Gce Model Questions Vol1 2020 Financial Accounting Question 3

Practice objective / multiple choice question 3 from the 2020 Gce Model Questions Vol1 Financial Accounting examination.

Gce Model Questions Vol1 2020 Financial Accounting Objective / Multiple Choice Easy Difficulty
Question 3 GCE_MODEL_QUESTIONS_VOL1 • 2020 • FINANCIAL_ACCOUNTING • objective

On 1 July a business receives a cash advance of \(\text{₦}10{,}000\) for services that will be performed evenly over the next two months. According to the accrual concept, how should the amount be recorded in the accounts on 31 July? Provide the journal entry that reflects the portion of revenue earned by that date.

Answer Options

A. Recognise ₦10,000 as revenue and retain ₦0 as unearned revenue (Debit Unearned Revenue ₦0, Credit Service Revenue ₦10,000).
B. Recognise ₦5,000 as revenue and retain ₦5,000 as unearned revenue (Debit Service Revenue ₦5,000, Credit Unearned Revenue ₦5,000).
Correct Answer C. Recognise ₦5,000 as revenue and retain ₦5,000 as unearned revenue (Debit Unearned Revenue ₦5,000, Credit Service Revenue ₦5,000).
D. Recognise ₦2,500 as revenue and retain ₦7,500 as unearned revenue (Debit Unearned Revenue ₦7,500, Credit Service Revenue ₦2,500).
Correct Answer
C
Correct Option:
Recognise ₦5,000 as revenue and retain ₦5,000 as unearned revenue (Debit Unearned Revenue ₦5,000, Credit Service Revenue ₦5,000).

About This Question

This is Gce Model Questions Vol1 2020 Financial Accounting Question 3. It is one of the objective questions from the 2020 Gce Model Questions Vol1 Financial Accounting examination.

Difficulty level: Easy .

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