Summative test in FABM 1

Entries required at the end of an accounting period to bring the accounts up to date and to ensure the proper matching of income and expenses are called________.

• Matching Entries

• Adjusting Entries

• Correcting Entries

• Contra entries

Reversing entries are

• Optional

• made to record a change in corporate objectives

• required by generally accepted accounting principles

• made prior to preparing a post-closing trial balance

The amount of accrued but unpaid expenses at the end of the period is both an expense and

• a. a liability

• b. an asset

• c. a deferral

• d. an income

A deferred expense should be recorded when

• a. a non-cash resource is consumed after cash is paid

• b. an expense is incurred as cash is paid.

• c. a service is rendered before payment of cash.

• d. cash is paid before an expense has been incurred.

The accounts receivable that cannot be collected because of their bankruptcy or another reason are termed as:

• a. collectible accounts

• b. bad customers

• c. doubtful accounts

• d. uncollectible accounts

Deferred revenues should be reported as

• a. income on the income statement.

• b. contributed capital on the balance sheet.

• c. assets on the balance sheet.

• d. liabilities on the balance sheet.

Deferred expenses should be reported as

• a. income on the income statement.

• b. expenses on the income statement.

• c. assets on the balance sheet.

• d. liabilities on the balance sheet.

The broad classification of adjusting entries are:

• a. accruals and closing.

• b. accrual and deferral.

• c. trials and deferrals.

• d. closing and trials.

A deferred revenue should be recorded by a

• a. buyer when a service is received on payment of cash.

• b. seller when a customer pays for a service before the service is rendered.

• c. seller when a service is rendered on receipt of cash.

• d. seller when a service is rendered before receipt of cash.

It is a reference to the net amount of accounts receivable that will be collected.

• a. Book value

• b. Present value

• c. Net realizable value

• d. None of the above