, the adjusting entry at the end of the period will transfer the portion of revenue earned to the Service Revenue account, which will result in a credit to the Service Revenue account.

Question 6

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? (Round any intermediate calculations to two decimal places,and your final answer to the nearest whole number. )
A)$100,000
B)$180,000
C)$240,000
D)$140,000

Accepted Answer

D) 11ea8a42_4f1e_1f24_8b44_1bffb78f2bc1_TB5024_00

Question 7

Luminous Electrical 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 performed services of $8,000 on...

Question 8

On January 1,2015,the Accounts Receivable of Linda Company had a debit balance of $150,000.During January,the company provided services for $600,000 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)$370,000
B)$750,000
C)$520,000
D)$600,000

Accepted Answer

C)Ending balance as of January 31,2015,in 11ea8a42_4f1d_a9ec_8b44_0305511032e7_TB5024_00 Debits - Credits 11ea8a42_4f1d_a9ed_8b44_0b7b97706dc8_TB5024_00

Question 9

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 recorded when the business has collected cash, but not yet earned the revenue. This is because the revenue will be earned in the future, at which time it will be recognized as earned revenue.

Question 10

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 11

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 are the advance cash receipts of future revenues. This is because the revenue has not yet been earned, and the company has received the cash in advance. The other options, accrued revenues and expenses, refer to revenues or expenses that have been earned or incurred but have not yet been recorded in the accounting system. Deferred expenses refer to payments made for goods or services that have not yet been used or consumed.

Question 12

Techno Technical Services is working on a six-month job for a client,starting on February 1.It will collect $30,000 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 $6,000.After the March 31 monthly adjusting entry has been made,what will be the balance in Accounts Receivable?
A)Debit balance of $5,000
B)Credit balance of $25,000
C)Debit balance of $11,000
D)Debit balance of $30,000

Accepted Answer

C)
 11ea8a42_4f1d_d0fe_8b44_878847edf18d_TB5024_00 Add Accounts Receivable of new job on March 31
 11ea8a42_4f1d_d0ff_8b44_2b931f59f473_TB5024_00

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

Pluto Promotions 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 $2,000.During March,it sold 300 tickets at $30 each,and 250 tickets were used during the month.What is the balance in Unearned Revenue at the end of March?
A)credit balance of $3,500
B)debit balance of $2,000
C)credit balance of $2,000
D)debit balance of $3,500

Accepted Answer

A)
 11ea8a42_4f1e_6d46_8b44_abf881b15b8b_TB5024_00 Add value of tickets unused on March 31
 11ea8a42_4f1e_6d47_8b44_9b3cf2348e6c_TB5024_00

Question 15

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 but has not yet been collected in cash. It is recorded as a receivable on the balance sheet until it is collected. Deferred expense refers to an expense that has been paid in advance and is allocated over a period of time. Deferred revenue refers to revenue that has been received in advance but has not yet been earned. Accrued expense refers to an expense that has been incurred but has not yet been paid.

Question 16

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

A)
 11ea8a42_4f1e_4635_8b44_6b4d0db0081a_TB5024_00

Question 17

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

Deferred revenue refers to the money collected in advance by a business before it has fulfilled its obligation towards the customer. It is a liability because the business owes the customer the product or service they have paid for, and until that is provided, the revenue cannot be recognized as earned. Accrued revenue refers to revenue earned but not yet received, while accrued expense refers to expenses incurred but not yet paid. Deferred expense refers to expenses that have been paid but have not yet been used, such as prepaid rent or insurance.

Question 18

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

An adjusting entry that debits Accounts Receivable is an example of accrued revenue as it represents revenue that has been earned but not yet received.

Question 19

Bright Lights Electrical 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 performed services of $8,000...

Question 20

Allen Company is hired on December 15,2016 to perform services,beginning on December 16,2016.Under this agreement,Allen will earn $3,700 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)$1,850
C)$3,700
D)There is not enough information to answer this.

Accepted Answer

B)Allen has earned revenue from December 16 - December 31,2016.$3,700 / 2 = $1,850

Quiz 3: The Adjusting Process

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

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

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.

Luminous Electrical 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. )

Unearned revenue is recorded when ________.

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.

The advance cash receipts of future revenues are called ________.

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

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

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

Bright Lights Electrical 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. )

Allen Company is hired on December 15,2016 to perform services,beginning on December 16,2016.Under this agreement,Allen will earn $3,700 monthly and receive payment on January 15,2017.What amount of service revenue should be recorded for the year ending December 31,2016?