CHAPTER 4

Question 1

involve changing account balances at the end of the period from what is the current balance of the account to what is the correct balance for proper financial reporting.

Answer 1

Adjusting entries

Question 2

Aaccountants have divided the economic life of a business into artificial time periods. This assumption is referred to as the ______________

Answer 2

periodicity concept

Question 3

are generally a month, a quarter or a year.

Answer 3

Accounting periods

Question 4

A period of less than a year is an _____________

Answer 4

interim period.

Question 5

There are two general types of adjustments made at the end of the accounting period –

Answer 5

deferrals and accruals.

Question 6

is the postponement of the recognition of “an expense already paid but not yet incurred”, or of “revenue already collected but not yet earned”.

Answer 6

DEFERRAL

Question 7

is the recognition of “an expense already incurred but unpaid”, or “revenue earned but uncollected”. This adjustment deals with an amount unrecorded in any account

Answer 7

ACCRUALS

Question 8

expenses are customarily paid in advance.

Answer 8

Prepaid Expense

Question 9

The estimated amount allocated to any one accounting period is called ____________________

Answer 9

depreciation or depreciation expense.