The adjustment to be made for income received in advance is:

Related Mcqs:

1. Payments received in advance from a customer for a contract can be__________?

   A. Shown as a deduction from contract work-in-progress on asset side
   B. Shown as a liability
   C. Credited to P&L A/c
   D. Either A or B above

2. Income earned but not received is called ____________?

   A. Fictitious assets
   B. Quick asset
   C. Real asset
   D. Outstanding asset

3. The creation of provision for doubtful debts given as an adjustment requires____________?

   A. Debit Profit and Loss Account and deduct the provision from debtors
   B. Credit Profit & Loss Account and deduct the provision from debtors
   C. Credit Profit and Loss Account and add the provision to debtors
   D. Debit Profit & Loss Account and add the provision to debtors

4. The adjustment to be made for prepaid expenses is____________?

   A. Add prepaid expenses to respective expenses and show it as an asset
   B. Deduct prepaid expenses from respective expenses and show it as an asset
   C. Add prepaid expenses to respective expenses and show it as a liability
   D. Deduct prepaid expenses from respective expenses and show it as a liability

5. Goods in stock worth 800 are destroyed by fire and the Insurance Co. is accepted the claim for 600. Adjustment would involve

   A. Debit of 800 to Trading Account and credit of 600 and 200 to insurance company and
   Profit and Loss Account respectively
   B. Deduct the 800 from closing stock in the Trading Account
   C. Credit insurance company for 600
   D. Debit of 600 and 200 to insurance company and Profit and Loss Account respectively and
   credit of 800 to Trading Account

6. Bank charges amounting to $5000 was not entered in the cash book. Identify the correct adjustment in cash book?

   A. Bank charges will be debited in cash book
   B. Bank charges will be added to cash book balance
   C. Bank charges will be credited in cash book
   D. Bank charges need no adjustment in cash book

7. A discount of $2000 was given to a supplier on his prompt repayment of debt but the cashier entered the gross amount in cash book. What should be the adjustment in cash to work out the correct balance of cash book?

   A. $2000 will be debited in cash book
   B. $2000 will be credited in cash book
   C. $4000 will be debited in cash book
   D. $4000 will be credited in the cash book

8. Bank sent debit advice of $500 to company being interest on overdraft. It wasn’t entered in cash book. Identify the correct adjustment in cash book.

   A. $500 will be debited
   B. $500 will be credited
   C. Non-adjustable
   D. $1000 will be subtracted

9. A company was entered in hire purchase agreement and had to pay $1000 per month. Three payments were made via bank account but no entry was found in cash book. Identify the correct adjustment in cash book

   A. $1000 will be added to cash book balance
   B. $2000 will be deducted from cash book balance
   C. $3000 will be added to cash book balance
   D. $3000 will be subtracted from cash book balance

10. $5000 deposited in bank account was entered twice in the cash book. Identify the correct adjustment in cash book.

    A. $5000 will be credited
    B. $5000 will be debited
    C. $10,000 will be credited
    D. $10,000 will be debited