Lecture 4 ACC1014

Revenue is recognized in the period in which it is earned

Which from of accounting best suits this description?

• Cash Basis

• Accrual Basis

Expense is recognized in the period where actual cash is paid out

Which form of accounting best suits this description?

• Cash Basis

• Accrual Basis

Which accounting principle forms the basis of accrual accounting?

• Revenue Recognition Principle

• Matching principle

• Business entity principle

• Duality concept

Which one of these is considered as a liability?

• Accrued expenses

• Accrued revenue

• Deferred (prepaid) expenses

• Deferred (unearned) revenue

Which of the following adjustments involves the recognition of revenue/expense first before the recognition of asset/liabilities?

• Asset & Liabilities Method

• Revenue & Expense Method

Tran, the owner of Tran’s Clothing Alterations had an accrued utilities expenses worth RM2,000 as at 31st Dec 2019.

Choose the correct accounting entry that records this transaction.

(Dr - Debit entry, Cr - Credit entry)

• Dr utilities expense 2000

  Cr Cash

  2000

• Dr utilities expense 2000

  Cr accrued utilities expense 2000

• Dr accrued utilities expense 2000

  Cr utilities expense

  2000

• Dr cash 2000

  Cr utilities expense 2000

Tran, the owner of Tran’s Clothing Alterations paid RM2,400 for a 24-month insurance policy starting in Oct 2019. The financial year end of the business is at year ending Dec 2019.

Choose the correct accounting entry that records this transaction. (using asset liabilities method)

• Dr insurance expense 2400

  Cr Cash 2400

• Dr insurance expense 2400

  Cr Cash 2400

  Dr prepaid insurance 2100

  Cr insurance expense 2100

• Dr prepaid insurance 2400

  Cr Cash 2400

• Dr prepaid insurance 2400

  Cr Cash 2400

  Dr insurance expense 300

  Cr prepaid insurance 300

Tran, the owner of Tran’s Clothing Alterations settled the RM500 owed for Utilities Expense.

Choose the accounting entry that records this transaction.

• Dr utilities expense 500

  Cr Cash 500

• Dr Cash 500

  Cr accrued utilities expense 500

• Dr accrued utilities expense 500

  Cr Cash 500

• Dr Cash 500

  Cr utilities expense 500

What is the difference between asset-liabilities adjustment method and revenue-expense adjustment method?

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Tran, the owner of Tran’s Clothing Alterations had an accrued utilities expenses worth RM2,000 as at 31st Dec 2019.

Choose the correct accounting entry that records this transaction.

(Dr - Debit entry, Cr - Credit entry)

• Dr utilities expense 2000

  Cr Cash

  2000

• Dr utilities expense 2000

  Cr accrued utilities expense 2000

• Dr accrued utilities expense 2000

  Cr utilities expense

  2000

• Dr cash 2000

  Cr utilities expense 2000