Question

1) Using accrual accounting, expenses are not recorded until the cash for the expense is disbursed.
True
False

2) The adjusting entry for accrued revenue always involves a:

A.debit to an asset account and a credit to a revenue account

B.debit to a revenue account and a credit to an asset account

C.debit to a liability account and a credit to an asset account

D.debit to an asset account and a credit to a liability account

3) A journal entry contains a debit to the Cash account and a credit to the Unearned Service Revenue account. This is an example of a(n):

A.deferred expense

B.deferred revenue

C.accrued revenue

D.accrued expense

4) The adjusting entry for a prepaid expense always involves a(n):

A. liability account and a revenue account

B.expense account and a liability account

C.expense account and an asset account

D.asset account and a liability account

5) On October 25, 2017 Quick Corp. prints a cheque for November's rent payment. Quick Corp. mails the cheque on October 27 to the landlord. The landlord receives the cheque October 31 and cashes the cheque on November 2. When should Quick Corp. record the rent expense associated with this transaction?

A.November 2, 2017

B.November 30, 2017

C.October 25, 2017

D.October 27, 2017

6) Which of the following transactions would be recorded at the time the transaction occurs under the accrual basis, but would not be recorded until sometime in the future under the cash basis?

A.issuance of stock

B.sale of merchandise on account

C.payment of interest expenses

D.payment of employee salaries

Answer 1

Answer-1( fasle)

Under accrual accounting,expense are recorded when the expense is incurr.

Answer-2(a) debit to an asset account and a credit to a revenue account which indicates increase of assets and revenue account. This is the adjusting entry for accrued revenue.

Answer-3(b) deferred revenue.

Journal entry contains debit to the cash and credit to the unearned revenue account is an example of deferred revenue. As deferred revenue is the revenue which is not earned but It is received.

Answer-4(c) the adjusting entry for a prepaid expense always involves a debit to the expense account and credit to an asset account.

Answer-5(c) on 25 October,2017 because at this date cheque was printed for rent payment.

Answer 6(b) sale of merchandise on account.

Sale of merchandise on account can be recorded at the time the transaction occur under the accrual basis as this transaction or revenue is incurr but in the cash basis, it will not be recorded untill the cash is not received.