Adjusting Entries MCQs Multiple Choice Questions

1.Accrued expenses are:




2.Prepaid insurance is shown in:

Profit & loss account

Balance sheet

Statement of changes in equity

3.The entry to record accrued rent is:

Debit Rent Expenses, Credit Accrued Rent

Debit Accrued Rent, Credit Rent Payable

Debit Rent Expenses, Credit Cash

4.Unearned income is:

Current asset

Current liabilities

Fixed assets

None of the above.

5.Adjusting double entry for prepaid expenses is:

Debit Expense Credit Cash

Debit Expense Credit Capital

Debit Expense Credit Accrued Expenses

Debit Prepaid Expense Credit Cash

6.The entry for earned income is:

Debit income Credit Earned Income

Debit Unearned Income Credit Income

Debit Cash Credit Income

7.Failure of Accountant to pass entry for accrued income leads to:

Understatement of Equity

Overstatement of expenses

Understatement of expenses

Overstatement of income

8.Failure to make accrued expenses adjusting entry leads to:

Overstatement of expenses

Overstatement of liabilities

Understatement of liabilities

Understatement of capital

Answers:Liabilities, Balance Sheet, Debit Rent Expenses, Credit Accrued Rent, Current liabilities, Debit Prepaid Expense Credit Cash, Debit Unearned Income Credit Income, Understatement of Equity, Understatement of liabilities.