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Financial Statements 2 Test 11

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Financial Statements 2 Test 11
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  • Question 1
    1 / -0
    Provision for bad debts are also known as deduction from __________ from balance sheet.
    Solution
    The amount of money that a business does not expect to collect from its clients. A bad or doubtful debt is an operating expense that can be reported on a financial statement when a customer is experiencing financial troubles or has filed for bankruptcy.
  • Question 2
    1 / -0
    Amount of prepaid expense is _______ from particular expense.
    Solution
    The amount of prepaid expense are deducted from the particular expense because as per Accrual system, only those expense and income should be recorded in the financial year which belongs to current accounting year.
    As prepaid expense belong to upcoming year therefore it is not part of expense of the current year.
    Prepaid Expense is an asset for the business.
  • Question 3
    1 / -0
    The Existence  of Bad Debts in trial balance signifies that the firm has already has incurred ________ arising from bad debts.
    Solution
     The existence of bad debts in the trial balance signifies loss arising out of bad debts during the year and which has been already recorded in the books of account. 
  • Question 4
    1 / -0
    Prepaid expenses is shown under ___________ side of balance side.
    Solution
    Generally, the amount of prepaid expenses that will be used up within one year are reported on a company's balance sheet as a current asset. As the amount expires, the current asset is reduced and the amount of the reduction is reported as an expense on the income statement.

  • Question 5
    1 / -0
    Expenses Paid in advance are called ________. 
    Solution
    Prepaid expenses are future expenses that have been paid in advance. In other words, prepaid expenses are costs that have been paid but are not yet used up or have not yet expired.
  • Question 6
    1 / -0
    Income received in advance is _______.
    Solution
    Under the accrual method of accounting, income that is received in advance is a liability because the company that received the money has not yet earned it and it has an obligation (a liability) to deliver the related goods or services in the future.
  • Question 7
    1 / -0
    Accrued interest will be ________ to interest account.
    Solution
    The amount of accrued interest for the recipient of the payment is a debit to the interest receivable (asset) account and a credit to the interest revenue account. The debit is rolled into the balance sheet (as a short-term asset) and the credit into the income statement.
  • Question 8
    1 / -0
    The portion of income belonging to next accounting year is called _______.
    Solution
    Sometimes earned revenue that belongs to a future accounting period is received in the current accounting period, such income is considered as income received in advance. It is also known as Unearned Income and is received before the related benefits are provided.
  • Question 9
    1 / -0
    Subscription received in advance Rs. 500 shall be ______________________.
  • Question 10
    1 / -0
    Accrued income is shown ___________ of balance sheet.
    Solution
    Accrued income is usually listed in the current assets section of the balance sheet in an accrued receivables account.
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