Question

purchases equipment on account. How would this affect the accounts on the books?

		Equipment increase, accounts payable increase
		Equipment increase, cash decrease
		Equipment increase, accounts receivable increase
		Cash increase, equipment decrease

Wonky Willa's Chocolate Factory sold $10,000 of candy on account to the University of Houston for a special event. When UH pays the bill, the transaction recorded on UH's books will:

		increase cash, decrease accounts receivable.
		increase cash, decrease accounts payable.
		decrease cash, increase accounts receivable.
		decrease cash, decrease accounts payable.

What is an unbilled or accrued revenue?

		Cash received from a customer after a service is billed.
		Cash received from a customer before a service is billed.
		A service performed for a customer before the service is billed and payment is received.
		A service performed for a customer after the customer is billed.

Adjusting entries:

		often include the Cash account.
		are usually recorded at the beginning of the accounting period.
		always involve at least one balance sheet account and one income statement account.
		adjust the balance of credit and debit accounts to zero.

Answer 1

• Purchases equipment on account. How would this affect the accounts on the books?

			CORRECT Answer: Equipment increase, accounts payable increase. Equipment (Asset) will increase when purchased, and Accounts Payable (Liabilities) will increase as purchase is on account.
			Equipment increase, cash decrease
			Equipment increase, accounts receivable increase
			Cash increase, equipment decrease

• Wonky Willa's Chocolate Factory sold $10,000 of candy on account to the University of Houston for a special event. When UH pays the bill, the transaction recorded on UH's books will:

		CORRECT Answer: increase cash, decrease accounts receivable. This is because cash is being received. Account receivables are decreased as they would have been recorded earlier when sales were made on account.
		increase cash, decrease accounts payable.
		decrease cash, increase accounts receivable.
		decrease cash, decrease accounts payable.

• What is an unbilled or accrued revenue?

		Cash received from a customer after a service is billed.
		Cash received from a customer before a service is billed.
		CORRECT Answer: A service performed for a customer before the service is billed and payment is received.When service has been performed, but the customer has not been billed, it is termed as Unbilled or accrued revenue.
		A service performed for a customer after the customer is billed.

• Adjusting entries:

		often include the Cash account.
		are usually recorded at the beginning of the accounting period.
		CORRECT Answer: always involve at least one balance sheet account and one income statement account.
		adjust the balance of credit and debit accounts to zero.