Question

1.How can accrual adjustments for interest incurred but not yet paid affect the balance sheet and the income statement?

A) Accrual adjustments can increase liabilities and increase expenses.

B) Accrual adjustments can increase assets and decrease revenues.

C) Accrual adjustments can decrease liabilities and increase revenues.

D) Accrual adjustments can increase assets and increase expenses.

2.Which of the following types of transactions could be an accrual adjustment?

A) An increase to an asset account and an increase to a liability account.

B) An increase to a revenue account and an increase to an expense account.

C) An increase to a liability account and an increase to a revenue account.

D) An increase to a liability account and an increase to an expense account.

3.In an accrual adjustment for expenses incurred but not yet paid:

A) a liability is decreasing since cash is being paid for an expense incurred at the time of the adjustment.

B) the liability recorded when cash was received is increasing as the expense is incurred.

C) the liability recorded when cash was received is decreasing as the expense is incurred.

D) a liability is increasing since cash will be paid in the future due to the expense incurred

4.In a deferral adjustment for revenues collected in advance that are now earned:

A) a liability is decreasing because cash is being paid for an expense incurred at the time of the adjustment.

B) the liability recorded when cash was received is increased by the adjustment for the revenue being earned.

C) the liability recorded when cash was received is decreased by the adjustment for revenue being earned.

D) a liability is increasing because cash will be paid for an expense in the future.

5.Accruing a revenue or expense in accounting means that the amount:

A) will not be reported in the accounting records.

B) will be reported as a revenue or an expense in the current period.

C) will be reported as a revenue or an expense in a later period.

D) was reported as a revenue or an expense in a prior period.

Answer 1

1.How can accrual adjustments for interest incurred but not yet paid affect the balance sheet and the income statement?

Interest accured entry would be interest expense debit and interest payable credit so effect is

So answer is a) Accrual adjustments can increase liabilities and increase expenses.

2) .Which of the following types of transactions could be an accrual adjustment?

Accural adjustment transaction is when interest , salary or any other expense accured

So answer is D) An increase to a liability account and an increase to an expense account.

3) In an accrual adjustment for expenses incurred but not yet paid:

Liabilities increase

So answer is D) a liability is increasing since cash will be paid in the future due to the expense incurred

4) In a deferral adjustment for revenues collected in advance that are now earned:

When unearned revenue is earned then liabilities would be debited and earned revenue would be credited

So answer is C) the liability recorded when cash was received is decreased by the adjustment for revenue being earned.

5) Accruing a revenue or expense in accounting means that the amount:

So answer is B) will be reported as a revenue or an expense in the current period.