4) A contra account has two characteristics: (1) a contra account is paired with a companion account, and (2) a contra account's normal balance is the same as that of the companion account.
5) In the case of a prepaid expense, the cash payment occurs before an expense is recorded.
6) In the case of a prepaid expense, the adjusting entry required at the end of a period consists of a debit to Prepaid expense.
7) In the case of a prepaid expense, the adjusting entry required at the end of a period consists of a credit to Prepaid expense.
8) In the case of Unearned revenue, the cash is received first, and the revenue is earned later.
9) In the case of Unearned revenue, the adjusting entry at the end of the period includes a debit to Service revenue.
10) In the case of Unearned revenue, the adjusting entry at the end of the period includes a credit to Service revenue.
11) Contra asset accounts like Accumulated depreciation have normal debit balances.
12) Unearned revenue would be classified as a(n) ________ account.
A) liability
B) asset
C) revenue
D) equity
13) Robert Rogers, CPA, performed accounting services for a client in December. A bill was mailed to the client on December 30. Roberts received a check in the mail on January 5. The revenue principle would require that which of the following accounts appear on the income statement for the year ended December 31?
A) Service revenue
B) Unearned revenue
C) Accounts payable
D) Prepaid expense