Question

QUESTION 11 Which of the following errors cause net income to be understated? A Depreciation Expense is not recorded. B. Employee wages that have not been paid are not recorded. c. Collection of an accounts receivable is not recorded. D. Revenue that has been earned but not yet collected has not been recorded. QUESTION 12 During 2016, a company provided services for cash of $21,000 and services on credit of $15,000. The company collected accounts receivable of $8,000 and incurred operating expenses of $22,700, S14,000 of which were paid during the year. The amount of net income (loss) for the year is: A $6,300 B. $22,700 C($1,700) D. $13,300 QUESTION 13 Bonnie's Piano School operations for the month of May were limited to the following transactions Click Save and submit to save and submit. Click Save All Answers to see all answers Save All Ars Cias MacBook Air esc & F1 000 20 F2 000 74 มี at FV @ # A 78 * 2 $ 4 3 % 5 & 7 6 8 9 9 0 Q. W

Answer 1

11. Which of the following will cause the net Income understated:

The Correct option is D) Revenue that has been earned but not yet collected has not been recorded

Option A is incorrect because it will overstate the net Income as an expense is not recorded against income.

Option B is incorrect because an expense which is not recorded will overstate the Income.

Option C is incorrect because it will not have any effect on Net Income

12. Income Statement

Revenue (Cash)	$ 21,000
Add: Revenue (Credit)	15,000
Total Revenue	36,000
Less: Operating Expenses	(22,700)
Net Income	13,300

The correct option is D) $13,300

We do not record Account Receivable collected in Income Statement. Also, all expenses will be recorded.

13. Income Statement (Amounts in $)

Revenue from Piano Lessons (800+200)	1,000
Less: Rent accrued for the month of May	300
Net Income for the month of May	700

So the correct option is A. $700

As accrual accounting system is followed all the expenses and incomes will be recorded as and when accrued.

17. The correct option is A. Assets will decrease by $ 20,000 and the liabilities would decrease by $20,000.

18. The correct Option is D) Credit to Accounts Payable

Because it will lead to increase in accounts payable and Advertising expense will be debited not Prepaid Advertising.