ACCT 200 Ch 4 Quiz
A liability—revenue account relationship exists with an unearned rent revenue adjusting entry.
True
An adjusting entry always involves a balance sheet account and an income statement account.
True
An adjusting entry to a prepaid expense is required to recognize expired expenses.
True
Revenue received before it is recognized and expenses used or consumed before being paid are both initially recorded as liabilities.
True
The cash basis of accounting is not in accordance with generally accepted accounting principles.
True
The expense recognition principle is frequently referred to as the matching principle.
True
The periodicity assumption states that the economic life of a business entity can be divided into artificial time periods.
True
The post-closing trial balance will contain only permanent—balance sheet—accounts.
True
The revenue recognition principle and the expense recognition principle are helpful guides used in determining net income or net loss for a period.
True
The revenue recognition principle dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied.
True
Without an adjusting entry for accrued interest expense, liabilities and interest expense are understated, and net income and stockholders' equity are overstated.
True
A revenue account is closed with a credit to the revenue account and a debit to Income Summary.
False
Accrued revenues are revenues that have been recorded but cash has been received before financial statements have been prepared.
False
Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.
False
Closing entries deal primarily with the balances of permanent accounts.
False
In the accounting cycle, closing entries are prepared before adjusting entries.
False
The adjusting entry for unearned revenue results in an increase (a debit) to an asset account and an increase (a credit) to a revenue account.
False
The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.
False
The difference between unearned revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and unearned revenue has never been recorded.
False
When closing entries are prepared, each income statement account is closed directly to retained earnings.
False
