What is the impact on the financial statements

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Reference no: EM131211462

1. Fun Facts Magazine gains a client who prepays $120 for a package of seven magazines per month for six months. Fun Facts Magazine collects the $120 in advance and will provide the magazines later. Which of the following will be included in the journal entry when Fun Facts Magazine records receipt of this $120 prepayment?

A. Credit to Revenue of $120

B. Debit to Revenue of $120

C. Credit to Unearned Revenue of $120

D. Credit to Cash of $120

2. What is the impact on the financial statements if an adjusting entry for deferred expense is not made?

A. Assets understated

B. Expenses understated

C. Expenses overstated

D. Both A and B

Reference no: EM131211462

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