The revenue recognition principle dictates that revenue is recognized in the period in which the cash is received.
The matching principle requires that expenses be recognized in the same period that they are paid.
The cash basis of accounting is in accordance with generally accepted accounting principles
Book value is equal to cost minus accumulated depreciation.
Accrued expenses are expenses that have already been paid.
Closing entries produce a zero balance in each temporary account
Cash received in advance from a customer would not cause a difference between net income and cash provided by operating activities.
A company receives their electricity bill on May 20, closes its books on May 31, sends a check in payment of the bill on June 5, and verifies the electric company received the check on June 11. Under the matching principle, the expense should be recognized on:
If revenues are recognized only when a customer pays, what method of accounting is being used?
Which of the following is not a type of adjusting entry?
Which of the following is not a typical example of a prepaid expense?
The difference between an asset's cost and its accumulated depreciation is called:
Payments received in advance of services provided are recorded as
Which of the following is not a typical example of an accrued expense?
overstate liabilities and understate revenues.
If the adjusting entry is not made for unearned revenues the result will be to:
debit Office Supplies Expense $3,700; credit Office Supplies $3,700.
Medina Company purchased office supplies costing $5,000 and debited Office Supplies for the full amount. Supplies on hand at the end of the accounting period were $1,300. The appropriate adjusting journal entry to be made would be:
debit Rent Expense $4,000; credit Prepaid Rent $4,000.
On September 1 the Mini-Mite Store paid $12,000 to the Maxi-Mall Co. for 3 months rent beginning September 1. Prepaid Rent was debited for the payment. If financial statements are prepared on September 30, the appropriate adjusting journal entry to make on September 30 would be:
debit Depreciation Expense $700; credit Accumulated Depreciation $700.
On August 1 the Hwang Co. purchased a photocopy machine for $8,000. The estimated annual depreciation on the machine is $1,680. If the company prepares annual financial statements on December 31, the appropriate adjusting journal entry to make on December 31 would be:
debit Unearned Rental Revenue $7,500; credit Rental Revenue $7,500.
Redlands Property Management Co. received a check for $30,000 on October 1, which represents a one year advance payment of rent on an office it rents to a client. Unearned Rental Revenue was credited for the full $30,000. Financial statements are prepared on December 31. The appropriate adjusting journal entry to make on December 31 would be:
debit Insurance Expense $2,100; credit Prepaid Insurance $2,100.
On July 1, East Lake, Inc. purchased a 3-year insurance policy for $12,600. Prepaid Insurance was debited for the entire amount. On December 31, when the annual financial statements are prepared, the appropriate adjusting journal entry would be:
debit Interest Expense $1,750; credit Interest Payable $1,750.
On August 1, Hacienda Corporation signed a $30,000, 14%, 2-year note to help finance some renovations they were making to the corporation headquarters. Assuming interest is accrued only when the year ends on December 31, the appropriate journal entry would be:
Employees at the Topanga Taco House were paid on Friday, December 27 for the five days ending on December 27. The next payday is Friday, January 3. Employees work 5 days a week. The weekly payroll amounts to $3,800. The appropriate adjusting journal entry on December 31 would be to credit Wages Payable for:
Salaries paid equal salaries incurred
Which of the following transactions will not cause a difference between net cash provided by operations and net income?
The adjusted trial balance.
Which is the primary basis for the preparation of the financial statements?
not a permanent accounting record.
A worksheet is: