SPECIALIZED MASTERS – CORE COURSES

Introduction to Financial Accounting

Offenbach
Solution

1
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1) Offenbach Co. granted a four-month loan. Interest on the loan has accrued for one
month and is expected to be collected when the loan is due (March X2)

A) Prepaid expense; B) Prepaid (deferred) revenue;

C) Accrued expense; D) Accrued revenue

ESSEC 2
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2) Offenbach Co. owns space office that it rents out. On April 1 X1 Offenbach Co.
rented out an office and received rent for an entire year.

A) Prepaid expense; B) Prepaid (deferred) revenue;

C) Accrued expense; D) Accrued revenue

ESSEC 3
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3) Offenbach Co. received on Oct. 1 X1 from its bank a loan to be repaid in Sept.
X2. The interest rate is 10%, payable in full at the time the loan will be repaid

A) Prepaid expense; B) Prepaid (deferred) revenue;

C) Accrued expense; D) Accrued revenue

ESSEC 4
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4) On Sept. 1 X1, Offenbach Co. paid insurance premium for coverage over the
next six months.

A) Prepaid expense; B) Prepaid (deferred) revenue;

C) Accrued expense; D) Accrued revenue

ESSEC 5
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5) The minutes of the last board meeting in X1 recorded the board’s decision to
give managers and employees year-end bonuses on the basis of X1 income, but
the payment of the bonuses was not made in X1.

A) Prepaid expense; B) Prepaid (deferred) revenue;

C) Accrued expense; D) Accrued revenue

ESSEC 6
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6) Offenbach Co. placed an advertisement in a local newspaper, in the last week of

December X1. The newspaper has not yet sent the invoice.

A) Prepaid expense; B) Prepaid (deferred) revenue;

C) Accrued expense; D) Accrued revenue

ESSEC 7