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- Name – Quiz 31 – Income received in advance – (Answers)
- Topic – Income received in advance
- Answers with Explanation
Q1. What is the nature of unearned income?
Ans. Unearned revenue, Income received in advance or Unearned Income is money received for a service or product that has yet to be provided or delivered. It is recorded as a liability.
Q2. Subscription Received/Month = 100, Subscription Received = 120, Income Received in Advance = _____.
Ans.Expected subscription amount to be received per month is 100, however, in this case, an excess of 20 has been received.
Q3. Income received in advance is income received but not earned.
Ans. The given statement is True. It is in fact income that is received in advance but it actually belongs to a future accounting period. Other names are Unearned Revenue, Unearned Income, and sometimes even Pre-Received Income.
Q4. _____ account is credited to post the journal entry for income received in advance.
Ans. Debit – Income A/C & Credit – Income Received in Advance A/C
Q5. Commission received in advance is an example of income received in advance.
Ans. The given statement is True. Commission received in advance actually belongs to a future accounting period therefore it is treated as income received in advance.
Q6. Insurance premium paid in advance is an example of income received in advance.
Ans. The given statement is False. It is an example of prepaid expense and not unearned income (income received in advance)
Q7. Rent received in advance is an example of income received in advance.
Ans. The given statement is True. Rent received in advance is not related to the current accounting period therefore it is an income received in advance.
Q8. Income received in advance is also known as _____.
Ans. It is also called ‘Unearned Income‘ as it is received before the related benefits are provided.
Q9. Income received in advance is treated as _____.
Ans. Income received in advance is a short-term liability (current) for the business.
Q10. Income received in advance is shown in _____.
Ans. Such income is to be shown on the balance sheet under current liabilities.
Q11. Income received in advance is a _____ account.
Ans. Income received in advance is a personal account.