Name  

Date  

Week 4 Score  

1. On 30 June 2023, TV Manufacture Ltd, which uses acc ual accounting, estimates that it will
incur wa ranty costs of $135 000 in the next financial year on products sold du ing the year
just ended. On 7 October 2023, the manufacturer pays $21 000 under the wa ranty. What is
the jou nal ent y made by TV Manufacture Ltd on 30 June 2023?
A Dr Wa ranty liability Cr Cash

B Dr Wa ranty liability Cr Wa ranty expense

C Dr Wa ranty expense Cr Wa ranty liability

D None of the answers provided

2. On 30 June 2023, TV Manufacture Ltd, which uses acc ual accounting, estimates that it will
incur wa ranty costs of $135 000 in the next financial year on products sold du ing the year
just ended. On 7 October 2023, the manufacturer pays $21 000 under the wa ranty. What is
the jou nal ent y made by TV Manufacture Ltd on 7 October 2023?
A Dr Wa ranty expense Cr Wa ranty liability

B Dr Wa ranty liability Cr Wa ranty expense

C Dr Wa ranty liability Cr Cash

D Dr Cash Cr Wa ranty liability

3. A consultant pe fo ms accounting se vices for a client on 30 June 2023 and bills the client
$350, to be paid within 60 days. Payment is received on 15 August 2023. Acc ual accounting
is used by both pa ties. What is the jou nal ent y made by the consultant on 30 June 2023?
A Dr Se vice revenue Cr Accounts payable

B Dr Accounts receivable Cr Cash

C Dr Accounts receivable Cr Se vice revenue

D None of the answers provided

4. A consultant pe fo ms accounting se vices for a client on 30 June 2023 and bills the client
$350, to be paid within 60 days. Payment is received on 15 August 2023. Acc ual accounting
is used by both pa ties. What is the jou nal ent y made by the consultant on 15 August 2023?
A Dr Cash Cr Accounts receivable

B Dr Cash Cr Se vice revenue

C Dr Accounts receivable Cr Cash

D None of the answers provided

5. Which of the following would be recorded as an asset?
A Prepayments

B Acc ued expenses

C Revenue received in advance

D All of the above would be recorded as assets

6. In 2023, Zealous Ltd paid $1900 for 2022 expenses, $32 000 for 2023 expenses and $4000
advance payment for 2024 expenses. Additionally, du ing 2023 Zealous Ltd acc ued $8000
for 2023 expenses to be paid in 2024. Fu niture depreciation for 2023 was $5000. What was
the acc ual accounting expense for 2023?
A $37 000

B $40 000

C $45 000

D None of the answers provided

7. At the end of the financial year, the usual adjusting ent y for depreciation on equipment was
omitted. Which of the following statements is t ue?
A Total assets will be understated at the end of the cu rent year

B The profit and loss statement will be misstated but the balance sheet will be co rect for the
cu rent year.

C Net profit will be overstated for the cu rent year.

D Total liabilities and total assets will be understated.

8. The balance in the Prepaid rent account before adjustment at the end of the year is $15 000,
which represents three months’ rent paid on May 1. The adjusting ent y required on June 30
is:
A Dr Rent expense $10 000 Cr Prepaid rent $10 000

B Dr Rent expense $5000 Cr Prepaid rent $5000

C Dr Prepaid rent $10 000 Cr Rent expense $10 000

D Dr Prepaid rent $5000 Cr Rent expense $5000

9. What is the co rect adjusting ent y at June 30, the end of the financial year, based on a
Supplies account balance, before adjustment, of $5200 and supplies invento y, on June 30,
of $1200?
A Dr Supplies $1200 Cr Supplies expense $1200

B Dr Supplies expense $1200 Cr Supplies $1200

C Dr Supplies expense $4000 Cr Supplies $4000

D Dr Supplies $4000 Cr Supplies expense $400

10. If the Prepaid rent account before adjustment at the end of the month has a debit balance of
$1500, representing a payment made on the first day of the month, and if the monthly rent
was $1000, the amount of prepaid rent that would appear on the balance sheet at the end of
the month, after adjustment, is:
A 500

B 1000

C 1500

D 2500

Solution

1. C
2. C
3. C
4. A
5. A
6. C
7. C
8. A
9. C
10. A