2.5 - Balance Day Adjustments [basic Level]
![2.5 - Balance Day Adjustments [basic Level] - Quiz](/quiz-school/user_upload/ckeditor/logo-596104.jpg "2.5 - Balance Day Adjustments [basic Level] - Quiz"){kind=logo}
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This is the Basic Level Quiz in regards to Balance Day Adjustments for NCEA Level Two.
When you feel that you are ready, please also take the Intermediate and Expert Level Quiz.
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- 1.
Driver's Wages Owing.
- 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 an expense that has been incurred but not yet paid for. In the context of "Driver's Wages Owing," it suggests that the company has accrued expenses related to the wages owed to its drivers. This means that the company has recognized the wages as an expense in its financial records, even though the payment has not been made yet. Accrued expenses are typically recorded as liabilities on the balance sheet, indicating the company's obligation to pay them in the future.Rate this question:
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- 2.
Invoice on Hand for Electricity.
- 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 an expense that has been incurred but has not yet been paid. In the context of the given question, an invoice on hand for electricity would be considered an accrued expense because the electricity has been consumed but the payment has not been made yet. This means that the expense has been recognized in the accounting records, but the actual payment will be made at a later date.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 the income that has been earned but not yet received. In this case, the company has invested in shares of another company and is entitled to receive dividends. However, the dividends have not been received yet, so they are considered as accrued income. This income will be recognized in the financial statements even though it has not been received in cash yet.Rate this question:
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- 4.
The business has received payment for work that is scheduled to commence next year.
- 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
Income in Advance refers to the situation where a business receives payment for goods or services that are yet to be provided or performed. In this case, the business has received payment for work that is scheduled to commence next year, indicating that the income has been received in advance. This is a liability for the business as it has an obligation to provide the goods or services in the future.Rate this question:
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- 5.
The business has paid for an expense [Insurance] before it has been used by the business.
- 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
Prepayments refer to expenses that have been paid in advance by the business before they are actually used. In this case, the business has paid for insurance before it has been used, making it a prepayment. Prepayments are recorded as assets on the balance sheet and are gradually expensed over time as they are used or consumed.Rate this question:
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- 6.
The business has had to write off some of its customers' accounts, because it knows these cutomers will not pay their outstanding balances [debt].
- 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 correct answer is "Bad Debts" because it refers to the accounts that the business has written off because it knows that the customers will not pay their outstanding balances. This indicates that the business has recognized that these debts are uncollectible and has decided to remove them from its accounts receivable.Rate this question:
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- 7.
The business knows that based on the history of Accounts Receivable that some customers might not pay their accounts. There is a possibility that the customer will pay their debt, but as Accountants we have to be conservative. Therefore the business will create an....
- 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 DebtsExplanation
The business creates an "Allowance for Doubtful Debts" to account for the possibility that some customers may not pay their accounts. This allowance is a provision made by the business to cover potential losses from customers who may default on their payments. It helps to reflect a more accurate representation of the accounts receivable and ensures that the financial statements are conservative.Rate this question:
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- 8.
Our non-current assets will incur wear and tear over their life with the business. This is known as...
- 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. DepreciationExplanation
Depreciation refers to the gradual decrease in value of non-current assets over time due to wear and tear. As assets are used in the business operations, they become less valuable and efficient. Depreciation is a way to account for this decrease in value and allocate the cost of the asset over its useful life. It is important to record depreciation in financial statements to accurately reflect the true value of the assets and the overall financial position of the business.Rate this question:
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- 9.
Interest is owing on the loan that we have taken out with 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. In this context, the interest on the loan is accruing, meaning that it is accumulating over time and will need to be paid in the future. Since it is an expense that has been incurred but not yet paid, it falls under the category of accrued expense.Rate this question:
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- 10.
Interest is owing on the term deposit that we have put into 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
A. Accrued IncomeExplanation
Accrued income refers to income that has been earned but not yet received. In this context, the interest on the term deposit is considered as accrued income because it has been earned by the depositor but has not been received yet. The income will be recorded as a receivable on the balance sheet until it is actually received.Rate this question:
-
![The business has paid for an expense [Insurance] before it has been used by the business.
- ProProfs](/quiz-school/user_upload/ckeditor/Pay-Cash-Advance-300x300.jpg "The business has paid for an expense [Insurance] before it has been used by the business.")
![The business has had to write off some of its customers' accounts, because it knows these cutomers will not pay their outstanding balances [debt].
- ProProfs](/quiz-school/user_upload/ckeditor/debt.jpg "The business has had to write off some of its customers' accounts, because it knows these cutomers will not pay their outstanding balances [debt].")
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Mar 21, 2023Quiz Edited by
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Nov 11, 2011Quiz Created by
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