Thumbs up for answers! Question 16 2 pts Which of the following transactions is

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Question 16 2 pts Which of the following transactions is not an example of a deferral? Revenue from advance sale movie tickets sold by a theater for a movie that will not be shown at the theater until the next accounting period Four months rent is paid in advance Supplies are purchased that will be used in the course of business over the next few months Revenue that was earned during the accounting period but has not yet been billed or payment received from the customer Question 17 2 pts Which of the following is not an example of an accrual? Wages earned by employees that have not been paid at the end of the period Interest that is owed on a Revenue from advance sale movie tickets sold by a theater for a movie that will not be O n outstanding not payable that has not been recorded in the accounting records shown at the theater until the next accounting period O Revenue that was earned during the accounting period but has not yet been billed to the customer and payment has not yet been received

Explanation / Answer

Question No: 1 (16)

Answer =

Deferral : When we make any expenses and benefit of this expenses are available more than one period than we have to deferred that expenses as per the useful life of the assets.

Ex. If we make any advance payment of rent for next six month on today. So this rent paid is not shown in one month because this is paid against for next six month. So this is called deferral.

In given question Revenue from advance sale movie tickets , Advance Rent Revenue of future earned now is an example of deferral.

So Supplies are purchased for next few months cannot be deferred because it is shown as purchase expenses and balance material is shown as current assets of the company.

Answer = Option 3 = Supplies are purchased that will be used in the course of business over next few months.

Question No: 2 (17)

Accrual : It means the expenses is incurred but not paid ex. If the salary of employee is not paid as on last day of month than in next month salary is accrued expenses for last month.

So as per the above ,

Option 1, Option 2 & option are example of accrual because in these all cases expenses are revenue are generated but not billed or not paid.

But in option 3 advance is received but no revenue is generated against that receipt due to non showing of movie in the running period. So this is   not an example of accrual

Answer = Option 3

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