Adjusting_-_Practice_Test - Adjusting Entries Question...

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Adjusting Entries Question Answer Under accrual basis accounting, you recognize revenue . . . when you have earned the revenue Under accrual basis accounting, you recognize an expense when you have . . . incurred the expense Under accrual basis accounting, revenues presented on the income statement are . . . revenues earned during the year Under accrual basis accounting, expenses presented on the income statement are . . . expenses incurred during the year To accrue revenue at year end is to record . . . the amount earned for which payment has not been received. To defer revenue is to . . . postpone recording a customer's payment as revenue until it is earned. To accrue an expense is to record . . . an expense incurred but not yet paid for To recognize revenue or an expense is to . . . record the amount in the general ledger Make an adjusting entries to accrue: interest revenue of $50, commission revenue earned ($100), rental revenue ($200). Dr. Int Receivable & Cr. Int. Revenue Dr. Commission receivable & Cr. Commission Rev. Dr. Rent Receivable & Cr. Rent Revenue If you omit the adjusting entry to accrue revenue you (over or understate) your firm's net income? Understate Interest receivable is what type of account . . . Asset If you omit the adjusting entry to accrue revenue what effect does this have on liabilities? none When revenue is accrued cash is received (before/after) revenue is recognized. After Your Co. holds a $100,000 11% note receivable on which it has collected $8,000 interest during the year. What adjusting entry do you record at year end? Dr. Int Receivable $3,000 & Cr. Int. Revenue $3,000 Receivables are what type of accounts ? Assets The adjusting entry to accrue revenue has what affect on cash? No effect. All accrued expenses involve what two types of accounts? expense and payable To accrue salaries the journal entry is . . . Dr. Salary Exp. & Cr. Salary Payable Your Co. has a 5 day workweek and payday is every Friday. Weekly salaries are $10,000 and your company contributes 5% of salaries to the pension fund. Make the adjusting entry if the accounting period ends Thurs. Dr. Salary Exp. $8,000 & Cr. Salary Payable
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Adjusting_-_Practice_Test - Adjusting Entries Question...

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