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Financial Reporting questions: deferred revenue accounts,

12. The balance in a deferred revenue account represents an amount that is

Earned Collected
a. Yes Yes
b. Yes No
c. No Yes
d. No No

13. A trial balance is useful because it indicates that
a. owners' equity is correct.
b. net income is correct.
c. all entries were made correctly.
d. total debits equal total credits.

14. The allowance for doubtful accounts is an example of a(n)
a. expense account.
b. contra account.
c. adjunct account.
d. control account.

15. Failure to record depreciation expense at the end of an accounting period results in
a. understated income.
b. understated assets.
c. overstated expenses.
d. overstated assets.

16. Arid Company paid $1,704 on June 1, 2013, for a two-year insurance policy and recorded the entire amount as Insurance Expense. The December 31, 2013, adjusting entry is
a. debit Prepaid Insurance and credit Insurance Expense, $497.
b. debit Insurance Expense and credit Prepaid Insurance, $497.
c. debit Insurance Expense and credit Prepaid Insurance, $1,207.
d. debit Prepaid Insurance and credit Insurance Expense, $1,207.

17. Which of the following accounts most likely would not appear in a post-closing trial balance?
a. Retained Earnings
b. Inventory
c. Sales Revenue
d. Common Stock

Solution Preview

12. The balance in a deferred revenue account represents an amount that is

Earned Collected
a. Yes Yes
b. Yes No
c. No Yes
d. No No

It was collected but not yet earned. The entry was to debit cash and credit deferred revenue. Answer is c.

13. A trial balance is useful because it indicates that
a. owners' equity is correct.
b. net income is correct.
c. all entries were made correctly.
d. total ...

Solution Summary

In a sentence or two, each problem is explained and the correct answer given.

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