Chapter 3—The Adjusting Process

MULTIPLE CHOICE

21. Which of the following is considered to be unearned revenue?

a Concert tickets sold for tonight’s performance.
.
b Concert tickets sold yesterday on credit.
.
c Concert tickets that were not sold for the current performance.
.
d Concert tickets sold for next month’s performance.
.
ANS: D PTS: 1 DIF: Difficult OBJ: 03-01
NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-04-Cash vs. Accrual

22. Which of the following is an example of accrued revenue?

a Swimming pool cleaning that has been paid for three months in advance.
.
b Swimming pool cleaning that has been provided but has not been billed or paid.
.
c An agreement has been signed for swimming pool cleaning for the next three months.
.
d Swimming pool cleaning that has been provided and paid on the same day.
.
ANS: B PTS: 1 DIF: Moderate OBJ: 03-01
NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-04-Cash vs. Accrual

23. Which of the following is considered to be an accrued expense?

a A computer technician has installed the latest software updates and was paid on the same
. day.
b A computer technician has been paid in advance to install software updates as they
. become available.
c A computer technician has just signed an agreement with you regarding pricing for
. future work.
d A computer technician has installed the latest software updates, but you have not
. received their invoice for payment.
ANS: D PTS: 1 DIF: Difficult OBJ: 03-01
NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-04-Cash vs. Accrual

24. Which account would normally not require an adjusting entry?

a Wages Expense
.
b Accounts Receivable
.
c Accumulated Depreciation
.
d Smith, Capital
 .
ANS: D PTS: 1 DIF: Difficult OBJ: 03-02
NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

25. Which one of the accounts below would likely be included in an accrual adjusting entry?
a Insurance Expense
.
b Prepaid Rent
.
c Interest Expense
.
d Unearned Rent
.
ANS: C PTS: 1 DIF: Moderate OBJ: 03-02
NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries