Accounting - Study Mode
[#1571] _______ are cheques that are issued by the business but not yet presented to bank for payment
Correct Answer
(C) Outstanding cheques
Explanation
Solution: Outstanding cheques are cheques that are issued by the business but not yet presented to bank for payment.
[#1572] Accrued expenses are considered as
Correct Answer
(B) Liability
Explanation
Solution: Accrued expenses are considered as Liability. Accrued expenses are typically periodic, and are documented on a company's balance sheet as current liabilities.
[#1573] Prepaid expenses are considered as
Correct Answer
(A) Asset
Explanation
Solution: Prepaid expenses are considered as Asset. Prepaid expenses are future expenses that have been paid in advance. You can think of prepaid expenses as costs that have been paid but have not yet been used up or have not yet expired. The amount of prepaid expenses that have not yet expired are reported on a company's balance sheet as an asset.
[#1574] Earned but not yet received income is treated as
Correct Answer
(A) Asset
Explanation
Solution: Earned but not yet received income is treated as Asset. It is income earned during a particular accounting period but not received until the end of that period. It is treated as an asset for the business.
[#1575] Revenue earned but not yet received by the business is known as
Correct Answer
(C) Accrued revenue
Explanation
Solution: Revenue earned but not yet received by the business is known as Accrued revenue. Accrued income is very important in accounting because companies receive advances for their goods or services all the time. To prevent overstating certain accounts, companies need to differentiate between the revenue that they have earned versus revenue that they have not earned yet.