connect 2

What is the effect of an accrued expense (such as salaries expense) adjustment on the income statement and the balance sheet? (Check all that apply.)

A liability (such as salaries payable) will be increased. Net income is reduced. Expenses are increased.

Which of the statements below describe(s) a permanent account? (Check all that apply.)

A permanent account's balance is carried forward to the next accounting period. A permanent account is reported on the balance sheet.

The Income Summary account can be defined as which of the following? (Check all that apply.)

An account that contains a credit for the sum of all revenues An account used during the closing process A temporary account An account whose balance equals net income or net loss

Which of the following statements are true regarding depreciation?

Depreciation is the original cost of an asset minus any residual value and this amount is expensed over its useful life. Depreciation is recorded through an adjusting entry. Depreciation is recognized at the end of an accounting period. Depreciation is the process of allocating the cost of an asset to the period the asset benefits.

what is depreciation

Depreciation is the process of allocating the costs of long-term assets over their expected useful life.

Identify which of the accounts below would be classified as a plant asset account. (Check all that apply.)

Equipment Land currently being used Building Machinery

What is the effect of an accrued expense (such as salaries expense) adjustment on the income statement and the balance sheet? (Check all that apply.)

Expenses are increased. A liability (such as salaries payable) will be increased. Net income is reduced.

Which statements below are true regarding permanent and temporary accounts? (Check all that apply.)

Temporary accounts have a balance for one period only. Permanent accounts are reported on the balance sheet. Retained Earnings is a permanent account, but Dividends is a temporary account. Temporary accounts are reported on the income statement. Permanent accounts will appear on a post-closing trial balance.

Which of the statements below is (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 9 (10 with optional reverse) steps. The cycle contains steps for adjusting and closing accounts.

Review the statements below and select the items that are correct regarding the operating cycle for a business. (Check all that apply.)

The length of a company's operating cycle depends on its activities. Most companies use a one-year period or operating cycle in deciding which assets and liabilities are current. Most operating cycles are less than one year. The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods or services.

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. 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. Accounts receivable is usually increased when accruing revenues.

Describe the effect of an accrued revenue adjustment on the income statement and the balance sheet by choosing from the statements below. (Check all that apply.)

Total assets will be increased. An asset will be increased. Net income is increased. A revenue account will be increased.

Describe the effect of the adjusting entry to show the earned amount of a previously recorded unearned revenue on the income statement and on the balance sheet by choosing the correct statements below. (Check all that appl

Total liabilities are reduced.A revenue account is increased.Net income is increased.A liability (unearned revenue) will be reduced.

accrual basis accounting

an accounting system that best reflects business performance and increases the comparability of financial statements from period to period. an accounting system that uses the adjusting process to recognize revenues when earned and expenses when incurred. an accounting system which is consistent with generally accepted accounting principles.

The following categories are on a classified balance sheet. List them in the order that they would appear.

current assets long term investments plant assets intangible assets current liabilities long term liabilities

Not recording an accrued expense will have the following effect on the financial statements:

liabilities on the balance sheet will be understated. expenses on the income statement will be understated.

Cash basis accounting recognizes revenues when cash is ______ and records expenses when cash is______

received paid

Explain your understanding of the closing process by choosing the correct statements below. (Check all that apply.)

the closing process helps to summarize a period's revenues and expenses. the closing process resets the balances in temporary accounts to zero.