Accounting Ch. 3

Adjusting entries are used to update accounts at the end of an accounting period.

True

Using the adjusted trial balance, the first financial statement to prepare is the Income Statement.

True

A period of time, such as a month or quarter, could be considered an

accounting period

If revenues are recognized and recorded when earned, the company is using the

accrual basis of accounting

The adjusted trial balance will directly show the

amount of the adjustments made to expense accounts only.

Another name for "book value" is

carrying value

Recording the collection of three months of advance rent from a client in an unearned account would be an example of a

deferred revenue

Which of the following accounts are NOT closed?

prepaid rent

The account to which revenue and expenses are closed is called

retained earnings

Closing entries are prepared for which of the following reasons?

to get the accounts ready for the next accounting period