Multiple Choice Questions
1. In which month should Dunn record the cost of the music as an expense?
a. January
b. February
c. March
d. April
2. In which month should Dunn report the $38 revenue on its income statement?
a. January
b. February
c. March
d. April
3. If Dunn Company uses the cash basis of accounting instead of the accrual basis, in what month will Dunn report revenue and in what month will it report expense?
Revenue Expense
a. March February
b. February April
c. February February
d. March April
4. In which month should revenue be recorded?
a. In the month that cash is collected from the customer
b. In the month that goods are shipped to the customer
c. In the month that goods are ordered by the customer
d. In the month that the invoice is mailed to the customer
5. On January 1 of the current year, Bambi Company paid $1,200 rent to cover six months (January June). Bambi recorded this transaction as follows:

Bambi adjusts the accounts at the end of each month. Based on these facts, the adjusting entry at the end of January should include
a. A credit to Prepaid Rent for $1,000.
b. A credit to Prepaid Rent for $200.
c. A debit to Prepaid Rent for $1,000.
d. A debit to Prepaid Rent for $200.
6. Assume the same facts as in question 3-56. Bambi€™s adjusting entry at the end of February should include a debit to Rent Expense in the amount of
a. $200.
b. $1,000.
c. $400.
d.$0.

Journal Entry Date Accounts Debit Credit Jan 1 Prepaid Rent 1,200 Cash 1,200