Accounting ch3

How do adjusting entries for accrued expenses affect liabilities and expenses? Adjusting entries for accrued expenses can decrease liabilities and decrease expenses. Adjusting entries for accrued expenses can increase liabilities and increase expenses. Adjusting entries for accrued expenses can decrease liabilities and increase expenses. Adjusting entries for accrued expenses can increase liabilities and decrease expenses.

Adjusting entries for accrued expenses can increase liabilities and increase expenses.

Which of the following statements regarding the statement of cash flows are correct? It is an optional financial statement Reports cash disbursements The financial statement that is typically prepared first The final financial statement that is typically prepared Reports cash receipts

Reports cash disbursements The final financial statement that is typically prepared Reports cash receipts

in an adjusting entry for expenses incurred but not yet paid a liability is increasing since cash will be paid in the future due to the expense incurred a liability is decreasing since cash is being paid for an expense incurred at the time of the adjustment the liability recorded when cash was received is decreasing as the expense is incurred the liability recorded when cash was received is increasing as the expense is incurred

a liability is increasing since cash will be paid in the future due to the expense incurred

The accounting basis that records revenues in the period that goods and services are provided to customers is referred to as GAAP-basis accounting. cash-basis accounting. accrual-basis accounting.

accrual-basis accounting.

To complete the measurement process, companies need to update balances of assets, liabilities, revenues and expenses for changes created by ----- entries

adjusting

At the beginning of the accounting period, the balances of temporary accounts depend on whether the company was profitable during the prior period are zero reflect the prior period ending balance

are zero

A classified balance sheet shows subtotals for current ----- and current -----

assets; liabilities

The entries that transfer the balances of all temporary accounts to retained earnings are referred to as external entries closing entries adjusting entries post-closing entries

closing entries

A prepayment is originally recorded as an asset. An adjusting entry at the end of the accounting period results in a(n) ______ in the asset account and a(n) ______ in the expense account. increase; decrease decrease; increase decrease; decrease increase; increase

decrease; increase

------ is an allocation of the cost of buildings, vehicles, and equipment to expense over time as they are used

depreciation

Adjusting entries help to ensure that all ______ are recorded in the period in which they are incurred. closing entries cash transactions journal entries expenses

expenses

Under cash-basis accounting, (Select all that apply.) expenses are recorded when cash is paid. revenues are recorded when cash is received. expenses are recorded in the period related revenue is generated. revenues are recorded when goods or services are provided.

expenses are recorded when cash is paid. revenues are recorded when cash is received.

A classified balance sheet ______. contains confidential information groups asset and liabilities into current and long-term categories shows only current assets and current liabilities shows changes in assets, liabilities, revenues and expenses

groups asset and liabilities into current and long-term categories

The adjusting entry for a deferred revenue includes a debit to a(n) ----- account and a credit to a(n) ---- account

liability; revenue

The post-closing trial balance helps to verify that the company was profitable during the current period the accounts are ready for next period's transactions we prepared and posted closing entries correctly we prepared and posted adjusting entries correctly

the accounts are ready for next period's transactions we prepared and posted closing entries correctly

After the adjusting entries have been completed, the adjusted balance in the Supplies Expense account represents the cost of supplies: on hand at the end of the accounting period used during the accounting period purchased, but not yet paid for, at the end of the accounting period purchased during the accounting period

used during the accounting period