ACC101-Ch3

Which principle requires that expenses be recognized in the same period as the revenues they help generate?

• Revenue Recognition Principle

• Historical Cost Principle

• Matching Principle

• Going Concern Principle

Which of the following is NOT an example of an adjusting entry?

• Depreciation expense

• Recording an accrued expense

• Recognizing earned but uncollected revenue

• Paying salaries in advance

Unearned revenue is initially recorded as a(n):

• Asset

• Liability

• Revenue

• Expense

Depreciation is the process of:

• Assigning costs to inventory

• Allocating the cost of an asset over its useful life

• Valuing an asset at market price

• Adjusting liabilities to fair value

Which of the following is NOT a type of adjusting entry?

• Prepaid expenses

• Depreciation

• Recording cash sales

• Accrued revenues

The formula for straight-line depreciation is:

• (Cost - Salvage Value) / Useful Life

• Cost × Depreciation Rate

• (Cost + Salvage Value) / Useful Life

• Cost × Usage Rate

Accrued expenses are recorded when:

• The expense has been incurred but not yet paid

• The company receives payment before service is provided

• An asset is purchased for cash

• A liability is settled in cash

What is the primary purpose of adjusting entries?

• To record transactions that occur during the period

• To correct errors in previous journal entries

• To ensure revenue and expenses are recorded in the proper period

• To close temporary accounts

What does accumulated depreciation represent?

• The total cost of all assets owned

• The portion of an asset's cost that has been allocated to expense

• The book value of the asset

• The salvage value of the asset

Intangible assets lack which of the following?

• Useful life

• Physical substance

• Value

• Amortization