FINANCIAL STATEMENT WITH ADJUSTMENTS

Which side of the profit and loss account would you record bad debts?

• • A) Credit side

• • B) Debit side

• • C) Adjusted in trading account

• • D) Not recorded

Outstanding expenses appear on which side of the balance sheet?

• • A) Liabilities side

• • B) Assets side

• • C) Not shown in the balance sheet

• • D) Both sides

If rent is paid for 15 months instead of 12 months, how will this be adjusted in the financial statements?

• • A) No adjustment is needed

• • B) Show 3 months' rent as outstanding

• • C) Show 3 months' rent as prepaid

• Show as an expenses

In the final accounts, unearned income is treated as:

• • A) An asset

• • B) A liability

• • C) An expense

• • D) A revenue

Which of the following is added to the opening capital in the balance sheet?

• • A) Drawings

• • B) Net loss

• • C) Fresh capital introduced

• • D) Expenses

The entry for depreciation on machinery is:

• • Debit Depreciation Account; Credit Machinery Account

• • Debit Machinery Account; Credit Depreciation Account

• • Debit Profit and Loss Account; Credit Depreciation Account

• Debit Machinery Account; Credit Profit and Loss Account

What is the treatment of prepaid expenses in the financial statements?

• • A) Shown as an asset

• • B) Shown as a liability

• • C) Shown as an expense

• • D) Not recorded

How are accrued income or income due but not received reflected in the financial statements?

• • A) Shown as an asset

• • B) Shown as a liability

• • C) Shown as an expense

• • D) Not recorded

Calculation of the provision for bad debts on

• • A) Debtors

• • B) Bad Debts

• • C) Cash

• • D) Inventory

Which of the following is considered a current liability?

• • A) Long-term debt

• • B) Bills payable

• • C) Share capital

• • D) Fixed assets