1-On August 1, your company takes a $10,000 note that requires your firm to repay principal and accrued interest (8% per year) at the end of 4 years. If your comapny uses the accrual basis, which entry should you record at the end of this year?

no entry is necessary

A/ debit Interest Expensefor $333; creditInterest Payable for $333

B/ debit Interest Expensefor $800; creditInterest Payablefor $800

C/ debit Interest Expensefor$800; credit Cash$800

D/ debit Interest Payable for $333; credit Interest Expense for $333

2-In its first year of operations, DEF Company earned $45,000 in revenues and received $37,000 of it in cash from their customers. The company incurred expenses of $25,500 but had not yet paid $5,250 of them at year end. DEF also prepaid $6,750 cash for expenses that would be incurred next year. Compute the first year's net income using theaccrual basis of accounting.

$10,000

$19,500

$11,500

$12,750

$4,750

3-On August 1, your company takes a $10,000 note that requires your firm to repay principal and accrued interest (8% per year) at the end of 4 years. If your comapny uses thecash basis, which entry should you record at the end of this year?

debit Interest Expensefor $800; creditInterest Payablefor $800

A/ no entry is necessary

B/ debit Interest Expensefor$800; credit Cash$800

C/ debit Interest Expensefor $333; creditInterest Payable for $333

D/ debit Interest Payable for $333; credit Interest Expense for $333

4-As of year end, your firm had completed $4,000 of work for a client, but had received only $1,500 in payment.The only thing you have recordedis a credit tothe Revenue account for the $1,500 received. If your firm uses the accrual basis, by what amount must the balance in theRevenue account be adjusted at year end?

$4,000

$0

$2,500

$1,500