Accounting II - Chapter 21

(B) debit Interest Expense; credit Interest Payable.

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.

FALSE

The adjusting entry for deferred rent income results in a debit to Rent Income.

(D) debit Rent Expense; credit Prepaid Rent.

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.

(B) debit Interest Income; credit Income Summary.

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.

(D) debit Interest Receivable; credit Interest Income.

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.

TRUE

Accounting procedures require that revenue and expenses be recorded in the accounting period in which revenue is earned and expenses are incurred.

FALSE

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.

TRUE

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

(D) an asset or liability account.

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.

Reversing entry

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

Accrual

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

Deferral

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

TRUE

An expense that is paid in advance is recorded as an asset until the expense is incurred.

Accrued expenses

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

Deferred revenue

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

Accrued interest expense

Interest incurred but not yet paid.

Deferred expenses

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

(D) debit Unearned Rent Income; credit Rent Income.

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 Interest Payable; credit Interest Expense.

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.

FALSE

The reversing entry for accrued interest expense increases the balance of Interest Payable.

FALSE

The reversing entry for accrued interest income increases the balance of Interest Receivable.

TRUE

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

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

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.