Chapter 4 and Chapter 5

What is the correct entry to record the prepayment of car insurance?

• Debit Accounts Payable and Credit Cash

• Debit Insurance Expense and Credit Cash

• Debit Prepaid Insurance and Credit Cash

• Debit Prepaid Insurance and Credit Accounts Payable

Journalize the transaction is the first step of the accounting cycle

• True

• False

When recording transactions, accountants should record and post transactions truthfully without manipulating the numbers.

• True

• False

Which one of the following accounts is decreased by a credit entry?

• Revenue

• Cash

• Bank Loan

• Accounts Payable

Entries are recorded in the journal:

• In order of account numbers used

• Chronologically (by date)

• Randomly

• Alphabetically

The entry to record the payment of Bank loan principal and interest requires:

• 
  A debit to Interest Expense, a debit to Bank Loan, and a credit to Cash

• A debit to Interest Expense and a credit to Bank Loan

• A debit to Cash and a credit to Bank Loan

• 
  A debit to Bank Loan and a debit to Cash

Adjustments are made at the end of the accounting period to ensure all income statement and balance sheet accounts accurately reflect the transactions that took place during the period being reported on.

• True

• False

Accrual-based accounting states that revenue and expenses should be recognized in the accounting period when they occur, regardless of when the cash payment is received or made.

• True

• False

Accrued revenue is revenue that has not been earned but not yet recorded.

• True

• False