Chapter 19 Prepaid and Accrued Revenues - Test

1. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 1
Chapter 19 Test – Balance-Day Adjustments for Revenue
Name ___________________________________________
Circle the correct response for each question:
1. (a) (b) (c) (d)
2. (a) (b) (c) (d)
3. (a) (b) (c) (d)
4. (a) (b) (c) (d)
5. (a) (b) (c) (d)
6. (a) (b) (c) (d)
7. (a) (b) (c) (d)
8. (a) (b) (c) (d)
9. (a) (b) (c) (d)
10. (a) (b) (c) (d)
11. (a) (b) (c) (d)
12. (a) (b) (c) (d)
13. (a) (b) (c) (d)
14. (a) (b) (c) (d)
15. (a) (b) (c) (d)
16. (a) (b) (c) (d)
17. (a) (b) (c) (d)
18. (a) (b) (c) (d)
19. (a) (b) (c) (d)
20. (a) (b) (c) (d)
21. (a) (b) (c) (d)
22. (a) (b) (c) (d)
23. (a) (b) (c) (d)
24. (a) (b) (c) (d)
25. (a) (b) (c) (d)
Total /25 marks

2. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 2
Chapter 19 Test – Balance-Day Adjustments for Revenue
1. Prepaid Revenue is:
a) Revenue that has not been received but has been earned
b) Revenue that has been received but not yet earned
c) Revenue that has been received and earned
d) Revenue that has not been received and has not yet been earned
2. Prepaid Revenue is classified as a:
a) Asset
b) Revenue
c) Liability
d) Expense
A firm had the following ledger accounts at the end of its reporting period on 31 December 2015:
Prepaid Sales Revenue
1 Jan 15 Balance 9000
31 Dec 15 Bank 55000
On 31 December 2015 the firm had $6,000 of prepaid revenue for products that will be delivered in
January 2016.
3. The total revenue earned for 2015 is:
a) $64,000
b) $70,000
c) $58,000
d) $55,000

3. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 3
A small business making custom-made furniture always requires customers to prepay for all orders.
During the year ended 30 September 2015, the business received a total of $188,000 from its
customers. The owner of the business has determined that $179,000 of this amount had been
earned by the end of the reporting period.
4. The General Journal entry required to record the revenue earned for the period is:
a)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
30 Sep Prepaid sales revenue 188000
Sales revenue 188000
b)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
30 Sep Prepaid sales revenue 179000
Sales revenue 179000
c)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
30 Sep Prepaid sales revenue 9000
Sales revenue 9000
d)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
30 Sep Sales revenue 179000
Prepaid sales revenue 179000
5. The effect on the Balance Sheet of the balance-day adjustment above to record the amount of
revenue earned for the period is:
Assets Liabilities Owner’s Equity
a) No effect Decrease Decrease
b) Increase Decrease Increase
c) Increase Increase No effect
d) No effect Decrease Increase

4. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 4
The Camberwell Times newspaper offers 12-month subscriptions to readers for $500 each per year
(plus $50 GST). During the year ended 30 June 2015, the business received a total of $73,700 from
subscribers consisting of $67,000 of subscriptions and $6,700 of GST. On balance day, the firm has
established that $5,000 of the revenue received has not yet been earned.
6. Once the balance-day adjustment has been made on 30 June, the Prepaid Subscriptions
Revenue ledger will look like:
a)
Prepaid Subscriptions Revenue
30 Jun Subscriptions revenue 68700 30 Jun Bank 73700
30 Jun Balance 5000
73700 73700
1 Jul Balance 5000
b)
Prepaid Subscriptions Revenue
30 Jun Subscriptions revenue 62000 30 Jun Bank 67000
30 Jun Balance 5000
67000 67000
1 Jul Balance 5000
c)
Prepaid Subscriptions Revenue
30 Jun Bank 67000
30 Jun Profit and loss summary 72000 30 Jun Subscriptions revenue 5000
72000 72000
d)
Prepaid Subscriptions Revenue
30 Jun Subscriptions revenue 68200 30 Jun Bank 73700
30 Jun Balance 5500 30 Jun Subscriptions revenue
73700 73700
1 Jul Balance 5500
7. On 30 June 2015, the $5,000 of revenue received that has not yet been earned would be
reported as a:
a) Revenue
b) Asset
c) Expense
d) Liability

5. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 5
The following transactions relate to a small trading business selling stereo equipment:
11 May An order for 15 stereos was placed by House Hi-Fi at a price of $350 each (plus
GST). The customer paid a deposit of $1,000 to confirm the order. Receipt 53 was
issued to the customer. The cost price of the stereos was $200 each.
28 June The business delivered the 15 stereos to House Hi-Fi and issued invoice 726 for the
full amount of the sale less the deposit already received in May.
30 June The firm’s annual reporting period ends.
8. The entry required in the Cash Receipts Journal on 11 May is:
a)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
11 May Prepaid sales revenue 53 1000 1000
b)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
11 May Prepaid sales revenue 53 1000 1000
c)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
11 May Prepaid sales revenue 53 1100 1000 100
d) No entry is required on this date.
9. The entry required in the Sales Journal on 28 June when the delivery of 15 units is made will be:
a)
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales
$
Sales $ GST $
Debtors
Control $
28 Jun House Hi-Fi 726 3000 5250 525 5775
b)
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales
$
Sales $ GST $
Debtors
Control $
28 Jun House Hi-Fi 726 200 1000 100 1100

6. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 6
c)
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales
$
Sales $ GST $
Debtors
Control $
28 Jun House Hi-Fi 726 3000 4250 425 4675
d)
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales
$
Sales $ GST $
Debtors
Control $
28 Jun House Hi-Fi 726 3000 4250 525 4775
The owner of Crafty Computers received an order from a customer, Ace Accountants, for 20 laptops.
The order was placed along with a deposit of $2,500 on 14 October 2015 (Receipt 128). The selling
price of each laptop is $700 (plus GST), while the cost price is $400 each (plus GST). On 24 December
2015 the 20 laptops were delivered to Ace Accountants and Invoice 763 was issued by Crafty
Computers. The firm’s annual reporting period ends on 31 December each year.
10. The impact of the receipt of the $2,500 deposit from Ace Computers on 14 October on the
Balance Sheet of Crafty Computers will be:
Assets Liabilities Owner’s Equity
a) Increase Increase No effect
b) Increase Increase Increase
c) No effect Decrease Increase
d) Increase Decrease No effect
11. The the balance-day adjustment required on 31 December 2015 is:
a)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
31 Dec Bank 2500
Prepaid sales revenue 2500
b)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
31 Dec Sales revenue 2500
Prepaid sales revenue 2500

7. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 7
c)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
31 Dec Debtors control 15400
Debtor – Ace Accountants 15400
Sales revenue 14000
GST clearing 1400
Cost of sales 8000
Stock control 8000
d)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
31 Dec Prepaid sales revenue 2500
Sales revenue 2500
The owner of Rob’s Rides sells motor vehicles to large businesses requiring fleet cars. On 12
February 2015, Rob’s Rides accepted an order to provide 5 vehicles to PHB Services at a price of
$15,000 per vehicle, plus $1,500 GST. Rick’s Rides agreed to provide the vehicles but required a
payment of 20% of the selling price as a deposit. This was received from PHB Services on 14 February
2015 and Receipt 97 was issued. The reporting period for Rick’s Riders ends on 31 March each year.
A mark-up of 50% is applied to all vehicles sold by the business.
Rob’s Rides had difficulty providing the vehicles as only 3 vehicles were in stock at the time of the
order. On 31 March 2015 the business delivered 3 vehicles to PHB Services (Invoice 746). The
remaining 2 vehicles were not delivered until 21 April 2015 and Invoice 756 was issued on this date.
12. The entry required in the Cash Receipts Journal on 12 February 2015 is:
a)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
14 Feb Prepaid sales revenue 97 15000 15000
b)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
14 Feb Prepaid sales revenue 97 16500 16500

8. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 8
c)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
14 Feb Prepaid sales revenue 97 15000 15000
d) No entry is required on this date.
13. If the balance-day adjustment on 31 March 2015 to record the prepaid revenue earned is not
made, the impact on the Balance Sheet of Rick’s Rides will be:
Assets Liabilities Owner’s Equity
a) Understated $15,000 Understated $15,000 No effect
b) No effect Understated $15,000 Overstated $15,000
c) No effect Overstated $15,000 Understated $15,000
d) No effect Overstated $16,500 Understated $16,500
14. The entry in the Sales Journal on 31 March 2015 will be:
a)
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales
$
Sales $ GST $
Debtors
Control $
31 Mar PHB Services 746 30000 30000 4500 34500
b)
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales
$
Sales $ GST $
Debtors
Control $
31 Mar PHB Services 746 22500 30000 4500 34500
c)
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales
$
Sales $ GST $
Debtors
Control $
31 Mar PHB Services 746 30000 30000 3000 33000
d)
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales
$
Sales $ GST $
Debtors
Control $
31 Mar PHB Services 746 30000 45000 4500 49500

9. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 9
15. The entry in the Sales Journal on 21 April 2015 will be:
a)
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales
$
Sales $ GST $
Debtors
Control $
21 Apr PHB Services 756 20000 15000 3000 18000
b)
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales
$
Sales $ GST $
Debtors
Control $
21 Apr PHB Services 756 15000 30000 3000 33000
c)
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales
$
Sales $ GST $
Debtors
Control $
21 Apr PHB Services 756 50000 75000 7500 82500
d)
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales
$
Sales $ GST $
Debtors
Control $
21 Apr PHB Services 756 20000 30000 3000 33000
16. Accrued Revenue is:
a) Revenue that has been earned but not yet received
b) Revenue that has not been earned but has been received
c) Revenue that has been received and earned
d) Revenue that has not been earned and has not yet been received
17. Accrued Revenue is classified as a:
a) Expense
b) Asset
c) Liability
d) Revenue

10. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 10
On 1 July 2015 a small business invested $12,000 in 7% state government bonds for four years. The
interest is to be received by the business on 30 June each year. Balance-day adjustments are
required on 31 March at the end of the annual reporting period.
18. The General Journal entry required to record the interest earned for the period on 31 March
2016 is:
a)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
31 Mar Accrued interest revenue 840
Interest revenue 840
b)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
31 Mar Accrued interest revenue 630
Interest revenue 630
c)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
31 Mar Accrued interest revenue 210
Interest revenue 210
d) No entry is required on this date.
19. The interest received by the firm for the year ended 31 March 2016 is:
a) $630
b) $210
c) $840
d) $0
20. The entry required in the firm’s Cash Receipts Journal on 30 June 2016 is:
a)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
30 Jun Accrued interest revenue 840 630
Interest revenue 210

11. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 11
b)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
30 Jun Accrued interest revenue 630 630
Interest revenue 210 210
c)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
30 Jun Accrued interest revenue 840 210
Interest revenue 630
d) No entry is required on this date.
21. A small business took out a term deposit on 1 February 2015 for three years by investing
$40,000. The bank will pay 7.5% interest on the investment and interest will be paid on 31
March, 30 June, 30 September and 31 December each year. The firm’s reporting period ends on
30 September each year. For the year ended 30 September 2015 the interest earned and
received will be:
Interest earned Interest received
a) $2,000 $2,000
b) $1,750 $1,750
c) $2,000 $1,750
d) $1,750 $2,000
For the year ended 30 June 2015 the owner of a small business recorded receipts of commission
revenue of $17,000 (plus GST). However, on balance-day the owner realised that another $5,000 of
commission revenue has been earned but not yet received.
22. The impact of the balance-day adjustment required on 30 June 2015 to record the accrued
revenue on the firm’s Income Statement is:
Revenues Expenses Net Profit
a) Increase Increase Increase
b) Increase No effect Decrease
c) Increase No effect Increase
d) No effect Increase Increase

12. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 12
23. Once the required balance-day adjustments and closing entries have been made on 30 June
2015, the Commission Revenue ledger will look like:
a)
Commission Revenue
30 Jun Bank 12000
30 Jun Profit and loss summary 17000 30 Jun Accrued commission revenue 5000
17000 17000
b)
Commission Revenue
30 Jun Bank 17000
30 Jun Balance 22000 30 Jun Accrued commission revenue 5000
22000 22000
1 Jul Balance 22000
c)
Commission Revenue
30 Jun Bank 17000
30 Jun Profit and loss summary 22000 30 Jun Accrued commission revenue 5000
22000 22000
d)
Commission Revenue
30 Jun Bank 17000
30 Jun Accrued commission revenue 5000 30 Jun Profit and loss summary 22000
22000 22000

13. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 13
The owner of a business invested $12,000 in a two-year term deposit at 5.5%. The investment was
made on 1 May 2015 and the business closes its books on 31 December each year. Interest on the
investment is paid twice a year on 30 April and 31 October.
24. The balance-day adjustment required to record the accrued interest on 31 December 2015 is:
a)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
31 Dec Accrued interest revenue 440
Interest revenue 440
b)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
31 Dec Accrued interest revenue 110
Interest revenue 110
c)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
31 Dec Accrued interest revenue 330
Interest revenue 330
d)
General Journal
Date Particulars General Ledger Subsidiary Ledger
Debit $ Credit $ Debit $ Credit $
31 Dec Accrued interest revenue 220
Interest revenue 220

14. VCE ACCOUNTING
UNIT 4 – CONTROL AND ANALYSIS OF BUSINESS PERFORMANCE
CHAPTER 19 – BALANCE-DAY ADJUSTMENTS FOR REVENUE
© Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Page | 14
25. The entry required in the Cash Receipts Journal to record the receipt of interest on 30 April
2016 is:
a)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
30 Apr Accrued interest revenue 110 110
Interest revenue 220 220
b)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
30 Apr Accrued interest revenue 330 220
Interest revenue 110
c)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
30 Apr Accrued interest revenue 330 110
Interest revenue 220
d)
Cash Receipts Journal
Date Details
Receipt
Number
Bank $
Debtors
Control $
Cost of
Sales $
Sales $ Sundries
$
GST $
30 Apr Accrued interest revenue 330 330