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## Instructions On your scannable answer sheet, shade A for True and B for False. ### True or False Questions 1. The adjusting entry related to accrued expense is required to show obligations at balance sheet date. 2. Failure to record the adjusting entry on the accrued salaries expense will resu...

## Instructions On your scannable answer sheet, shade A for True and B for False. ### True or False Questions 1. The adjusting entry related to accrued expense is required to show obligations at balance sheet date. 2. Failure to record the adjusting entry on the accrued salaries expense will result in the overstatement of year-end liability and understatement of current expenses. 3. When an item of revenue is collected and recorded in advance, it is normally called an accrued income. 4. Accrued revenues may accumulate with the passing of time, as in the case of interest revenue and rent revenue, or they may result from services that have been performed but neither billed nor collected. 5. Prepaid expenses, such as prepaid rent and prepaid insurance, represent assets for a business until they are used. 6. The adjusting entry required for a prepaid expense is always a debit to an expense and a credit to an asset. 7. In preparing adjusting entries for unearned income under the liability method, an income account will be debited and a liability account will be credited. 8. Unearned revenues are earned by providing a service to the customer. 9. The cost of a long-term asset, such as equipment, is transferred to expense as it is used during its useful life. 10. All property, plant and equipment accounts are depreciated. 11. A correct adjusting entry for doubtful accounts will always result in a debit balance of the Allowance for Doubtful Accounts after posting the adjusting entries.