chap 3 quiz
adjustment process at the end of the accounting period
1) using there unadjusted trial balance, determine the accounts requiring adjustment 2) record the adjusting entries in the journal 3) post the adjusting journal entries to the t-accounts 4) prepare an adjusted trial balance to check the equality of the debits and credits
Under the accrual basis of accounting, the ___ principle requires that expenses be recognized in the same period as the related revenues
matching
transactions that do not require adjusting entries
ones that result in revenues or expenses being recorded at the same time as the cash flow; transactions that do not involve revenue or expense activities
costs of assets acquired in one period that will be recorded as expense in a future period are referred to as ___ and initially recorded as ___.
prepaid expenses; assets
the sum of current and long-term assets reported on the balance sheet is referred to as
total assets
In an accrual adjustment for expenses incurred but not yet paid ____
a liability is increasing since cash will be paid in the future
Reporting revenues when goods or services are provided and expenses in the period they are incurred to generate these revenues is referred to as ___-basis accounting
accrual
____-basis accounting helps measure and report revenues and expenses in a way that clearly reflects the ability of a company to create value for its stockholders
accrual
Revenue in the income statement for the year ended December 31, 2018 equals the ___
amount earned by selling goods or services to customers during 2018
a classified balance sheet shows subtotals for current ___ and current ___
assets; liabilities
Reporting revenues only when cash is received and expenses only when cash is paid is called the ___ basis of accounting
cash
the entries needed for the closing process
credit dividends declared and debit retained earnings; debit each revenue, credit each expense, and record the difference in retained earnings
on a classified balance sheet, total liabilities represent the sum of ___ and long-term ___.
current; liabilities
entries needed for the closing process
debit each revenue, credit each expense, and record the difference in retained earnings; credit dividends declared and debit retained earnings
An adjusting entry for accrued expenses involves a:
debit to an expense; credit to a liability
The post-closing trial balance checks that total ___ equal total ___ at the end of the period
debits; credits
supplies should be ___ and supplies expense should be ___ for supplies used up during the period
decreased; increased
___ is an allocation of the cost of buildings, vehicles, and equipment to expense over time as they are used
depreciation
current liabilities are
due within the next year
credit
expenses
adjusting entries are posted to ___ ___ accounts to update their balances
general ledger
revenues and expenses are reported in the
income statement
___ is defined as the "cost of borrowing money." Since the account represents all the cost incurred during the period on borrowed money, it is classified as a(n) ___ account.
interest; expense
deferred revenue is a(n)
liability
What are current assets?
provide benefits within the next year
expenses incurred, not yet paid; goods and services provided, not yet collected
referred to as "accruals"
debit
retained earnings
according to the ___ ___ principle, revenues should be recognized when goods or services are provided to customers, not necessarily when cash is received.
revenue recognition
What appears in an income statement?
salaries expense; sales revenue
do not require adjusting entries
transactions that do not involve revenue or expense activities; transactions that result in revenues or expenses being recorded at the same time as the cash flow