Question

Mastering Adjusting Entries The following information relates to questions 31 and 32: CBA Co. uses accrual basis accounting. It collects $20,000 in December for a job and credits unearned revenue. By the end of December, its year end. CBA has completed 40% of the work. 31. How much revenue has CBA earned in December? a. $20,000 b. $12,000 c. $8,000 d. $0 32. Which accounts does CBA debit and credit in the adjusting journal entry on December 31? a. Unearned Revenue Cash To reflect revenue earned c. Revenue Unearned Revenue To reflect revenue earned b. Unearned Revenue Revenue To reflect revenue earned d. Cash Revenue To reflect revenue earned 33. When revenue is credited, it increases revenue. a. True b. False 34. Unearned Revenue is what type of account? a. asset b. liability c. revenue d. expense 35. In accrual basis accounting, "recognized" would mean... a. paid. b. received. c. incurred. d. recorded. 36. With prepaid supplies, cash payment follows recording of the expense. a. True b. False

Answer 1

Answer 31. C $8000

Calculated as

40% of 20000 = $8000

Answer 32

b. Unearned Revenue

Revenue

Answer 33

True

AS crediting revenue always increase revenue

Answer 34

Liability

Answer 35

Incurred

as

In accrual accounting expenses are recorded when the are incurred not when they are paid here incurred means recognizing

Answer 36

False

as

Prepaid payment means we have paid in advance and the amount is not recorded as expense tilll the time the work is not done for which payment is made

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