NEED ANSWERS ASAP Question 23 If a resource has been consumed but a bill has not
ID: 2421672 • Letter: N
Question
NEED ANSWERS ASAP
Question 23
If a resource has been consumed but a bill has not been received at the end of the accounting period, then
an expense should be recorded when the bill is received.
an expense should be recorded when the cash is paid out.
an adjusting entry should be made recognizing the expense.
it is optional whether to record the expense before the bill is received.
3 points
Question 24
Prepaid expenses are
paid and recorded in an asset account before they are used or consumed.
paid and recorded in an asset account after they are used or consumed.
incurred but not yet paid or recorded.
incurred and already paid or recorded.
3 points
Question 25
If a business has received cash in advance of services performed and credits a liability account, the adjusting entry needed after the services are performed will be
debit Unearned Service Revenue and credit Cash.
debit Unearned Service Revenue and credit Service Revenue.
debit Unearned Service Revenue and credit Prepaid Expense.
debit Unearned Service Revenue and credit Accounts Receivable.
3 points
Question 26
The preparation of adjusting entries is
straight forward because the accounts that need adjustment will be out of balance.
often an involved process requiring the skills of a professional.
only required for accounts that do not have a normal balance.
optional when financial statements are prepared.
3 points
Question 27
On January 1 of the current year, Doolittle Company purchased furniture for $7,560. The company expects to use the furniture for 3 years. The asset has no salvage value. The book value of the furniture at December 31of this year is
$0.
$2,520.
$5,040.
$7,560.
3 points
Question 28
Husker Du Supplies Inc. purchased a 12-month insurance policy on March 1 of the current year for $1,800. At March 31, the adjusting journal entry to record expiration of this asset will include a
debit to Prepaid Insurance and a credit to Cash for $1,800.
debit to Prepaid Insurance and a credit to Insurance Expense for $200.
debit to Insurance Expense and a credit to Prepaid Insurance for $150.
debit to Insurance Expense and a credit to Cash for $150.
an expense should be recorded when the bill is received.
an expense should be recorded when the cash is paid out.
an adjusting entry should be made recognizing the expense.
it is optional whether to record the expense before the bill is received.
Explanation / Answer
Question 23
If a resource has been consumed but a bill has not been received at the end of the accounting period, then
an adjusting entry should be made recognizing the expense.
Otherwise the expense wouldbe understated for the period in which it has been incurred and the profit will be oestated.
Question 24
Prepaid expenses are - paid and recorded in an asset account before they are used or consumed
For example prepaid insurnce. It is recorded as a current asset when paid. The insurance expense incurred and expensed during the accounting period is charged against the prepaid expense account thereby reducing the prepaid expense account as and when required.
Question 25
If a business has received cash in advance of services performed and credits a liability account, the adjusting entry needed after the services are performed will be - debit Unearned Service Revenue and credit Service Revenue.
Service revenue is recognised after the services has been rendered against which the advance has already been collected and recorded earlier in unearned service revenue account as a liability. Once the service is rendered the liability will decrease thereby debiting the Unearned Service revenue account.
Question 26
The preparation of adjusting entries is - often an involved process requiring the skills of a professional.
There are two scenarios where adjusting journal entries are needed before the financial statements are issued:
It s not optional for prearing financial statements,rather adjusting entries must be passed before preparing the financial staements.
Question 27
On January 1 of the current year, Doolittle Company purchased furniture for $7,560. The company expects to use the furniture for 3 years. The asset has no salvage value. The book value of the furniture at December 31of this year is - $5040
Assuming straight line method of depreciation has been used,
depreciation per year
= (cost - salvage value) / Number of useful life in years
= (7560 - 0) / 3 =$2520
Book value on 31st december of the current year = (7560 - 2520) = $5040
Question 28
Husker Du Supplies Inc. purchased a 12-month insurance policy on March 1 of the current year for $1,800. At March 31, the adjusting journal entry to record expiration of this asset will include a -
debit to Insurance Expense and a credit to Prepaid Insurance for $150
Insurance expense per month to be expired = $1800 / 12 = $150
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