10 multiple choice questions  for Business  about ( Accrual Accounting)1)  You operate a lawn care business. On May 1, 20×4, one of your customers paid you $631 for lawn care for the summer of 20×4. What is the effect of this transaction on the accounting equation?
Select one:
a. Liabilities increase by $631 and shareholders’ equity increases by $631 
b. There is no effect on the accounting equation 
c. Assets increase by $631 and shareholders’ equity increases by $631 
d. Assets increase by $631 and liabilities increases by $631
ans: d
2)   Karr Corporation received cash of $6284 on August 1, 20×8 for one year’s rent in advance and recorded the transaction with a credit to Rent Revenue. The December 31, 20×8 adjusting entry is:
Select one:
a. Debit Rent Revenue and credit Unearned Rent, $2618 
b. Debit Cash and credit Unearned Rent, $3666 
c. Debit Unearned Rent and credit Rent Revenue, $2618 
d. Debit Rent Revenue and credit Unearned Rent, $3666 
ans:D
3)   BC Incorporated is in the process of closing their books at year-end. The following information is reported on the income statement:
  
Salary Expense

$27
 
Interest Expense 

$15
 
Revenue 

$919
 
Rent Expense 

$32
Which of the following are correct closing entries:
Select one:
a. A credit to retained earnings of $961 
b. A debit to retained earnings of $ 919 
c. A debit to retained earnings of $845 
d. A credit to retained earnings of $ 845
ans: d
not specified