Acct: Chapter 4 TF
A 10-column worksheet is a permanent accounting record
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A revenue account is closed with a credit to the revenue account and a debit to Income Summary
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Accrued revenues are revenues that have been received but not yet recognized
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Accrued revenues are revenues that have been recognized but cash has not been received before financial statements have been prepared
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Accumulated depreciation is a liability account and has a credit normal account balance
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Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal
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Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger
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An adjusted trial balance must be prepared before the adjusting entries can be recorded
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An adjusting entry always involves two balance sheet accounts
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An adjusting entry would be made to the revenue account only when cash is received
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Cash is a temporary account
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Closing entries deal primarily with the balances of permanent accounts
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If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future
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In the accounting cycle, closing entries are prepared before adjusting entries
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Income will always be greater under the cash basis of accounting than under the accrual basis of accounting
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Revenue received before it is recognized and expenses paid before being used or consumed are both initially recorded as liabilities
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TF The periodicity assumption is often referred to as the expense recognition principle
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The Dividends account is closed to the Income Summary account at the end of the year
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The accounting cycle begins with the journalizing of transactions
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The accrued interest for a three month note payable of $10,000 dated December 1, 2013 at an interest rate of 6% is $150 on December 31, 2013
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The adjusting entry for accrued salaries requires a debit to Salaries and Wages Payable
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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
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The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same
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The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique
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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
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When closing entries are prepared, each income statement account is closed directly to retained earnings
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A contra asset account is subtracted from a related account in the balance sheet
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A liability--revenue account relationship exists with an unearned rent revenue adjusting entry
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Accounts receivable is a permanent account
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An expense account is closed with a credit to the expense account and a debit to the Income Summary account
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Asset prepayments become expenses when they expire
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Closing entries result in the transfer of net income or net loss into the Retained Earnings account
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Financial statements can be prepared from the information provided by an adjusted trial balance
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Financial statements must be prepared before the closing entries are made
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The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset
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The only accounts that are closed are temporary accounts
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The post closing trial balance will have fewer accounts than the adjusted trial balance
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The post-closing trial balance will contain only permanent--balance sheet--accounts
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Unearned revenue is a prepayment that required an adjusting entry when services are performed
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Without an adjusting entry for accrued interest expense, liabilities and interest expense are understated, and net income and stockholder' equity are overstated
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Accrued revenues are revenues that have been recognized but not yet recorded
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Adjusting entries are often made because some business events are not recorded as they occur
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An adjusting entry always involves a balance sheet account and an income statement account
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An adjusting entry to a prepaid expense is required to recognize expired expenses
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Recognizing when an expense contributes to the production of a revenue is critical
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Revenue received before it is recognized and expenses used or consumed before being paid are both initially recorded as liabilities
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TF Expense recognition is tied to revenue recognition
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TF The expense recognition principle requires that efforts be related to accomplishments
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TF The revenue recognition principle dictates that the revenue be recognized in the accounting period in which the performance obligation is satisfied
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TF the periodicity assumption states that the economic life of a business entity can be divided into artificial time periods
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The cash basis of accounting is not in accordance with generally accepted accounting principles
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The expense recognition principle is frequently referred to as the matching principle
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TF The revenue recognition principle and the expense recognition principle are helpful guides used in determining net income or net loss for a period
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