Accounting adjustment and financial statement

Which of the following statements is NOT true about accruals?

• Accruals involve the recognition of revenues or expenses that have been earned or incurred, but not yet received or paid

• Accruals are recorded at the time of payment or receipt

• Accruals are used to match revenues and expenses to the period in which they are earned or incurred

• Accruals are used to smooth out fluctuations in cash flows

Which of the following is NOT an example of an accrual?

• Recognizing revenue that has been earned but not yet received

• Recognizing expenses that have been incurred but not yet paid

• Recognizing a liability for a product that has been shipped but not yet invoiced

• Paying for a product or service before it has been received or consumed

When should a prepayment be recognized as an expense?

• When the prepayment is made

• When the product or service is received or consumed

• When the product or service is invoiced

• When the prepayment is refunded

Which of the following is NOT a common type of prepayment?

• Rent payments

• Insurance premiums

• Taxes

• Employee salaries

Which of the following is NOT a key component of the statement of profit or loss?

• Revenues

• Expenses

• Net income

• Net asset

Which of the following is not a key component of the statement of financial position?

• Asset

• Liability

• Income

• Equity

The statement of profit or loss is also known as the:

• Income statement

• Balance sheet

• Cash flow statement

• Statement of changes in equity

The statement of financial position is also known as the:

• Income statement

• Balance sheet

• Cash flow statement

• Statement of changes in equity

The statement of profit or loss shows a company's:

• Financial position at a specific point in time

• Financial performance over a specific period of time

• Cash inflows and outflows over a specific period of time

• Changes in equity over a specific period of time

The statement of financial position shows a company's:

• Financial position at a specific point in time

• Financial performance over a specific period of time

• Cash inflows and outflows over a specific period of time

• Changes in equity over a specific period of time