L3: Ajusting entries

Which of the following statements is false?

• The matching principle states that revenue should be matched with the receipt of cash.

• The accrual basis is required by GAAP.

• Under cash-basis accounting, expenses are recorded when paid.

• A/R would only appear on the balance sheet of a company using the accrual basis.

Which of the following is NOT a principle or concept that supports making adjusting entries?

• The matching principle

• The recognition criteria for revenues

• The reliability concept

• The time-period assumption

The beginning balance of supplies is $600. Purchases of supplies are $3,500. An inventory of supplies at year end reveals $500 of supplies on hand. The adjusting entry for supplies includes:

• a debit to Supplies Expense, $500.

• a credit to Supplies Expense $3,600.

• a debit to Supplies, $500.

• a credit to Supplies, $3,600.

As capital assets such as plant and equipment are used, the cost of using them is allocated through an adjusting entry that would include:

• a credit to Capital Assets

• a credit to Accumulated Amortization

• a credit to Amortization Expense

• a debit to Accumulated Amortization

During 2019, Bruno Consulting incurred salary expense of $120,000. Beginning and ending Salary Payable was $4,000 and $1,000, respectively. In 2019, Bruno paid salaries of:

• $117,000

• $121,000

• $123,000

• $124,000