College Accounting - Ch 3

Under accrual​ accounting, transactions are recorded only when cash is received or paid.

• True

• False

Under cash basis​ accounting, an expense is recorded only when cash is paid.

• True

• False

A contra​ account's normal balance​ (debit or​ credit) is the opposite of the normal balance of the related account.

• True

• False

Under accrual basis​ accounting, revenue is recorded when it is​ earned, regardless of when cash is received.

• True

• False

GAAP requires the use of cash basis accounting.

• True

• False

Financial statements are prepared from the balances in​ a(n)

• chart of accounts

• journal

• unadjusted trial balance

• adjusted trial balance

Revenue is said to be earned when the business​ has

• received cash from the customer before goods or services are delivered.

• delivered a good or service to the customer.

• entered into an agreement with the customer about the goods or services to be delivered.

• passed a journal entry to record revenue.

Which of the following accounting elements does the matching principle help to​ match?

• revenues and liabilities

• expenses and revenues

• expenses and liabilities

• expenses and assets

An adjusting entry that credits Salaries Payable is an example of​ a(n)

• accrued revenue.

• deferred revenue.

• accrued expense.

• deferred expense.

An adjusting entry that debits Accounts Receivable is an example of​ a(n)

• accrued revenue.

• accrued expense.

• deferred expense.

• deferred revenue.