Chapter 3 Mini Quiz

What is the primary purpose of adjusting entries?

• To record daily transactions

• To ensure revenues and expenses are recorded in the correct period

• To prepare the post-closing trial balance

• To increase total assets

Under accrual accounting, when is revenue recognized?

• When a contract is signed

• When cash is received

• When services are performed or goods are delivered

• At the end of the accounting period

Which of the following is an example of an accrued expense?

• Depreciation on office equipment

• Wages earned by employees but not yet paid

• Cash paid in advance for insurance

• Supplies purchased for future use

A company had $2,500 in supplies at the beginning of the month. At the end of the month, only $1,000 remained. Adjusting entry is:

• Debit Cash 1,500; Credit Supplies Expense 1,500

• Debit Supplies Expense 1,500; Credit Cash 1,500

• Debit Supplies Expense: 1,500; Credit Supplies 1,500

• Credit Supplies 1,500; Debit Supplies Expense 1,500

Revenue Recognition and Matching Principle is part of what basis of accouting?

• Cash Basis Accounting

• Accrual Basis Accounting

• None

• Both