Patterson Realty Company Received a Cheque for $21,000 on July

question 21

Multiple Choice

Patterson Realty Company received a cheque for $21,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $21,000. Financial statements will be prepared on July 31. Patterson Realty should make the following adjusting entry on July 31

• A) debit Unearned Rent Revenue, $3,500; credit Rent Revenue, $3,500.
• B) debit Rent Revenue, $3,500; credit Unearned Rent Revenue, $3,500.
• C) debit Unearned Rent Revenue, $21,000; credit Rent Revenue, $21,000.
• D) debit Cash, $21,000; credit Rent Revenue, $21,000.

Analyze the impact of prospective adjustments on financial statements.

Assess the effects of changes in inventory valuation methods on financial statements.

Understand the classification of different types of activities in a statement of cash flows (operating, investing, and financing activities).

Identify adjustments needed for the computation of cash flows from operating activities using the indirect method.

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Definitions:

Foreign Currency

Currency used in a country other than one's own, implying the need for exchange rate conversion in international transactions or financial reports.

Exchange Rates

The rate at which one currency can be exchanged for another, affecting how international transactions are recorded in financial statements.

Accounts Payable

The amounts a company owes because it purchased goods or services on credit from a supplier or vendor.

Accounts Payable

amounts owed by a business to its suppliers or creditors for goods and services received but not yet paid for.