FAR — Financial Accounting & Reporting — Quiz 13

Questions in this quiz (10)

1. Which adjusting entry is required when interest income has been earned but not yet received?

   • Debit Cash; Credit Interest Revenue
   • Debit Interest Receivable; Credit Interest Revenue
   • Debit Interest Expense; Credit Cash
   • Debit Interest Revenue; Credit Cash

2. Which step in the accounting cycle occurs immediately after adjusting entries?

   • Preparing the adjusted trial balance
   • Closing entries
   • Recording transactions
   • Posting journal entries

3. Which accounts are classified as temporary accounts?

   • Assets and liabilities
   • Revenue and expenses
   • Assets and equity
   • Liabilities and equity

4. What is the primary objective of closing entries?

   • Prepare adjusting entries
   • Transfer temporary account balances to retained earnings
   • Prepare trial balance
   • Record transactions

5. Which of the following best explains the purpose of accrual accounting adjustments?

   • To record transactions when cash is exchanged
   • To match revenues and expenses to the correct period
   • To close revenue accounts
   • To prepare financial statements

6. A company receives $9,000 on October 1 for services to be provided over three months. How much revenue is recognized in October?

   • $0
   • $1,500
   • $3,000
   • $9,000

7. Which adjusting entry is required for interest earned but not yet collected?

   • Debit Cash; Credit Interest Revenue
   • Debit Interest Receivable; Credit Interest Revenue
   • Debit Interest Expense; Credit Cash
   • Debit Revenue; Credit Interest Receivable

8. Which of the following is an example of a prepaid expense?

   • Unearned rent
   • Prepaid insurance
   • Accounts payable
   • Accrued wages

9. A company owes employees $2,500 at period end. Which adjusting entry is required?

   • Debit Salaries Expense $2,500; Credit Salaries Payable $2,500
   • Debit Cash $2,500; Credit Salaries Expense $2,500
   • Debit Salaries Payable $2,500; Credit Cash $2,500
   • Debit Salaries Expense $2,500; Credit Cash $2,500

10. Which account increases when prepaid utilities are used?

    • Utilities Expense
    • Utilities Payable
    • Utilities Revenue
    • Accounts Receivable