1. If an adjusting entry for accrued revenues of $200 at year-end is omitted, what is this error’s effect on the year-end income statement and balance sheet?
2. What is a contra account? Explain its purpose.
3. What is an accrued expense? Give an example.
4. Describe how an unearned revenue arises. Give an example.
5. Music-Mart records $1,000 of accrued salaries on December 31. Five days later, on January 5 (the next payday), salaries of $7,000 are paid. What is the January 5 entry?