Question

Revaluation Magazine receives $90 in advance from a customer for a 3-year subscription. Revaluation Magazine's entry to record this transaction would include: O A. debit to Unearned Subscription Revenue for $90 B. credit to Unearned Subscription Revenue for $90 C. credit to Subscription Revenue for $90 OD. debit to Subscription Revenue for $90

Answer 1

Question 1

Correct answer-------(B) credit to unearned subscription revenue for $90

The subscription is received in advance hence amount will be recorded as a liability. Cash account will be debited for 90.

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Question 2

Correct answer-------True.

Accrual expense include Interest accrued on any loan, Salaries accrued but not paid, Utility bill accrued etc.

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Question 3

Correct answer-------(C ) Debit to sales

Since sales tax is included in sales the sales amount is overstated and hence it will be balanced to correct amount if the sales tax is credited and sales is debited.

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Question 4

Correct answer-------(B) Overstate owner’s equity

The owner’s equity is overstated because net income is overstated. Moreover liabilities are understated and expenses are understated.