2.5 - Balance Day Adjustments [intermediate Quiz]
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This is the Intermediate Level Quiz in regards to Balance Day Adjustments for NCEA Level Two.
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- 1.
Record Driver's Wages Owing $2450.
- A.
Accrued Income
- B.
Accrued Expense
- C.
Income in Advance
- D.
Prepayments
- E.
Allowance for Doubtful Debts
- F.
Depreciation
- G.
Bad Debts
Correct Answer
B. Accrued ExpenseExplanation
Accrued expenses refer to expenses that have been incurred but not yet paid. In this case, the driver's wages of $2450 have been earned by the driver but have not yet been paid. Therefore, it is classified as an accrued expense.Rate this question:
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- 2.
Invoice on Hand for Electricity $1,092.50 including GST.
- A.
Accrued Income
- B.
Accrued Expense
- C.
Income in Advance
- D.
Prepayments
- E.
Allowance for Doubtful Debts
- F.
Depreciation
- G.
Bad Debts
Correct Answer
B. Accrued ExpenseExplanation
Accrued expense refers to expenses that have been incurred but not yet paid. In this case, the invoice for electricity has been received but not yet paid, making it an accrued expense. The amount of $1,092.50 includes GST, indicating that it is the total amount owed for the electricity usage.Rate this question:
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- 3.
Dividends owing on shares we have invested in another company.
- A.
Accrued Income
- B.
Accrued Expense
- C.
Income in Advance
- D.
Prepayments
- E.
Allowance for Doubtful Debts
- F.
Depreciation
- G.
Bad Debts
Correct Answer
A. Accrued IncomeExplanation
Accrued income refers to income that has been earned but not yet received. In this case, the dividends owing on shares that we have invested in another company have been earned by us as shareholders, but we have not yet received the actual payment. Therefore, it is considered as accrued income.Rate this question:
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- 4.
Shop rent is $2,500 per month excluding GST. Two months has been paid for in advance. The business uses the shop to sell its goods and pays the shop rent to Ray White Real Estate.
- A.
Accrued Income
- B.
Accrued Expense
- C.
Income in Advance
- D.
Prepayments
- E.
Allowance for Doubtful Debts
- F.
Depreciation
- G.
Bad Debts
Correct Answer
C. Income in AdvanceExplanation
The correct answer is "Income in Advance." This is because the business has paid two months' rent in advance, which means they have received income for those two months before actually providing the goods or services. This is considered income in advance because it is a payment received for a future period.Rate this question:
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- 5.
Record depreciation on shop fixture and fittings at 20% per annum, using the diminishing value method. Shop fixture and fittings cost $20,000. Accumulated depreciation to date is $5,000.
- A.
Accrued Income
- B.
Accrued Expense
- C.
Income in Advance
- D.
Prepayments
- E.
Allowance for Doubtful Debts
- F.
Depreciation
- G.
Bad Debts
Correct Answer
D. PrepaymentsExplanation
The given information states that the depreciation on shop fixture and fittings is recorded at 20% per annum using the diminishing value method. This means that each year, the value of the shop fixture and fittings decreases by 20% of its remaining value. The cost of the shop fixture and fittings is $20,000 and the accumulated depreciation to date is $5,000. Since the accumulated depreciation is less than the cost of the shop fixture and fittings, it indicates that there are prepayments made for the depreciation expense. Therefore, the correct answer is Prepayments.Rate this question:
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- 6.
Write off Bad Debts. $3,588 including GST.
- A.
Accrued Income
- B.
Accrued Expense
- C.
Income in Advance
- D.
Prepayments
- E.
Allowance for Doubtful Debts
- F.
Depreciation
- G.
Bad Debts
Correct Answer
G. Bad DebtsExplanation
The given correct answer, "Bad Debts," refers to the practice of writing off debts that are considered uncollectible. In this case, the amount of $3,588, including GST, is being written off as a bad debt. This means that the company has determined that it is unlikely to receive payment for this amount, and therefore removes it from their accounts receivable. Writing off bad debts is a common accounting practice to accurately reflect the financial position of a company.Rate this question:
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- 7.
Depreciation on manager's truck is 15% per annum, use the straight-line method. Manager's truck cost $40,000. Accumulated depreciation to date is $6,000.
- A.
Accrued Income
- B.
Accrued Expense
- C.
Income in Advance
- D.
Prepayments
- E.
Allowance for Doubtful Debts
- F.
Depreciation
- G.
Bad Debts
Correct Answer
E. Allowance for Doubtful Debts -
- 8.
Record the adjustment to the allowance to doubtful debts to 5% of Accounts Receivable.
- A.
Accrued Income
- B.
Accrued Expense
- C.
Income in Advance
- D.
Prepayments
- E.
Allowance for Doubtful Debts
- F.
Depreciation
- G.
Bad Debts
Correct Answer
F. Depreciation -
- 9.
Interest owing on balance date is $450 [this is in relation to a loan that was taken out from the bank].
- A.
Accrued Income
- B.
Accrued Expense
- C.
Income in Advance
- D.
Prepayments
- E.
Allowance for Doubtful Debts
- F.
Depreciation
- G.
Bad Debts
Correct Answer
B. Accrued ExpenseExplanation
Accrued expense refers to expenses that have been incurred but not yet paid for. In this case, the interest owing on the loan represents an expense that has been accrued but not yet settled. The $450 represents the amount of interest that has accumulated up to the balance date. This amount will need to be paid in the future, but it has not yet been recorded as an actual payment. Therefore, the correct answer is accrued expense.Rate this question:
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- 10.
Record interest owing on the term deposit that we have put into the bank - $560.
- A.
Accrued Income
- B.
Accrued Expense
- C.
Income in Advance
- D.
Prepayments
- E.
Allowance for Doubtful Debts
- F.
Depreciation
- G.
Bad Debts
Correct Answer
A. Accrued IncomeExplanation
Accrued income refers to the income that has been earned but not yet received. In this case, the interest owing on the term deposit has been earned by the company, but it has not been received yet. Therefore, it is considered as accrued income.Rate this question:
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- 11.
Close Phil's drawings account for the year ended 31 / 03 / 2012 [drawings are at $55,000].
- A.
Accrued Income
- B.
Accrued Expense
- C.
Income in Advance
- D.
Prepayments
- E.
Allowance for Doubtful Debts
- F.
Depreciation
- G.
Bad Debts
Correct Answer
A. Accrued IncomeExplanation
Accrued income refers to income that has been earned but not yet received or recorded. In this case, Phil's drawings account for the year ended 31/03/2012 is considered as accrued income because it represents the amount of money that Phil has withdrawn from the business during the year but has not yet been recorded as an expense. This amount will need to be recognized as income in the financial statements for the year, even though it has not been received yet.Rate this question:
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![Interest owing on balance date is $450 [this is in relation to a loan that was taken out from the bank].
- ProProfs](/quiz-school/user_upload/ckeditor/personal-banking-loan.jpg "Interest owing on balance date is $450 [this is in relation to a loan that was taken out from the bank].")
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Mar 21, 2023Quiz Edited by
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Nov 11, 2011Quiz Created by
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