Reference no: EM132464927

Question

Question 1: During a discount sale, Larry buys a CD from Best Buy. Rather than paying cash, Larry uses his Best Buy card to buy the CD on account. Under the accrual basis of accounting, when will Best Buy record revenue from this sale?

1. after cash is received
2. after the discount period is over
3. at the time of sale
4. in the next accounting period

Question 2: Under both accrual-basis and cash-basis accounting, all revenues and expenses are recorded at the same point in time.

• True or False

Question 3: A company receives cash in March for services that it will provide in April. This scenario is an example of a(n):

1. Accrued expense
2. Accrued revenue
3. Deferred revenue
4. Prepaid expense

Question 4: A company receives a utility bill for operations in May. The company does not expect to pay the bill until June. This scenario is an example of a(n):

1. Accrued expense
2. Accrued revenue
3. Deferred revenue
4. Prepaid expense

Question 5: A company pays one year of rent in advance on January 1. On January 31, the company will record an adjusting entry that will:

1. Increase assets and increase expenses
2. Increase assets and decrease expenses
3. Decrease assets and increase expenses
4. Decrease assets and decrease expenses

Question 6: Depreciation on a company's equipment for the year is $6,000. The adjusting entry for depreciation is recorded as:

1. Debit Accumulated Depreciation $6,000, Credit Depreciation Expense $6,000
2. Debit Depreciation Expense $6,000, Credit Accumulated Depreciation $6,000
3. Debit Depreciation Expense $6,000, Credit Cash $6,000
4. Debit Depreciation Expense $6,000, Credit Equipment $6,000

Question 7: At the end of May, a company receives a utility bill for $500 associated with operations in May. The company plans to pay the bill on June 10. In May, the adjusting entry is recorded as:

1. Debit Utilities Expense $500, Credit Cash $500
2. Debit Utilities Expense $500, Credit Utilities Payable $500
3. Debit Utilities Payable $500, Credit Cash $500
4. No adjusting entry is required.