Adjustment for Revenue in Advance

Q.

What is the correct entry for recording rent received in advance as at the end of the financial year amounting to Rs 1, 000?

1. None of these

2. Rent received in advance A/c Dr	1, 000
   To Rent income A/c	1, 000

3. Cash A/c Dr	1, 000
   To Rent received in advance A/c	1, 000

4. Rent A/c Dr	1, 000
   To Cash A/c	1, 000

Q.

Incomes received in advance are regarded as ________

1. Asset

2. Capital

3. Liability

4. Expense

Q. On 1st April, 2015, Shivam Enterprise purchased a second-hand machinery for ₹ 52, 000 and spent ₹ 2, 000 on cartage, ₹ 3, 000 on unloading, ₹ 2, 000 on installation and ₹ 1, 000 as brokerage of the middle man. It was estimated that the machinery will have a scrap value of ₹ 6, 000 at the end of its useful life, which is 10 years. On 31st December 2015, repairs and renewals amounted to ₹ 2, 500 were paid. On 1st October, 2017, this machine was sold for ₹ 30, 600 and an amount of ₹ 600 was paid as commission to an agent. Calculate the amount of annual depreciation and rate of depreciation. Also prepare the Machinery Account for first 3 years, assuming that firm follows financial year for accounting.

Q.

What is another name for incomes received in advance?

1. Unearned incomes

2. None of these

3. Outstanding incomes

4. Accrued incomes

Q.

Parth has an accounting year ending on 31st March. He receives rent quarterly in advance amounting Rs. 45, 000 on 1 January, 1 April, 1 July and 1 October but for the current year, he received the rent on 31st March instead for 1st April. What shall be the amount of rental income to be recorded in the profit & loss account for the year?

1. Rs. 45, 000

2. Rs. 90, 000

3. Rs. 1, 80, 000

4. Rs. 2, 25, 000

Q.

What do you understand by income received in advance?

1. None of the above

2. Incomes which have been earned & received

3. Income earned for providing a service or selling a product that is yet to be received.

4. Incomes which are received but not yet earned

Q. X bought a machine for ₹ 25, 000 on which he spent ₹ 5, 000 for carriage and freight. ₹ 1, 000 for brokerage of the middleman, ₹ 3, 500 for installation and ₹ 500 for an iron pad. The machine is depreciated @ 10% every year on Written Down Value basis. After three years, the machine was sold to Y for ₹ 30, 500 and ₹ 500 was paid as commission to the broker through whom the sale was effected. Find out the profit and loss on sale of machine.

Q.

At the start of the year, the balance sheet contained a balance for rent received in advance of Rs. 1, 000. Rs. 15, 000 was received throughout the year and at the year end, it was clear that Rs. 2, 000 was still receivable for the year. Which of the following is the correct entry in the profit and loss account?

1. Rent Income of Rs. 15, 000

2. Rent Income of Rs. 17.000

3. Rent Income of Rs. 16, 000

4. Rent Income of Rs. 18, 000

Q. are incomes pertaining to a later accounting period for which money is already received.

1. Revenue in advance
2. Accrued incomes
3. Future incomes
4. Outstanding incomes

Q. Explain each of the following accounting terms with examples.
Fixed assets
Gain
Profit
Revenue
Expenses
Short term liability
Capital

Q.

________ are incomes pertaining to a later accounting period for which money is already received.

1. Revenue in advance

2. Both A & B

3. Accrued income

4. None of these

Q. __________ = income received + o/s income - income received in advance.

1. Total expense
2. Total income
3. Asset
4. Liability

Q. Accrued income is the income earned by a company for providing a service or selling a product for which money is yet to be received.

1. True
2. False

Q. Question

Q. The amount paid to the petty cashier at the beginning of a period is known as __________ amount.

1. None of these
2. Imprest
3. Credit
4. Idle