Adjusting Entries MCQs

1)

Accrued expenses are considered as

A) Asset

B) Liability

C) Gain

D) Income

2)

Prepaid expenses are regarded as

A) Asset

B) Liability

C) Loss

D) Capital

3)

Which of the following adjusting double entries is correct for Unearned income?

A) DEBIT= Income, CREDIT= Unearned income

B) DEBIT= Unearned income, CREDIT= Income

C) DEBIT= Cash, CREDIT= Unearned income

D) DEBIT= Income, CREDIT= Cash

4)

Earned but not yet received income is treated as

A) Asset

B) Liability

C) Loss

D) Capital

5)
Which of the following adjusting double entries is correct for accrued expenses?

A) DEBIT= Expenses, CREDIT= Accrued expenses

B) DEBIT= Accrued expenses, CREDIT= Expenses

C) DEBIT= Cash, CREDIT= Accrued expenses

D) DEBIT= Expenses, CREDIT= Cash

6)

Which of the following adjusting double entries is correct for Prepaid expenses?

A) DEBIT= Expenses, CREDIT= Prepaid expenses

B) DEBIT= Prepaid expenses, CREDIT= Expenses

C) DEBIT= Cash, CREDIT= Prepaid expenses

D) DEBIT= Expenses, CREDIT= Cash

7)

Unearned income is classified as

A) Asset

B) Liability

C) Loss

D) Capital

8)

Which of the following adjusting double entries is correct for earned income?

A) DEBIT= Income, CREDIT= Earned income

B) DEBIT= Earned income, CREDIT= Income

C) DEBIT= Cash, CREDIT= Earned income

D) DEBIT= Income, CREDIT= Cash

9)

Failure to make adjusting entries for accrued income results in

A) Overstatement of expenses
B) Understatement of expenses

C) Understatement of capital

D) Overstatement of income

10)

Identify the consequences of not making adjustment entry for accrued expense

A) Overstatement of liabilities

B) Understatement of liabilities

C) Overstatement of expenses

D) Understatement of capital

11)

An adjusting entry for prepaid expenses affects

A) Assets and expenses

B) Assets and income

C) Liabilities and expenses

D) Liabilities and assets

12)

Adjusting entries convert cash based account into _________ based accounting

A) Capital

B) Asset

C) Accrual

D) Prepaid

13)

An unearned income adjusting entry affects

A) Asset and liabilities

B) Cash and income

C) Income and liabilities

D) Cash and liabilities

14)

A business paid 3 month rent amounting to $3000 out of this amount one month rent pertains to
the next accounting period. Identify the correct amount prepaid expense

A) $3000

B) $1000

C) $2000

D) $4000

15)

Adjusting entries help allocating incomes and expenses to their ________

A) Cash balances

B) Appropriate accounting periods

C) Credit balances

D) Received or paid cash balances

16)

A customer paid you $100,000 for some construction work. However, at the end of your
accounting period only 1/4 of work was completed. What amount of income should be shown in
income statement?

A) 100,000

B) 50,000

C) 10,000

D) 25,000

17)

A business paid $5000 for technical services but used up the services for only $2000 until the end
of its accounting period. The remaining $3000 would be referred as
A) Accrued expenses

B) Accrued income

C) Prepaid income

D) Prepaid expenses

18)

Revenue earned but not yet received by the business is known as

A) Contra asset revenue

B) Accrued expenses

C) Accrued revenue

D) Unearned revenue

19)

Another name of accrued revenue is

A) Outstanding asset

B) Earned asset

C) Unearned revenue

D) Earned revenue

20)

If Rent expenses=$5000, Insurance expenses=$4000, Prepaid rent expenses=$3000. What amount

of total expenses will be shown in income statement?

A) $9000

B) $12000

C) $8000

D) $6000