2.5 - Balance Day Adjustments [basic Level]

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| By BroSir
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BroSir
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Quizzes Created: 8 | Total Attempts: 1,758
| Attempts: 220
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  • 1/10 Questions
    Our non-current assets will incur wear and tear over their life with the business. This is known as... - ProProfs

    Our non-current assets will incur wear and tear over their life with the business. This is known as...

    • Accrued Income
    • Accrued Expense
    • Income in Advance
    • Prepayments
    • Allowance for Doubtful Debts
    • Depreciation
    • Bad Debts
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About This Quiz

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This is the Basic Level Quiz in regards to Balance Day Adjustments for NCEA Level Two.

When you feel that you are ready, please also take the Intermediate and Expert Level Quiz.

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2.5 - Balance Day Adjustments [basic Level] - Quiz

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  • 2. 
    Driver's Wages Owing. - ProProfs

    Driver's Wages Owing.

    • Accrued Income

    • Accrued Expense

    • Income in Advance

    • Prepayments

    • Allowance for Doubtful Debts

    • Depreciation

    • Bad Debts

    Correct Answer
    A. Accrued Expense
    Explanation
    Accrued expense refers to an expense that has been incurred but not yet paid for. In the context of "Driver's Wages Owing," it suggests that the company has accrued expenses related to the wages owed to its drivers. This means that the company has recognized the wages as an expense in its financial records, even though the payment has not been made yet. Accrued expenses are typically recorded as liabilities on the balance sheet, indicating the company's obligation to pay them in the future.

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  • 3. 
    The business has had to write off some of its customers' accounts, because it knows these cutomers will not pay their outstanding balances [debt]. - ProProfs

    The business has had to write off some of its customers' accounts, because it knows these cutomers will not pay their outstanding balances [debt].

    • Accrued Income

    • Accrued Expense

    • Income in Advance

    • Prepayments

    • Allowance for Doubtful Debts

    • Depreciation

    • Bad Debts

    Correct Answer
    A. Bad Debts
    Explanation
    The correct answer is "Bad Debts" because it refers to the accounts that the business has written off because it knows that the customers will not pay their outstanding balances. This indicates that the business has recognized that these debts are uncollectible and has decided to remove them from its accounts receivable.

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  • 4. 
    The business has paid for an expense [Insurance] before it has been used by the business. - ProProfs

    The business has paid for an expense [Insurance] before it has been used by the business.

    • Accrued Income

    • Accrued Expense

    • Income in Advance

    • Prepayments

    • Allowance for Doubtful Debts

    • Depreciation

    • Bad Debts

    Correct Answer
    A. Prepayments
    Explanation
    Prepayments refer to expenses that have been paid in advance by the business before they are actually used. In this case, the business has paid for insurance before it has been used, making it a prepayment. Prepayments are recorded as assets on the balance sheet and are gradually expensed over time as they are used or consumed.

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  • 5. 
    The business knows that based on the history of Accounts Receivable that some customers might not pay their accounts. There is a possibility that the customer will pay their debt, but as Accountants we have to be conservative. Therefore the business will create an.... - ProProfs

    The business knows that based on the history of Accounts Receivable that some customers might not pay their accounts. There is a possibility that the customer will pay their debt, but as Accountants we have to be conservative. Therefore the business will create an....

    • Accrued Income

    • Accrued Expense

    • Income in Advance

    • Prepayments

    • Allowance for Doubtful Debts

    • Depreciation

    • Bad Debts

    Correct Answer
    A. Allowance for Doubtful Debts
    Explanation
    The business creates an "Allowance for Doubtful Debts" to account for the possibility that some customers may not pay their accounts. This allowance is a provision made by the business to cover potential losses from customers who may default on their payments. It helps to reflect a more accurate representation of the accounts receivable and ensures that the financial statements are conservative.

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  • 6. 
    The business has received payment for work that is scheduled to commence next year. - ProProfs

    The business has received payment for work that is scheduled to commence next year.

    • Accrued Income

    • Accrued Expense

    • Income in Advance

    • Prepayments

    • Allowance for Doubtful Debts

    • Depreciation

    • Bad Debts

    Correct Answer
    A. Income in Advance
    Explanation
    Income in Advance refers to the situation where a business receives payment for goods or services that are yet to be provided or performed. In this case, the business has received payment for work that is scheduled to commence next year, indicating that the income has been received in advance. This is a liability for the business as it has an obligation to provide the goods or services in the future.

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  • 7. 
    Invoice on Hand for Electricity. - ProProfs

    Invoice on Hand for Electricity.

    • Accrued Income

    • Accrued Expense

    • Income in Advance

    • Prepayments

    • Allowance for Doubtful Debts

    • Depreciation

    • Bad Debts

    Correct Answer
    A. Accrued Expense
    Explanation
    Accrued expense refers to an expense that has been incurred but has not yet been paid. In the context of the given question, an invoice on hand for electricity would be considered an accrued expense because the electricity has been consumed but the payment has not been made yet. This means that the expense has been recognized in the accounting records, but the actual payment will be made at a later date.

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  • 8. 
    Interest is owing on the loan that we have taken out with the bank... - ProProfs

    Interest is owing on the loan that we have taken out with the bank...

    • Accrued Income

    • Accrued Expense

    • Income in Advance

    • Prepayments

    • Allowance for Doubtful Debts

    • Depreciation

    • Bad Debts

    Correct Answer
    A. Accrued Expense
    Explanation
    Accrued Expense refers to expenses that have been incurred but not yet paid. In this context, the interest on the loan is accruing, meaning that it is accumulating over time and will need to be paid in the future. Since it is an expense that has been incurred but not yet paid, it falls under the category of accrued expense.

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  • 9. 
    Dividends owing on shares we have invested in another company. - ProProfs

    Dividends owing on shares we have invested in another company.

    • Accrued Income

    • Accrued Expense

    • Income in Advance

    • Prepayments

    • Allowance for Doubtful Debts

    • Depreciation

    • Bad Debts

    Correct Answer
    A. Accrued Income
    Explanation
    Accrued income refers to the income that has been earned but not yet received. In this case, the company has invested in shares of another company and is entitled to receive dividends. However, the dividends have not been received yet, so they are considered as accrued income. This income will be recognized in the financial statements even though it has not been received in cash yet.

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  • 10. 
    Interest is owing on the term deposit that we have put into the bank... - ProProfs

    Interest is owing on the term deposit that we have put into the bank...

    • Accrued Income

    • Accrued Expense

    • Income in Advance

    • Prepayments

    • Allowance for Doubtful Debts

    • Depreciation

    • Bad Debts

    Correct Answer
    A. Accrued Income
    Explanation
    Accrued income refers to income that has been earned but not yet received. In this context, the interest on the term deposit is considered as accrued income because it has been earned by the depositor but has not been received yet. The income will be recorded as a receivable on the balance sheet until it is actually received.

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Nov 11, 2011
    Quiz Created by
    BroSir
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