Question

multiple-choice questions Financial Accounting for Business about ( Accrual Accounting)

6)On February 1, 20x1 the Abdoll business paid Fraser $13481 cash to complete a renovation on their property starting in May 20x1 and ending August 31, 20x1. Both parties agreed to the work being completed in equal parts over the summer. Fraser’s year-end is June 30, 20x1. Assuming the initial entry made on February 1, 20x1 by Fraser was a credit of $13481 to revenue, the following adjusting entry is required on June 30, 20x1:

Select one:

a. A debit of $3370 to unearned revenue

b. A credit of $6740 to unearned revenue

c. A debit of $3370 to revenue

d. A credit of $6740 to revenue

7)At August 1, 20x3, Zulu Inc. had a credit balance of $4696 in its unearned service revenue account. During August 20x3, the company received $20486 cash for services to be performed and credited these to the unearned service revenue account. At August 31, 20x3, $7968 worth of services had not yet been performed. What is the company’s service revenue for the month of August 20x3?

Select one:

a. $7968

b. $23758

c. $12664

d. $17214

8)Knight Company began operations on July 1, 20x5 and prepares monthly financial statements. It has the following partial unadjusted trial balance at July 31, 20x5:

Debit

Credit

Prepaid Insurance

$6,000

Unearned Service Revenue

$2787

The balance in the unearned service fees account represents a cash payment made by a customer in July 20x5. At July 31, 20x5, Knight Company had earned $520 of the service fees. Which of the following would be the correct adjusting journal entry at July 31, 20x5 with respect to this payment?

Select one:

a. Debit Unearned Service Revenue $2267 and Credit Service Revenue $2267

b. Debit Service Revenue $2267 and Credit Unearned Service Revenue $2267

c. Debit Unearned Service Revenue $520 and Credit Service Revenue $520

d. Debit Cash $520 and Credit Service Revenue $520

9)Beach Company paid $ 3192 on June 1, 20x8 for a two-year insurance policy and recorded the entire amount as Insurance Expense. The December 31, 20x8 adjusting entry is::

Select one:

a. Debit Insurance Expense and credit Prepaid Insurance, $2261

b. Debit Prepaid Insurance and credit Insurance Expense, $2261

c. Debit Prepaid Insurance and credit Insurance Expense, $931

d. Debit Insurance Expense and credit Prepaid Insurance, $931

10)It is December 31, 20x9 and TZ Corporation is making their necessary year-end adjusting entries. Their accountant is unsure how to properly adjust for the following items:

Interest incurred on an outstanding loan of $13246 at 12%

Interest earned on an outstanding loan of $29656 at 10%

Select one:

a. A credit to interest revenue of $ 2966

b. A credit to interest expense of $ 1590

c. A debit to interest expense of $ 2966

d. A credit to interest revenue of $ 1590

Answer 1

Multiple-choice questions Q6 Fraser Option b A credit of $6740 to unearned revenue credit to revenue Period of revenue 13,481 May 20x1 to August 31, 20x1 Unearned revenue 6,740 =13,481/4*2 Since July & Aug is yet unearned as of June, 2 months of revenue to be credited to Unearned Revenue Credit Date Account 30-Jun Revenue Unearned revenue Debit 6,740 6,740 Zulu Inc. 07 Option d 17,214 Unearned service revenue 1-Aug Opening balance 31-Aug During Aug 31-Aug Ending balance Service revenue earned 4,696 20,486 (7,968) 17,214

Q8 Knight Company Optionc Debit Unearned Service Revenue $520 and Credit Service Revenue $520 Date Account Debit Credit 31-Jul Service Revenue 520 Unearned Service Revenue 520 $520 is service revenue earned as of July, so it will be taken to Revenue 29 Beach Company Option d Debit Insurance Expense and credit Prepaid Insurance, $931 Prepaid Insurance 3,192 Insurance Expense 931 =3,192/24*7 June 1 to Dec 31 is 7 months of insurance expense till Dec Q10 TZ Corporation Option a A credit to interest revenue of $ 2966 Loan Receivable Interest rate Interest revenue 29,656 10% 2,966 =29,656*10% Loan Payable Interest rate Interest expense 13,246 12% 1,590 =13,246*12%