Using accrual accounting

Using accrual accounting, revenue is recorded and reported only ________.

• when the services are rendered without regard to when cash is received

• if cash is received after the services are rendered

• when cash is received at the time services are rendered

• when cash is received without regard to when the services are rendered

Using accrual accounting, expenses are recorded and reported only _________.

• when they are incurred and paid at the same time

• if they are paid after they are incurred

• if they are paid before they are incurred

• when they are incurred, whether or not cash is paid

The matching principle __________.

• determines whether the normal balance of an account is a debit or credit

• states that the revenues and related expenses should be reported in the same period

• requires that the dollar amount of debits equal the dollar amount of credits on a trial balance

• addresses the relationship between the cost of goods sold and sales revenue

Deferred revenue is revenue that is ________.

• earned but the cash has not been received

• not earned but the cash has been received

• not earned and the cash has not been received

• earned and the cash has been received

Which of the following is an example of accrued revenue ________.

• snow removal services that have been provided but have not been billed or paid

• services that have been provided and paid on the same day

• an agreement that has been signed for snow removal services for the next three months

• services that have been paid for three months in advance

Provided tutoring for a student that will be invoiced next month

• Accrued revenue

• Accrued expense

• Unearned revenue

• Prepaid expense

Electric bill to be paid next month

• Accrued revenue

• Accrued expense

• Unearned revenue

• Prepaid expense

Paid for a six-month magazine subscription

• Accrued revenue

• Accrued expense

• Unearned revenue

• Prepaid expense

Received payment covering a six-month rent in advance

• Accrued revenue

• Accrued expense

• Unearned revenue

• Prepaid expense

Zoey Bella Company has a payroll of $5,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. Prepare the adjusting entry on December 31 assuming the year ends on Thursday.

• Debit: Wages Expense 4,000

• Credit: Wages Expense 4,000

• Debit: Wages Payable 5,000

• Credit: Wages Payable 5,000