Question

When a service has been performed but no cash has been received, which of the following statements is true? Select one: a. The entry includes a debit to Accounts payable. b. The entry includes a credit to Unearned revenue. c. The entry includes a debit to Accounts receivable. d. No journal entry is made.

Adjusting entries are:

Select one:

a. not necessary if the accounting system is operating properly.

b. made to Statement of Financial Position accounts only.

c. usually required before financial statements are prepared.

d. made whenever management desires to change an account balance.

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause:

Select one:

a. profit to be understated.

b. an overstatement of assets and an overstatement of liabilities.

c. no any understatement or overstatement.

d. an understatement of expenses and an understatement of liabilities.

Answer 1

1.c.The entry includes a debit to accounts receivable

When a service has been performed by a company but if no cash is received then accounts receivable account would be debited and service revenue account would be credited.

2.c.usually required before financial statements are prepared

Before preparing the financial statments,adjusting entries are made to make sure that the company's financial records are in adherence to matching principle and revenue recognition principle.

3.d.an understatement of expenses and an understatement of liabilties

The adjusting entry to record an accrued expense increases expenses and liabilities,a failure to do somwould lead to understatemnt of expenses and understtament of liabilities.