Accounting 2 Chapter 9

The redemption of a gift card results in an increase in sales.

• True

• False

State laws determine whether a business can recognize unredeemed cards as revenue.

• True

• False

When cash is received for services, only that part of the service actually earned should be recorded as revenue in a fiscal period.

• True

• False

If the maturity date of a note is in a later fiscal period, an adjusting entry will be needed at the end of the current period.

• True

• False

The receipt of cash on an installment note increases Interest Income and Sales.

• True

• False

Unearned Rent is classified as a current liability on the balance sheet.

• True

• False

The principal portion of the monthly payments of an installment loan decreases each month.

• True

• False

The adjusting entry to record accrued interest revenue includes a

• Debit to other revenue

• Credit to interest receivable

• Credit to interest income

• Debit to interest income

A retail business that expects outstanding gift cards to never be redeemed will record as a

• Credit to unearned revenue

• Credit to breakage revenue

• Debit to breakage revenue

• Credit to gift cards outstanding

Over the term of an installment notes receivable

• the interest portion of each monthly payments remain constant

• the interest portion of each monthly payment increases

• the monthly payment amount decreases

• the principal portion of each monthly payment increases