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1. Accrued expenses are considered as

Asset
Liability
Gain
Income
2. Prepaid expenses are regarded as
Asset
Liability
Loss
Capital
3. Which of the following adjusting double entries is correct for Unearned
income now earned?
DEBIT= Income, CREDIT= Unearned income
DEBIT= Unearned income, CREDIT= Income
DEBIT= Cash, CREDIT= Unearned income
DEBIT= Income, CREDIT= Cash
4. Earned but not yet received income is treated as
Asset
Liability
Loss
Capital
5. Which of the following adjusting double entries is correct for accrued
expenses?
DEBIT= Expenses, CREDIT= Accrued expenses
DEBIT= Accrued expenses, CREDIT= Expenses
DEBIT= Cash, CREDIT= Accrued expenses
DEBIT= Expenses, CREDIT= Cash
6. Which of the following adjusting double entries is correct for Prepaid
expenses expired?
DEBIT= Expenses, CREDIT= Prepaid expenses
DEBIT= Prepaid expenses, CREDIT= Expenses
DEBIT= Cash, CREDIT= Prepaid expenses
DEBIT= Expenses, CREDIT= Cash
7. Unearned income is classified as
Asset
Liability
Loss
Capital
8. Failure to make adjusting entries for accrued income results in
Overstatement of expenses
Understatement of expenses
Understatement of capital
Overstatement of income
9. Identify the consequences of not making adjustment entry for accrued
expense
Overstatement of liabilities
Understatement of liabilities
Overstatement of expenses

D) Understatement of capital

10. Which of the following is an example of an accrual?

a. wages incurred but not yet paid
b. payment of advertising six months in advance
c. purchase of supplies
d. revenue collected in advance
e. all of the above
11. An example of a current asset is:
a. paid-in capital
b. equipment
c. inventory
d. retained earnings
e. fixed assets
12. Book value is defined as:
a. cost less salvage value
b. current market value less accumulated depreciation
c. cost less accumulated depreciation
d. cost plus accumulated depreciation
e. cost plus salvage value
13. . The double-declining-balance method of depreciation:
a. causes less depreciation in the early years of an asset's use as compared to other
depreciation methods
b. causes the same amount of depreciation in the early years of an asset's use as compared
to other depreciation methods
c. causes more depreciation in the early years of an asset's use as compared to other
depreciation methods
d. is not an acceptable depreciation method according to generally accepted accounting
principles
e. none of the above
A)
B)
C)
D)
A)
B)
C)
D)

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

Contra asset revenue
Accrued expenses
Accrued revenue
Unearned revenue
15.Another name of accrued revenue is
Outstanding asset
Earned asset
Unearned revenue
Earned revenue

16.What is depreciation?
A) Cost of a fixed asset
B) Cost of a fixed assets repair
C) The residual value of a fixed asset
D) Portion of a fixed assets cost consumed during the current accounting
period
17.Under which depreciation method the amount of depreciation expenses
remains same throughout the useful life of a fixed asset
A) Straight line method
B) Reducing balance method
C) Number of units produced method
18.What is the accumulated deprecation?
A) Sum of all depreciation expenses of a fixed asset
B) Depreciation expenses
C) Cost of depletion of assets
D) Future value of fixed asset
19.Which of the following is the normal balance of an accumulated depreciation
account?
A) Debit balance
B) Credit balance
C) Nil balance
20.How trial balance shows the accumulated depreciation?
A) as a debit item
B) as a credit item
C) It doesnt show
21.Which of the following is a double entry for depreciation expenses?
A) Accumulated depreciation debit and depreciation expenses Credit
B) Depreciation expenses Debit and accumulated depreciation Credit
C) Cash Debit and depreciation expenses Credit
D) Depreciation expenses Debit and cash Credit
22.An alternative term used for accumulated depreciation expenses?
A) Provision for depreciation
B) Cumulative depreciation
C) Targeted depreciation
D) Depletion
23.Which of the following is/are a kind of depreciation expenses?
A) Amortization
B) Depletion
C) Both of them