Question 1

Select the best situation 
prepaid expense (PE), revenue received in advance (RRA), accrued revenue (AR) or an accrued expense (AE).
-Legal fees of $1,000 were collected in advance. By year end 60 per cent were still unearned.
A) prepaid expense (PE)
B) revenue received in advance (RRA)
C)accrued revenue (AR)
D)an accrued expense (AE).

Accepted Answer

This situation is best described as revenue received in advance (RRA) because the legal fees were collected before the services were fully provided. At year end, 60% of the fees are still unearned, indicating that the revenue has been received but not yet earned, which is characteristic of RRA.

Question 2

Select the best situation 
prepaid expense (PE), revenue received in advance (RRA), accrued revenue (AR) or an accrued expense (AE).
-Prepaid insurance had a $500 balance prior to adjustment. By year end, 40 percent was still unexpired.
A) prepaid expense (PE)
B) revenue received in advance (RRA)
C)accrued revenue (AR)
D)an accrued expense (AE).

Accepted Answer

This situation describes a prepaid expense (PE) because it involves payment for insurance that has not yet been fully utilized or expired by the end of the accounting period. The fact that 40 percent is still unexpired indicates that it is a cost paid in advance for future benefit, which is the definition of a prepaid expense.

Question 3

Select the best situation 
prepaid expense (PE), revenue received in advance (RRA), accrued revenue (AR) or an accrued expense (AE).
-Unpaid salaries earned by year end but not yet paid or recorded amounted to $1,200.
A) prepaid expense (PE)
B) revenue received in advance (RRA)
C)accrued revenue (AR)
D)an accrued expense (AE).

Accepted Answer

Unpaid salaries earned by year end but not yet paid or recorded are considered an accrued expense (AE) because it represents an expense that has been incurred during a period but has not been paid or recorded by the end of that period.

Question 4

Match the statements with the appropriate terms :
-Office supplies on hand that will be used in the next period.
A) Prepaid expenses
B) Revenue received in advance
C) Accrued revenues
D) Accrued expenses

Accepted Answer

Office supplies on hand that will be used in the next period are considered prepaid expenses because the payment has been made for goods or services that will be utilized in a future accounting period.

Question 5

Match the statements with the appropriate terms :
-Rent revenue collected; not yet earned.
A) Prepaid expenses
B) Revenue received in advance
C) Accrued revenues
D) Accrued expenses

Accepted Answer

Revenue received in advance refers to money received by a business for services or products yet to be delivered or performed, which is exactly what "Rent revenue collected; not yet earned" describes.

Question 6

Match the statements with the appropriate terms :
-Interest earned; not yet collected.
A) Prepaid expenses
B) Revenue received in advance
C) Accrued revenues
D) Accrued expenses

Accepted Answer

Accrued revenues are amounts earned but not yet received in cash or recorded at the statement date, which fits the description of interest earned but not yet collected.

Question 7

Match the statements with the appropriate terms :
-An expense incurred; not yet paid or recorded.
A) Prepaid expenses
B) Revenue received in advance
C) Accrued revenues
D) Accrued expenses

Accepted Answer

Accrued expenses are expenses that have been incurred but have not yet been paid or recorded in the company's accounts. This matches the description given.

Question 8

Match the statements with the appropriate terms :
-A revenue earned; not yet collected or recorded.
A) Prepaid expenses
B) Revenue received in advance
C) Accrued revenues
D) Accrued expenses

Accepted Answer

Accrued revenues are revenues that have been earned but not yet collected or recorded, fitting the description provided.

Question 9

Match the statements with the appropriate terms :
-An expense not yet incurred; paid in advance.
A) Prepaid expenses
B) Revenue received in advance
C) Accrued revenues
D) Accrued expenses

Accepted Answer

Prepaid expenses are costs that have been paid but are not yet incurred, reflecting a payment made for goods or services before receiving the benefit from them.

Question 10

The Strikers, a semi-professional cricket team, prepare financial statements on a monthly basis. Their season begins in November, but in October the team engaged in the following transactions:
(a) Paid $150,000 to Cooma Council as advance rent for use of Cooma Stadium for the six-month period of 1 November to 30 April.
(b) Collected $300,000 cash from sales of season tickets for the team's 20 home games. This amount was credited to Revenue received in advance.
During the month of November, the Strikers played four home games and five away games.
Instructions: Prepare the adjusting entries required at 30 November for the transactions above.

Accepted Answer

The answer of The Strikers, a semi-professional cricket team, prepare...

Question 11

Prepare adjusting entries for the following transactions. Omit explanations.
1. Depreciation on equipment is $840 for the accounting period.
2. Interest of $175 is owing on a loan payable.
3. There was no beginning balance of supplies. During the period $400 of office supplies were purchased. At the end of the period $70 of supplies were on hand.
4. Prepaid rent had a $1,000 normal balance prior to adjustment. By year end $300 had expired.
5. Accrued salaries at the end of the period amounted to $900.

Accepted Answer

The answer of Prepare adjusting entries for the following transactions....

Question 12

Prepare adjusting entries for the following transactions. Omit explanations.
1. Unrecorded interest receivable that has accrued on investment bonds is $270.
2. Rates incurred but not paid or recorded amount to $700.
3. Legal service revenues of $3,000 were collected in advance. By year end $600 was earned.
4. Prepaid insurance had a $400 debit balance prior to adjustment. By year end, 40 percent was still unexpired.
5. Salaries incurred by year end but not yet paid or recorded amounted to $950.

Accepted Answer

The answer of Prepare adjusting entries for the following transactions....

Question 13

Prepare year-end adjustments for the following transactions. Omit explanations.
1. Accrued interest on notes receivable, $85.
2. Revenues received in advance now earned, $1,000.
3. Three years rent, totalling $36,000, was paid in advance at the beginning of the year.
4. Services totalling $2,100 had been performed but not yet invoiced at the end of the year.
5. Depreciation on equipment totalled $4,500 for the year.
6. Supplies for use totalled $690. By year end, only $100 in supplies remained.
7. Salaries owed to employees at the end of the year total $1,000.

Accepted Answer

The answer of Prepare year-end adjustments for the following transactions....

Question 14

Allen Coat Ltd purchased a delivery truck on 1 June for $18,000, paying $8,000 cash and signing a 12%, 2-month note payable for the remaining balance. The truck is expected to depreciate $3,000 each year. Allen Coat Ltd prepares monthly financial statements.
(a) Prepare the general journal entry to record the acquisition of the delivery truck on 1 June.
(b) Prepare any adjusting journal entries that should be made on 30 June
(c) Show how the delivery truck will be reflected on Allen Coat Ltd's statement of financial position on 30 June.

Accepted Answer

The answer of Allen Coat Ltd purchased a delivery truck...

Question 15

Watson Ltd prepares monthly financial statements. Below are listed some selected accounts and their balances on the 30 September trial balance before any adjustments have been made for the month of September.
  (Note: Debit column does not equal credit column because this is a partial listing of selected account balances.)
An analysis of the account balances by the company's accountant provided the following additional information:
1. A physical count of office supplies revealed $1,200 on hand on 30 September.
2. A two-year insurance policy was purchased on 1 June for $5,400.
3. Office equipment depreciates $5,400 per year.
4. The amount of rent received in advance that remains unearned at 30 September is $500.
Using the above additional information, prepare the adjusting entries that should be made by Watson Ltd on 30 September.

Accepted Answer

The answer of Watson Ltd prepares monthly financial statements. Below...

Question 16

Prepare the required end-of-period adjusting entries for each independent case listed below.
Case 1:
Thomas Ltd began the year with a $3,000 balance in the Office supplies account. During the year, $8,500 worth of additional office supplies was purchased. A physical count of office supplies on hand at the end of the year revealed that $6,400 worth of office supplies had been used during the year. No adjusting entry has been made.
Case 2:
Carson Ltd has a calendar year-end accounting period. On 1 July, the company purchased office equipment for $28,800. It is estimated that the office equipment will depreciate $400 each month. No adjusting entry has been made.
Case 3:
Yates Realty is in the business of renting several apartment buildings and prepares monthly financial statements. It has been determined that 3 tenants in $600 per month apartments and one tenant in the $1,000 per month apartment had not paid their December rent as of 31 December.

Accepted Answer

The answer of Prepare the required end-of-period adjusting entries for...

Question 17

The Reality Insurance Agency prepares monthly financial statements. Presented below is an income statement for the month of June that is correct on the basis of information supplied.
  Additional data: When the income statement was prepared, the agency accountant neglected to take into consideration the following information:
1. An electricity invoice for $2,000 was received on the last day of the month for electric and gas service for the month of June.
2. A company insurance salesman sold a life insurance policy to a client for a premium of $28,000. The agency invoiced the client for the policy and is entitled to a commission of 20%.
3. Supplies on hand at the beginning of the month were $3,000. The agency purchased additional supplies during the month for $2,500 in cash and $2,200 of supplies were on hand at 30 June.
4. The agency purchased a new car at the beginning of the month for $16,800 cash. The car will depreciate $4,200 per year.
5. Salaries owed to employees at the end of the month total $5,300. The salaries will be paid on July 5.
Prepare a corrected income statement.

Accepted Answer

The answer of The Reality Insurance Agency prepares monthly financial...

Question 18

One part of an adjusting entry is given below.
Indicate the account title for the other part of the entry.
-Revenue received in advance is debited.

Accepted Answer

The answer of One part of an adjusting entry is...

Question 19

One part of an adjusting entry is given below.
Indicate the account title for the other part of the entry.
-Prepaid rent is credited.

Accepted Answer

The answer of One part of an adjusting entry is...

Question 20

One part of an adjusting entry is given below.
Indicate the account title for the other part of the entry.
-Accounts receivable is debited.

Accepted Answer

The answer of One part of an adjusting entry is...

Quiz 3: Accrual Accounting Concepts

Select the best situation prepaid expense (PE) , revenue received in advance (RRA) , accrued revenue (AR) or an accrued expense (AE) . -Legal fees of $1,000 were collected in advance. By year end 60 per cent were still unearned.

Select the best situation prepaid expense (PE) , revenue received in advance (RRA) , accrued revenue (AR) or an accrued expense (AE) . -Prepaid insurance had a $500 balance prior to adjustment. By year end, 40 percent was still unexpired.

Select the best situation prepaid expense (PE) , revenue received in advance (RRA) , accrued revenue (AR) or an accrued expense (AE) . -Unpaid salaries earned by year end but not yet paid or recorded amounted to $1,200.

Match the statements with the appropriate terms : -Office supplies on hand that will be used in the next period.

Match the statements with the appropriate terms : -Rent revenue collected; not yet earned.

Match the statements with the appropriate terms : -Interest earned; not yet collected.

Match the statements with the appropriate terms : -An expense incurred; not yet paid or recorded.

Match the statements with the appropriate terms : -A revenue earned; not yet collected or recorded.

Match the statements with the appropriate terms : -An expense not yet incurred; paid in advance.

One part of an adjusting entry is given below. Indicate the account title for the other part of the entry. -Revenue received in advance is debited.

One part of an adjusting entry is given below. Indicate the account title for the other part of the entry. -Prepaid rent is credited.

One part of an adjusting entry is given below. Indicate the account title for the other part of the entry. -Accounts receivable is debited.