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- 1. Multiple Choice
What is difference between accrued expenses and prepaid expenses? (tick 2 boxes)
accrued expenses = not yet paid for the current year
prepaid expenses = paid in advance for the next accounting period
accrued expenses = paid for the current year
prepaid expenses = not paid for next accounting year
accrued expenses = posted as current asset
prepaid expenses = posted as current liability
accrued expenses = posted as current liability
prepaid expenses = posted as current asset
- 2. Multiple Choice
What is the difference between income receivable and income received in advance? (tick 2 boxes)
income receivable = posted as current asset
income received in advance = posted as current liability
income receivable = not yet received for current year
income received in advance = received in advance for next year
income receivable = received for current year
income received in advance = not received in advance for next year
income receivable = posted as current liability
income received in advance = posted as current asset
- 3. Multiple Choice
What are 2 accounting concepts applied to prepayments and accruals?
prudence and accrual concepts
prudence and matching concepts
accounting entity and going concern concepts
matching and accrual concepts
- 4. Multiple Choice
Additional information at year end:
accrued insurance $300 prepaid rent $700
Identify the correct entries in Income statement .
add $300 accrued insurance minus $700 prepaid rent
add $300 accrued insurance add $700 prepaid rent
minus $300 accrued insurance minus $700 prepaid rent
minus $300 accrued insurance add $700 prepaid rent
- 5. Multiple Choice
Additional information at year end:
interest income receivable $500
Rent income received in advance $200
add Rent income received in advance $200
less interest income receivable $500
add Rent income received in advance $200
add interest income receivable $500
less Rent income received in advance $200
add interest income receivable $500
less Rent income received in advance $200
less interest income receivable $500
- 6. Multiple Choice
How do we close the Insurance(expenses) account at year end?
close to Trading portion
close to Profit and loss portion
close to Income statement portion
close to Balance sheet portion
- 7. Multiple Choice
Jan 1 Prepaid rent $400
Calculate the amount to be closed to Profit and loss.
Profit and loss = - 400 + 600 + 200 = $400
Profit and loss = 400 + 600 + 200 = $1200
Profit and loss = 400 - 600 + 200 = 0
Profit and loss = - 400 - 600 + 200 = - $800
- 8. Multiple Choice
Adjustments at beginning of year Jan 1 2019:
Prepaid rent $600 Accrued insurance $500
Identify the correct adjusting entries in :
Rent account Insurance account
Jan 1 Rent account add prepaid $600
Jan 1 Insurance account add accrued insurance $500
Jan 1 Rent account add prepaid $600
Jan 1 Insurance account less accrued insurance $500
Jan 1 Rent account less prepaid $600
Jan 1 Insurance account add accrued insurance $500
Jan 1 Rent account less prepaid $600
Jan 1 Insurance account less accrued insurance $500
- 9. Multiple Choice
Adjustments at beginning of year Jan 1 2019:
interest received in advance $700
commission income receivables $300
Identify the correct adjusting entries for:
Interest received account
Commission income account
Jan 1 Interest recd account add recd in advance 700
Jan 1 Comm income account add comm receivable $300
Jan 1 Interest recd account less recd in advance 700
Jan 1 Comm income account less comm receivable $300
Jan 1 Interest recd account add recd in advance 700
Jan 1 Comm income account less comm receivable $300
Jan 1 Interest recd account less recd in advance 700
Jan 1 Comm income account add comm receivable $300
- 10. Multiple Choice
What is the difference between prepaid insurance at beginning of year and prepaid insurance at end of year?
Jan 1 Prepaid insurance $400
Dec 1 Prepaid insurance $650
Identify the correct entry in the Insurance account.
Jan 1 add prepaid insurance $400
Dec 31 less prepaid insurance $650
Jan 1 add prepaid insurance $400
Dec 31 add prepaid insurance $650
Jan 1 less prepaid insurance $400
Dec 31 add prepaid insurance $650
Jan 1 less prepaid insurance $400
Dec 31 less prepaid insurance $650
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