Chp 6: Revenue and other income

Question 1

Explain the accrual basis of accounting behind the accounting of revenue and other income

Answer 1

It states that business activities that have

occurred, regardless of whether cash is paid or received, should be recorded in the relevant accounting period.

Question 2

Explain the revenue recognition theory behind the accounting of revenue and other income

Answer 2

It states that revenue is earned

when goods have been delivered or services have been provided.

Question 3

Rent income receivable is classified as ______________ with ______nature

Answer 3

Asset

Dr nature

Question 4

Rent income received in advance is classified as ______________ with ______nature

Answer 4

Liability

Cr nature

Question 5

Give journal entry on FIRST DAY OF Accounting period for

Rent Income receivable.

Hint: Reverse

Answer 5

Question 6

Journal Entry: Business received cheque for rent income

Answer 6

Question 7

Give journal entry on Last Day OF Accounting period for

Rent Income receivable.

Hint: Adjust (EARNED BUT NOT RECEIVED $)

Answer 7

Question 8

Journal Entry: To CLOSE OFF rent income ON LAST DAY

Answer 8

Question 9

Describe Jan 1

Answer 9

Rent income of $$ EARNED LAST YEAR but

not received now reversed

Question 10

Describe Dec 31 for $40 250

Answer 10

Business received $$ for rent income by cheque

Question 11

Describe Dec 31 for $4900

Answer 11

rent income $$ is earned but not yet received in this financial year.

Question 12

Describe Dec 31 for $38 650

Answer 12

rent income $$ is earned and transferred to i_ncome summary_