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