Chapter 8 True/False

A reversing entry is usually the opposite of the adjusting entry made to the same accounts

True

Accrued Warranty Liability and Allowance for Uncollectable Accounts each have natural credit balances

True

If an adjusting entry creates a balance in an asset or a liability account, the adjusting entry is reversed

True

Recording repair costs during a warranty period as an expense in the same period the merchandise is sold is an application of the accounting concept Matching Expenses with Revenue

True

The amount of note interest is slightly higher using a 360-day year compared to a 365-day year

True

The interest rate on a credit line can change, based on market interest rates

True

The proceeds of a non-interest-bearing note are less than its maturity value

True

The reversing entry for an accrued expense results in a temporary credit balance in the expense account

True

Interest expense is reported as an operating expense

False

When prepaid expenses are initially recorded as expenses, no adjusting entry is required prior to preparing financial statements

False