U2T2 Post-Test

The trial balance shows prepaid advertising as $10,000. Of this amount, $1,500 is consumed. What is the Balance Day Adjustment journal entry?

• Dr Advertising exp $1,500 Cr Prepaid exp $1,500
• Dr Prepaid exp $1,500 Cr Advertising $1,500
• Dr Advertising exp $1,500 Cr Accrued exp $1,500
• Dr Accrued exp $1,500 Cr Advertising exp $1,500

A customer paid $750 in advance for a service job that we will commence next financial year. What is the balance day adjustment journal entry?

• Dr Accrued revenue $750 Cr Service fee revenue $750
• Dr Service fee revenue $750 Cr Accrued revenue $750
• Dr Service fee revenue $750 Cr Unearned revenue $750
• Dr Unearned revenue $750 Cr Service fee revenue $750

A stocktake revealed a shortage of $500 worth of stock. What is the balance day adjustment journal entry?

• Dr Inventory adjustment $500 Cr Inventory $500
• Dr Inventory $500 Cr Inventory adjustment $500

Prepaid expenses are classified as:

• A Current Asset
• A Liability
• An Expense
• A Non-Current Asset

Accrued Expenses are classified as:

• An Asset
• A Liability
• An Expense
• Revenue

Accrued Revenues are classified as:

• A Current Asset
• A Liability
• An Expense
• A Non-Current Asset

Unearned Revenue are classified as:

• Revenue
• An Expense
• A Liability
• Assets

What is the purpose of calculating and posting Balance Day Adjustments?

PEARs are Assets. What does the acronym stand for? (select all that apply)

• Prepaid Expenses
• Accrued Revenue
• Unearned Revenue
• Accrued Expenses

URAE are Liabilities. What does the acronym stand for? (select all that apply)

• Prepaid Expenses
• Accrued Revenue
• Unearned Revenue
• Accrued Expenses