Reference no: EM132695604

Questions -

Q1) An electricity bill of $550 for June has not been recorded and will not be paid until next month. What adjusting entry is required as of 30 June?

a. Debit electricity payable $550; Credit electricity expense $550

b. Debit electricity expense $550; Credit cash $550

c. Debit electricity payable $550; Credit cash $550

d. Debit electricity expense $550; Credit electricity payable $550

Q2) Invoices representing $5000 of services performed during the month have not been recorded as of June 2019. What adjusting entry is required at the end of June 2019?

a. Debit Cash $5000; Credit Accounts receivable $5000.

b. Debit Revenue received in advance $5000; Credit Service revenue $5000.

c. Debit Cash $5000; Credit Service revenue $5000.

d. Debit Accounts receivable $5000; Credit Service revenue $5000.

Q3) A law firm received $2,000 cash for legal services to be provided in the future. The full amount was credited to the liability account Revenue Received in Advance. If the legal services have been provided at the end of the accounting period and no adjusting entry is made, this would cause:

a. profit to be overstated.

b. liabilities to be understated.

c. revenues to be understated.

d. expenses to be overstated.

Q4) An entity fails to adjust the Revenue received in advance account for rent that has been earned, what effect will this have on the financial statements? Select one:

a. Liabilities will be overstated and revenues will be understated.

b. Assets will be understated and revenues will be understated.

c. Assets will be overstated and revenues will be understated.

d. Liabilities will be understated and revenues will be understated