2. Which of the following statements is correct? a. Unearned Revenue is increase

Question

2. Which of the following statements is correct? a. Unearned Revenue is increased with a credit b. Rent Expense is increased with a credit c. Accounts Payable is decreased with a credit d. Prepaid Expenses are decreased with a debit What do closing entries accomplish? a. b. c. d. 3. Zero out the revenues, expenses, and capital accounts Transfers owner capital to owner withdrawals Bring the Capital account to its correct ending balance All of the above Unearned Revenue is classified as a. A revenue account b. An asset account c. A liability account d. A contra asset account 4.

Explanation / Answer

Solution(2): Option(a) is correct.

Explanation: Unearned revenue is an advance receipts of revenues. So, it is a liability. Therefore, unearned revenue will increase with a credit.

Solution(3): Option(d) is correct.

Explanation: The closing entries are journal entries which are made at the end of the accounting cycle to set the balance of temporary accounts to zero and to begin the next accounting period. Here, the closing entries accomplish all the things that are mentioned above.

Solution(4): Option(C) is correct.

Explanation: An Unearned revenue is an advance receipts of revenues. Therefore, it is classified as a liability account.

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