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Problem 1: If the advanced payment of an expense was initially recorded in an asset account, then the adjusting entry will involve:
a. a debit to expense and a credit to an asset account in the amount of the expired cost. b. a debit to expense and a credit to an asset account in the amount of the unexpired cost. c. a debit to an asset account and a credit to expense in the amount of the expired cost. d. a debit to an asset account and a credit to expense in the amount of the unexpired cost.
Problem 2: Failure to record a revenue item which is not yet collected nor rendered:
a. understates assets b. understates profit for the period c. overstates expenses for the period d. does not affect anything in the FS
Financial Statement Analysis and Preparation
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