chpt 3

Which of the following accounts would be considered a prepaid expense or prepaid asset account? (Check all that apply.)

Prepaid insurance Prepaid rent Supplies

Which of the statements below are correct regarding the accounting cycle? (Check all that apply.)

The accounting cycle refers to steps followed by a company to prepare its financial statements. The accounting cycle is a series of steps repeated each reporting period. The accounting cycle contains 10 steps (including an optional step). The cycle contains steps for adjusting and closing accounts.

Determine which of the following transactions may require adjustments.

a 24-month insurance policy was prepaid Supplies were purchased at the beginning of the year, but not all were used. An advance payment was received from a customer earlier in the month, but only partially earned by the end of the month. Six months of rent were paid in advance. Equipment was purchased in the middle of the year.

Select the statements below that describe the purpose of a post-closing trial balance. (Check all that apply.)

One purpose is to verify that total debits equal total credit for permanent accounts. One purpose is to verify that all temporary accounts have zero balances.

Explain your understanding of what an accrued expense is by selecting the statements below which are correct.

They refer to costs that are incurred in a period, but are both unpaid and unrecorded. Adjustments involve increasing both an expense and a liability account. They are reported on an income statement. Examples of accrued expenses are wages expense and interest expense.

Which of the following describes accrued revenue? (Check all that apply.)

They refer to revenues that are earned in a period, but have not been received and are unrecorded. Accounts receivable is usually increased when accruing revenues. The adjustment causes an increase in an asset account and an increase in a revenue account. They refer to earnings which have been earned but not yet billed.