CH 3 ACG2021
Which of the following is (are) true regarding timeliness and the importance of periodic reporting?
Businesses report financial information at regular intervals to ensure timeliness of data. Useful information must reach decision-makers frequently and promptly. The value of information is often linked to its timeliness.
For the current year, Bubbles Office Supply had earned $600 of interest on investments. As of December 31, none of this interest had been received or recorded. Demonstrate the required half of the adjusting entry by choosing the correct statement below. Credit Interest receivable for $600. Debit Cash for $600. Debit Interest receivable for $600. Debit Interest revenue for $600.
Debit Interest receivable for $600.
Place the steps in the adjusting process in the correct order in which they would be performed. Recording an adjusting entry Determine what the correct account balance should be Determine what the current account balance is
Determine what the current account balance is Determine what the correct account balance should be Recording an adjusting entry
A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. Demonstrate the required adjusting journal entry on Dec. 31 by selecting from the choices below. Prepaid insurance would be credited for $3,600. Insurance expense would be debited for $300. Cash would be credited for $3,600. Insurance expense would be debited for $3,600.
Insurance expense would be debited for $300.
Which of the following statements describes the expense recognition (matching) principle?
Matching of expenses with revenues is a major part of the adjusting process. Expenses should be matched in the same accounting period as the revenues that are recognized as a result of those expenses.
Accrual basis accounting recognizes (equity/revenues/expenses) when earned and records (revenues/expenses/liabilities) when (incurred/paid) in order to adhere to the matching principle.
Revenues, Expenses, incurred
