Which of the following accounts would be increased with a credit?

14. Which of the following accounts would be increased with a
credit?

	a.	Accounts Payable; Unearned Revenue; Common Stock
	b.	Dividends; Accounts Receivable; Unearned Revenue
	c.	Cash; Accounts Receivable; Common Stock
	d.	Land; Accounts Payable; Dividends

15. Which one of the accounts below would likely be included in
an accrual adjusting entry?

	a.	Unearned Rent
	b.	Interest Expense
	c.	Insurance Expense
	d.	Prepaid Rent

16. Which account would normally not require an
adjusting entry?

	a.	Wages Expense
	b.	Cash
	c.	Accounts Receivable
	d.	Accumulated Depreciation

17.

April	14	Equipment	15,000
		Cash		5,000
		Note Payable		10,000
		????????????.

Which is the best explanation for this journal entry?

	a.	Purchased equipment; paid cash of $5,000, with the remainder to be paid in the future.
	b.	Purchased equipment with cash.
	c.	Purchased equipment on account.
	d.	Purchased equipment; paid cash of $10,000, with the remainder to be received in the future.

18. The posting process will include the transfer of which of
the following data from the journal to the account?

	a.	date, amount (debit or credit), journal page number
	b.	date, amount (debit or credit)
	c.	amount (debit or credit), account number
	d.	date, amount (debit or credit), account number

Answer

General guidance

Concepts and reason

Accrual Basis of Accounting: – This defined as the type of accounting wherein the revenues are noted on the profit or loss statement as and when they are earned. The revenues earned are recorded under asset receivable accounts until cash is received. The expenses are reported on the statement of profit or loss to match with the income being reported.

A liability account would be maintained to record these expenses until cash is being paid. In the accrual basis of the accounting, cash receipt and cash payment are not important for reporting purpose.

Fundamentals

Revenues: -This is defined as the money that the company receives on providing specific services. It may get recorded on monthly basis, quarterly basis or on annual basis. It is generally computed as the product of the selling price determined by the business with the number of the units sold by the business.

Expenses: – This is defined as the money that the company or the business spends in making a specific product or service. In other words, this basically described as the cost that the business incurs in running the operation.

Asset Account: – This is defined as the permanent or the accounts of assets that records the income for which cash is yet to be received. This not closed routinely. This is a general ledger account that records the debit and credit that happens during the course of business of the company.

Liability Account: – This is defined as the amount that records the liability held by the business. These are also general ledger accounts maintain by the business for which cash are to be paid.

Step-by-step

Step 1 of 3

14.

The line items that increase with the credit balance are account payable, common stock and unearned revenue. The line items that increase with the debit is account receivable, cash, dividends and land.

Part 14

The accounts that would increase with a credit are Account payable, common stock and unearned revenue.

The debit entry always increases an account of asset and account of the expense. The credit entry on the other hand decreases the asset account and expense account. The credit entry always increases the liability account and equity account and the debit entry always decreases the account of the liability and equity account.

Therefore, an unearned revenue is the account of the liability that receives payment with debit to the cash with the corresponding credit to the unearned revenue. Similarly account payable is a liability account and the credit entry would always increase the value of the account payable. The common stock forms a part of the owners account and any credit would increase its balance.

Step 2 of 3

15.

The interest expense is the account that would be likely be included in the accrual adjusting entry. The unearned rent, insurance expense and prepaid expense are not included in the accrual adjusting entry.

Part 15

Interest Expense is the account that would be included in the accrual adjusting entry.

The adjusting entries can be bifurcated to the deferrals and accruals. The interest expense is adjusted on the accrual basis as the business would incur the expense during the accounting period and it would be liable to be paid at the end of the accounting period. The prepaid expense, insurance expense and unearned rent are basically deferrals and are adjusted on two or more accounting periods.

Step 3 of 3

16.

The wages expense, account receivable and accumulated depreciation would require the adjusting entry. The cash is the account that doesn’t require adjusting entry.

Part 16

Cash is the account that would not require an adjusting entry.

All the account line items except cash would require adjusting entries. The goal of the adjusting entries is to match and account for the expense with the corresponding revenues where one entry of adjustment would have one balance sheet account and one account for the income statement in the journal entry.