FABM1-REVIEW

Revenue results from collection of accounts receivable

• True

• False

When teh reduction in prepaid expenses is not recorded properly, this causes the assets accounts and expense accounts to be understated.

• True

• False

Accrued revenue is a term used to describe revenue that has been received but not yet earned.

• True

• False

Which of the following transactions results in an increase in expense?

• purchase of equipment on credit

• cost of employees salaries

• payment on accounts payable

• repayment of principal of bank loan

As the usefulness of the asset property and equipment expires,___.

• the cost of the asset is allocated to an expense account

• a liability is created

• a related expense account is reduced

• an amount is transferred from one asset account to another

which of the following assets is not subject to depreciation?

• art equipment

• store fixtures

• computers

• land

Which of the following pairs of accounts would NOT appear in the same adjusting entries?

• Service revenues and accounts receivable

• interest revenues and interest payable

• service revenues and unearned revenues

• rent expense and rent payable

The decrease in usefulness of property and equipment as time passes is called___.

• consumption

• deterioration

• depreciation

• ontra asset

If a P2,500 adjustment for depreciation is omitted, which of the following financial statement errors will occur?

• expenses will be overstated

• profi will be understated

• owner's equity will be overstated

• assets will be understated

An item that represents services received by the firm for which it will pay for in the future is called ___.

• a prepaid expense

• an unearned revenue

• an accrued revenue

• an accrued expense