Q1.)A journal entry to record revenue could include each of the following, excep
ID: 2418556 • Letter: Q
Question
Q1.)A journal entry to record revenue could include each of the following, except: A)A credit to a revenue account. B.)A credit to the Capital Stock account. C.)A debit to Cash. D.)A debit to Accounts Receivable q2.) Unearned revenue appears: A.) As income on the income statement. B.) As an asset on the balance sheet. C.)As a liability on the balance sheet. D.)As a part of the retained earnings. Q3.) Retained Earnings at the end of a period: A.)Is equal to the balance in the Retained Earnings account in the adjusted trial balance at the end of a period. B.) Is determined in the Statement of Retained Earnings. C.)Is equal to Retained Earnings at the beginning of the period, minus net income (or plus net loss) for the period.D.) Appears in the Income Statement for the period.
Explanation / Answer
Solution:
(1) A journal entry to record revenue could include all of the given alternatives except (b) credit to capital stock account.
(2) Unearned revenue appears as (c) as a liability in the balance sheet
unearned revenue is a revenue which is not related to the current financial period. i.e a revenue which the company received in advance for a work to be accomplished at a future date. Hence it would not be recorded in the income statement as a revenue as it is not related to the current financial period. It will be debited to asset cash account and credited to liability account and will reflect in the balance sheet. The year in which the work is accomplished it will reflect in the income statement as income statement will be credited and liability unearned revenues will be debited.
(3) Retained earnings at the end of a period (a) is determined in the Statement of Retained Earnings.
The ending period retained earnings can be derived by the following formula:
Beginning retained earnings + Net income - Net loss - Dividend paid for the year = Ending retained earnings.
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