Accounting I - Chapter 21

Which accounting concept is applied when revenue and expenses are recorded in the accounting period in which revenue is earned and expenses are incurred? 

• Adequate Disclosure
• Accounting Period Cycle
• Realization of Revenue
• Matching Expenses with Revenue

Revenue earned in one fiscal period but not received until a later fiscal period is called 

• delayed revenue
• overdue revenue
• promised revenue
• accrued revenue

The adjusting entry for accrued interest income is a credit to interest receivable and a debit to interest income. 

• True
• False

The reversing entry is the opposite of the _______________ entry. 

• original
• contra
• adjusting
• closing

Adjusting entries for accrued revenues have no effect on transactions that will be recorded in the following fiscal period. 

• True
• False

A debit balance is the opposite of the normal balance of Interest Income. 

• True
• False

The adjusting entry for accrued revenue _______________ a revenue account. 

• decreases
• increases
• has no effect
• zeroes out

A note payable incurs interest expense each day the note is outstanding.

• True
• False

17.  The reversing entry for accrued interest expense is a credit to Interest Payable and a debit to Interest Expense. 

• True
• False

After the reversing entry zeros out Interest Receivable, interest received will be credited to Interest Receivable, resulting in a credit balance again. 

• True
• False