Accounting Ch. 21

The adjusting entry for accrued interest expense is (A) debit Interest Payable; credit Interest Expense. (B) debit Interest Expense; credit Interest Payable. (C) debit Interest Expense; credit Income Summary. (D) debit Income Summary; credit Interest Expense

(B) debit Interest Expense; credit Interest Payable

An entry made at the beginning of one fiscal period to reverse an adjusting entry made in a previous fiscal period.

reversing entry

The closing entry for interest income is (A) debit Income Summary; credit Interest Income. (B) debit Interest Income; credit Income Summary. (C) debit Interest Income; credit Interest Receivable. (D) debit Interest Receivable; credit Interest Income.

(B) debit Interest Income; credit Income Summary

When reversing entries are used, and a note payable that was signed in a previous fiscal period is paid, (A) Interest Payable is credited for the amount of interest incurred in the current fiscal year. (B) Interest Payable is credited for the total amount of interest incurred during the full term of the note. (C) Interest Expense is debited for the amount of interest incurred in the current fiscal year. (D) Interest Expense is debited for the total amount of interest incurred during the full term of the note.

(D) Interest Expense is debited for the total amount of interest incurred during the full term of the note

An adjusting entry normally is reversed if the adjusting entry creates a balance in (A) a revenue or expense account. (B) a revenue and liability account. (C) an expense and asset account. (D) an asset or liability account.

(D) an asset or liability account

The entry to journalize the reversing entry for accrued interest expense is (A) debit Income Summary; credit Interest Expense. (B) debit Interest Payable; credit Income Summary. (C) debit Interest Expense; credit Income Summary. (D) debit Interest Payable; credit Interest Expense.

(D) debit Interest Payable; credit Interest Expense

The entry to journalize an adjusting entry for interest income is (A) debit Income Summary; credit Interest Income. (B) debit Interest Income; credit Income Summary. (C) debit Interest Income; credit Interest Receivable. (D) debit Interest Receivable; credit Interest Income.

(D) debit Interest Receivable; credit Interest Income

The adjusting entry for prepaid rent is (A) debit Income Summary; credit Rent Expense. (B) debit Rent Expense; credit Income Summary. (C) debit Rent Income; credit Prepaid Rent. (D) debit Rent Expense; credit Prepaid Rent.

(D) debit Rent Expense; credit Prepaid Rent

The entry to journalize the adjusting entry for unearned rent revenue that has now been earned is (A) debit Rent Income; credit Unearned Rent Income. (B) debit Unearned Rent Income; credit Income Summary. (C) debit Income Summary; credit Unearned Rent Income. (D) debit Unearned Rent Income; credit Rent Income.

(D) debit Unearned Rent Income; credit Rent Income

An entry recording revenue before the cash is received or an expense before the cash is paid.

accrual

Expenses incurred in one fiscal period but not paid until a later fiscal period.

accrued expenses

Interest incurred but not yet paid.

accrued interest expense

An entry recording the receipt of cash before the related revenue is earned or payment of cash before the related expense is incurred.

deferral

Payments for goods or services which have not yet been received.

deferred expenses

Cash received for goods or services which have not yet been provided.

deferred revenue

After adjustments at the end of a fiscal period, the balance in Prepaid Rent represents the amount of rent expense for the current fiscal period. (T/F)

false

Recording an adjusting entry for an accrued expense is an application of the Realization of Revenue concept. (T/F)

false

The adjusting entry for deferred rent income results in a debit to Rent Income. (T/F)

false

The adjusting entry for deferred rent revenue earned increases the Unearned Rent Income account. (T/F)

false

The reversing entry for accrued interest earned includes a credit to the Interest Income account. (T/F)

false

The reversing entry for accrued interest expense increases the balance of Interest Payable. (T/F)

false

The reversing entry for accrued interest income increases the balance of Interest Receivable. (T/F)

false

When a reversing entry is made for accrued interest expense, a credit entry to Interest Payable is required. (T/F)

false

Accounting procedures require that revenue and expenses be recorded in the accounting period in which revenue is earned and expenses are incurred. (T/F)

true

Accrued interest income is credited to the Interest Income account. (T/F)

true

After adjustments at the end of a fiscal period, the balance in Unearned Rent Income represents the rent still unearned. (T/F)

true

An expense that is paid in advance is recorded as an asset until the expense is incurred. (T/F)

true

At the end of a fiscal period, the Interest Expense balance after adjustments shows the amount of interest expense that has been incurred in that fiscal period. (T/F)

true

If cash is paid for a deferred expense, an asset is increased. (T/F)

true

If cash is received for revenue that has not been earned, a liability is increased. (T/F)

true

Revenue and expenses should be recorded when the revenue is earned and expenses are incurred. (T/F)

true

Reversing entries are not required in accounting. (T/F)

true

The adjusting entry for deferred rent expense incurred includes a credit to Prepaid Rent. (T/F)

true

The adjusting entry for deferred rent expense incurred increases the Rent Expense account. (T/F)

true

The adjusting entry for deferred rent revenue earned includes a credit to Rent Income. (T/F)

true

To record revenue that has been received but not yet earned, an entry is made that increases a liability account. (T/F)

true