ACCT ch 3

Which of the following transactions would normally be recorded as an asset when cash is paid?

Rent paid in advance

occur when the cash flow occurs after either the expense is incurred or the revenue is earned.

accruals

A prepayment that is originally recorded as an asset will be ______.

allocated to future accounting periods based on the cost of the asset used during the period

A prepayment such as "Prepaid Insurance" is originally recorded as a(n) ____________ , when an insurance policy is purchased and will later be expensed in the period used.

asset

Adjusting entries ensure that ______ balances are reported at amounts representing the economic benefits that remain at the end of the period.

asset

Prepaid rent appears in the ______.

balance sheet because it is an asset

Prepaid expenses should be ______ by the cost of the asset used during the accounting period.

decreased

Supplies should be ______ and Supplies Expense should be ______ for the cost of supplies used up during the period.

decreased; increased

Adjusting entries help to ensure that all ______ are recorded in the period in which they are incurred.

expenses

Costs of assets acquired in one period that will be recorded as expense in a future period are referred to as ______ and are initially recorded as _____.

prepaid expenses; assets