Chapter Exam flash cards
The revenue recognition principle dictates that revenue should be recognized in the accounting records
a. when cash is received
b. when it is earned
c. at the end of the month
d. in the period that income taxes are paid
When it is earned.
The matching principle matches
a. customers with business
b. expenses with revenues
c. assets with liabilities
d. creditors with business
expenses with revenues
Assets prepayments become revenues when they expire
a. True
b. false
. False
A contra asset account is subtracted from a related account in the balance sheet.
a. true
b. false
True
The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset.
a. true
b. false
True
An asset — revenue account relationship exists with an unearned rent revenue adjusting entry.
a. True
b. false
False
Unearned revenue is a prepayment that requires an adjusting entry when services are performed.
a. true
b. false
True
revenues earned but not yet received in cash or recorded
a. defferals
b. accruals
Accrual
Expenses paid in cash and recorded as assets before they are used or consumed
a. defferals
b. accruals
Defferal
Cash received and recorded as liabilities before revenue is earned
a. defferal
b. accruals
. Defferal
Expenses incurred but not yet received in cash or recorded
a. defferal
b. accrual
Accrual
Types of Adjustment is Prepaid expenses and account relationship is assets and expenses. What is the account before adjustment for assets and expenses
Assets
-overstated or understated
Expenses
-understated or overstated
Adjusting Entry for Debits and Credits
- Assets are overstated
- Expenses are understated
- Debit Expenses and Credit Assets
The type of adjusting entry is unearned revenues and the account relationship is liabilities and revenues and the accounts before adjustment is
Liabilities
-overstated or understated
Revenues
-understated or overstated
Adjusting Entry for Debits and Credits
- liabilities are overstated
- Revenues are understated
- Debit Liabilities and Credit Revenues
The adjusting type is accrued revenues and the account relationship is Assets and Revenues
Assets
-overstated or understated
Revenues
-understated or overstated
Adjusting Entry for Debits and Credits
- Assets are understated
- Revenues are understated
- Debit Assets and Credit Revenues
The type of adjustment is accrued expenses and the account relationship is expenses and liabilities and the account before adjustment is
Expenses
-overstated or understated
Liabilities
-understated or overstated
Adjusting Entry for Debit and Credits
- Expenses are understated
- Liabilities are understated
- Debit Expenses and Credit Liabilities
