17 Questions
What is the purpose of an adjusted trial balance?
To prove that total debit and credit balances are equal after adjusting entries
In the context of financial statements preparation, what follows the adjusted trial balance?
Income Statement
What account would typically be debited when recognizing accrued revenues?
Revenue
Which account is credited when recognizing unearned revenue?
Revenue
When preparing the financial statements, the adjusted trial balance is used to calculate the ________.
Net income
Which principle requires the preparation of Adjusting Entries in accounting?
Revenue recognition principle
In accrual basis accounting, when are revenues recognized?
When services are performed or goods are sold and delivered
Which accounting concept states that expenses should be recognized in the same period as the related revenue is earned?
Matching concept
What is the purpose of preparing adjusting entries for prepayments in accrual accounting?
To recognize expenses incurred but not yet paid
How are long-lived assets typically expensed in accounting?
Over the useful life of the asset
Which concept divides the economic life of a business into time periods in accounting?
Periodicity concept
What is the purpose of adjusting entries for accruals?
To record revenue or expenses that have occurred but not yet been recorded
Which of the following best describes accrued revenues?
Revenues that have been earned but not yet recorded or received in cash
In an adjusting entry for accrued expenses, what accounts are typically affected?
Liability and expense accounts
What would be the journal entry to record an accrued revenue?
Dr. Accounts Receivable, Cr. Revenue
Accrued expenses are best described as:
Expenses that have been incurred but not yet paid or recorded
Why are adjusting entries important in accrual accounting?
To align reported revenues and expenses with their actual occurrence
Learn about adjusting entries for accruals and pre-payments, including the concepts of accrued revenues and expenses. Understand how to record revenue or expenses that have occurred but have not been recorded in the accounting books yet.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
