1. Give an example of a real account.
2. Give an example of a nominal account.
3. Why are balance sheet accounts considered real and permanent?
4. Why are income statement accounts considered nominal and temporary?
5. Which account are dividends closed into?
6. How would the proceeds received from the advance sale of nonrefundable tickets for a theatrical performance be reported in the sellers financial statements before the performance? A. Revenue for the entire proceeds.

B. Revenue to the extent of related costs expended.

C. Unearned revenue to the extent of related costs expended.

D. Unearned revenue for the entire proceeds.

7. Record the journal entry for the transaction above. Make up numbers.
8. An adjusting entry that records the earned portion of unearned revenue previously recorded always includes a
   1. A. Debit to an account in the asset category.
   2. B. Credit to an account in the asset category.
   3. C. Credit to an account in the equity category.
   4. D. Credit to an account in the liability category.
9. Record the journal entry for the transaction above. Make up numbers.
10. In reviewing a set of journal entries, an auditor encounters an entry composed of a debit to interest expense and a credit to interest payable. The purpose of this journal entry is to record A. An accrued expense. B. A deferred expense. C. A contingent liability. D. An unexpired cost.
11. Explain the above transaction in plain English.
12. Which common account can never appear in an adjusting entry?
13. Which two types of accounts (one or the other) must always appear in an adjusting entry?

Chapter 1

1. Name 5 of the 10 elements of financial statements.