FinAcc chap 4

At the time of the initial cash flow, deferred expenses are recorded as ______, and when used in the future, expenses will increase, and liabilities will increase.

• assets

• liabilities

• revenues

• equity

Deferred expenses are initially recorded as ______ and when they are later used, expenses will increase and assets will decrease.

• assets

• liabilities

• revenues

• equity

Income taxes incurred but not yet paid at the end of the accounting period is an example of an ______ expense.

• accrued

• prepaid

• deferred

• estimated

Cash collected from customers in advance of providing the goods or services creates a ______, which is later reduced when the goods or services are provided.

• liability

• asset

• revenue

• expense

Accrued revenues are revenues that have been earned, but the customer has not yet paid for the goods or services.

• True

• False

An accrued expense is incurred and paid for in the current period.

• True

• False

A deferred expense such as prepaid insurance is created when cash is paid in advance of the expense being incurred, and is reduced when the expense is actually incurred.

• True

• False

The adjusting entry to record an accrued expense increases ______.

• liabilities

• revenues

• assets

• owner's equity

The journal entry to adjust the unearned revenue account when revenues are earned results in an increase in ______ and a decrease in ______.

• assets; liabilities

• liabilities; assets

• expenses; revenues

• revenues; expenses

The journal entry to adjust the prepaid rent account for rent used during the period results in an increase in ______ and a decrease in ______.

• expenses; stockholders' equity

• assets; liabilities

• revenues; assets

• liabilities; expenses