Unit 2 Topic 1 (2025)

Balance day adjustments are made to

• ensure that the balance sheet balances

• create additional revenue and balance sheet accounts

• Change revenue or expense accounts on balance day so that they show revenue earned and expenses incurred in the period

• create prepayments

Accrued expenses is what type of account?

• Asset

• Liability

• Revenue

• Expense

Transactions are recognised only on the date that cash is received or paid is which type of accounting

• Accrual accounting

• Cash accounting

An expense that has not been paid, but is owed in the current accounting period.

• Prepaid expense

• Unearned expense

• Accrued expense

• Cash expense

An expense that has been paid in one period and the benefits will be received in the subsequent

• Accrued Expense

• Prepaid Expense

• Cash Expense

• Unearned Expense

A prepaid expense is what type of account

• Asset

• Liability

• Expense

• Revenue

We are accruing wages for the year end.  What is the journal?

• Dr Accured Expense,  Cr Expense
• Dr Wages,  Cr Accrued expense
• Dr Wages,  Cr Prepaid expense
• Dr Wages,  Cr Accrued revenue

If commission owing @ 30 June is $1,000.00 what is the journal

• Dr Commission $1,000.00  Cr Accrued Revenue $1,000.00
• Dr accrued revenue $1,000.00  Cr  Commission Revenue $1,000.00
• Dr Accrued revenue  $500.00  Cr Commission $500.00
• Dr  Accrued expense $1,000.00  Cr Commission $1,000.00

Rent of $250 was received in advance. The BDA would be:

• DR Rent expense

  CR Unearned Revenue

• DR Accrued revenue

  CR Rent Revenue

• DR Rent revenue

  CR Unearned revenue

• DR Rent revenue

  CR Accrued revenue

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

Answer explanation

Advertising was paid in advance, so we need to expense the portion that was consumed this accounting period. This amount is owed to us.