1.Accrued expenses are:
Assets
Liabilities
Equity
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.
