Accy 200

Matching revenues and expenses refers to:

Accurately reflecting the results of operations for a fiscal period

When a firm purchases supplies for its business:

An adjustment will probably be required as supplies are used.

When a firm purchases supplies for use in its business, and the cost of the supplies purchased is recorded as an asset, the following adjustment to recognize the cost of supplies used will probably be required:

Dr. Supplies Expense Cr. Supplies

The effect of an adjustment on the financial statements is usually to:

Increase the accuracy of both the balance sheet and income statement

The distinction between a current asset and other assets:

Is based on when the asset is expected to be converted to cash, or used to benefit the entity. The income statement shows amounts for:

The effect of an adjustment:

Is to the increase the accuracy of an financial statement

The income statement shows amounts for:

Revenues, gains, expenses and losses.

The balance sheet of an entity:

Shows amounts that are not adjusted for changes in the purchasing power of the dollar.

The Statement of Cash Flows:

Shows how cash has changed during a period

The principle of consistency means that:

The effect of any change in an accounting method will be disclosed in the financial statements or notes thereto

The principle of full disclosure pertains to:

The entity fully discloses all necessary information to prevent a reasonably astute user of financial statements from being misled.

The going concern concept refers to a presumption that:

The entity will continue to operate in the foreseeable future

The purpose of the income statement is to show the:

net income or net loss for the period covered by the statement