WorksheetsACCRUALS AND PREPAYMENTS
Total questions: 20
Worksheet time: 8mins
On November 1, 2024, a business pays RM3,600 for a 12-month advertising campaign. If the financial year ends on December 31, 2024, what is the advertising expense that should be reported on the income statement for the year?
RM300
RM3,600
RM600
RM3,000
At the end of its financial year on December 31, MNO Enterprise determined that telephone services used in December, costing RM250, will not be paid for until January 2025. How is this item correctly described?
It is an accrual because an expense has been incurred but not yet paid.
It is an accrual because the invoice has not been received.
It is a prepayment because the cash will be paid in the future.
It is a prepayment because the expense relates to the current yeat.
UVW Manufacturing has wages of RM1,500 for the last week of December 2024 that will be paid in January 2025. What is the correct adjusting journal entry for December 31, 2024?
Debit Wages Expense RM1,500; Credit Cash RM1,500
Debit Accrued Wages RM1,500; Credit Wages Expense RM1,500
Debit Wages Expense RM1,500; Credit Accrued Wages RM1,500
Debit Prepaid Wages RM1,500; Credit Cash RM1,500
On July 1, 2024, STU Services paid RM4,800 for an insurance policy covering 12 months. What is the value of Prepaid Insurance that will be shown on the Statement of Financial Position as at December 31, 2024?
RM400
RM0
RM2,400
RM4,800
How is an accrued expense, such as unpaid wages at year-end, presented in the Statement of Financial Position?
As a current asset
As a reduction in equity
As a current liability
As a non-current liability
XYZ Enterprise pays RM3,000 on September 1, 2024 for rent covering 5 months (until January 31, 2025). The company's year ends on December 31, 2024. What is the total rent expense for 2024?
RM2,400
RM600
RM3,000
RM1,800
A business paid RM1,500 for insurance during the year. At year-end, it is determined that RM250 of this amount relates to the following year. What is the correct adjusting entry?
Debit Insurance Expense RM250; Credit Prepaid Insurance RM250
Debit Insurance Expense RM1,250; Credit Prepaid Insurance RM1,250
Debit Prepaid Insurance RM1,250; Credit Insurance Expense RM1,250
Debit Prepaid Insurance RM250; Credit Insurance Expense RM250;
PQR Trading has a total electricity bill of RM960 for the final quarter (October-December). As of December 31, this amount has not been paid. What is the impact on the financial statements for the year?
A current liability of RM960 but no expense until it is paid.
No impact, as the cash has not yet been paid.
An expense of RM960 and a current liability of RM960.
An expense of RM960 and a current asset of RM960.
On December 1, 2024, JKL Enterprise received RM6,000 from a tenant for 3 months' rent in advance (covering December, January, and February). JKL's year ends December 31. From JKL's perspective, the RM4,000 related to January and February is considered:
Prepaid rent expense
Accrued Revenue
Unearned Revenue (Deferred Income)
Rent Revenue
During the year ended December 31, 2024, ABC Traders paid RM24,000 in wages. At year-end, it was determined that an additional RM2,000 of wages for December had been incurred but were unpaid. What is the total wages expense for 2024?
RM2,000
RM26,000
RM22,000
RM24,000
XYZ Corporation incurred RM5,000 in advertising expenses during the year, but RM1,000 of this amount was for services to be rendered in the following year. What is the correct adjusting entry at year-end?
Debit Prepaid Advertising RM1,000; Credit Advertising Expense RM1,000
Debit Advertising Expense RM1,000; Credit Prepaid Advertising RM1,000
Debit Advertising Expense RM5,000; Credit Prepaid Advertising RM1,000
Debit Prepaid Advertising RM5,000; Credit Advertising Expense RM5,000
ABC Company has a total of RM2,500 in utility expenses for the month of December, but RM500 remains unpaid as of December 31. How should this be recorded in the financial statements?
As a current asset
As a current liability
As an expense only when paid
As a reduction in revenue
On September 1, 2024, DEF Enterprises paid RM1,200 for a 6-month insurance policy. What amount should be recognized as insurance expense for the year ending December 31, 2024?
RM1,200
RM400
RM600
RM800
ABC Corporation has a total of RM1,200 in office supplies purchased during the year, but RM300 of this amount is for supplies to be used in the following year. What is the correct adjusting entry at year-end?
Debit Office Supplies Expense RM300; Credit Prepaid Office Supplies RM300
Debit Prepaid Office Supplies RM300; Credit Office Supplies Expense RM300
Debit Office Supplies Expense RM1,200; Credit Prepaid Office Supplies RM300
Debit Prepaid Office Supplies RM1,200; Credit Office Supplies Expense RM1,200
On April 1, 2024, GHI Services paid RM2,400 for a 12-month subscription to a software service. What amount should be recognized as subscription expense for the year ending December 31, 2024?
RM1,200
RM600
RM2,400
RM1,800
During the year ended December 31, 2024, JKL Traders incurred RM10,000 in rent expenses. At year-end, it was determined that an additional RM1,500 of rent for December had been incurred but was unpaid. What is the total rent expense for 2024?
RM11,500
RM9,500
RM10,000
RM8,500
What is the Matching Principle in accounting?
Recording revenue and expenses in different accounting periods
Recording revenue and expenses in the same accounting period
Recording revenue before expenses
Recording expenses before revenue
What is the main advantage of using the Accrual Basis of Accounting?
Accurate measurement of profitability
Better tracking of expenses
Simpler calculation of cash flow
Less complexity in recording transactions
