WorksheetsChapter 3
Total questions: 17
Worksheet time: 9mins
the revenue recognition principle states that:
revenue should be recognized in the accounting period in which a performance obligation is
satisfied.
expenses should be matched with revenues.
the economic life of a business can be divided into
artificial time periods.
the fiscal year should correspond with the calen-
dar year.
The time period assumption states that
companies must wait until the calendar year is completed to prepare financial statements.
companies use the fiscal year to report financial information.
the economic life of a business can be divided into artificial time periods.
companies record information in the time period in which the events occur.
Which of the following statements about the accrual basis of accounting is false?
Events that change a company’s financial state-
ments are recorded in the periods in which the
events occur.
Revenue is recognized in the period in which ser-
vices are performed.
This basis is in accord with generally accepted
accounting principles.
Revenue is recorded only when cash is received,
and expense is recorded only when cash is paid.
the principle or assumption dictating that efforts (expenses) be matched with accomplishments (reve-
nues) is the:
expense recognition principle.
cost assumption.
time period assumption.
revenue recognition principle.
Adjusting entries are made to ensure that:
expenses are recognized in the period in which
they are incurred.
revenues are recorded in the period in which ser-
vices are performed.
balance sheet and income statement accounts
have correct balances at the end of an accounting
period.
All the responses above are correct.
Each of the following is a major type (or category) of adjusting entries except:
prepaid expenses.
accrued revenues.
accrued expenses.
recognized revenues.
The trial balance shows Supplies $1,350 and Supplies Expense $0. If $600 of supplies are on hand at the end of the period, the adjusting entry is:
Supplies 600
SuppliesExpense 600
Supplies 750
SuppliesExpense
750
SuppliesExpense
750
Supplies 750
SuppliesExpense 600
Supplies 600
Adjustments for prepaid expenses:
decrease assets and increase revenues.
decrease expenses and increase assets.
decrease assets and increase expenses.
decrease revenues and increase assets.
ccumulated Depreciation is:
a contra asset account.
an expense account.
an owner’s equity account.
a liability account.
Rivera Company computes depreciation on delivery equipment at $1,000 for the month of June. The adjusting entry to record this depreciation is as follows.
(a) DepreciationExpense
Accumulated Depreciation— Rivera Company
(b)
(c)
(d)
Depreciation— Rivera Company 1000
Accumulated
DepreciationExpense 1000
DepreciationExpense 1000
Equipment 1000
DepreciationExpense 1000
Accumulated Depreciation—
Equipment 1000
EquipmentExpense 1000
Accumulated Depreciation—
Equipment 1,000
Adjustments for unearned revenues:
decrease liabilities and increase revenues.
have an assets-and-revenues-account relationship.
increase assets and increase revenues.
decrease revenues and decrease assets.
Adjustments for accrued revenues
have a liabilities-and-revenues-account relation-
ship.
have an assets-and-revenues-account relationship.
decrease assets and revenues.
decrease liabilities and increase revenues.
Anika Wilson earned a salary of $400 for the last week of September. She will be paid on October 1. The adjusting entry for Anika’s employer at September 30 is:
(a) No entry is required.
(b) (c) Salaries and Wages Expense
Cash
(d)
No entry is required.
Salaries and Wages Expense 400
Salaries and Wages Payable 400
Salaries and Wages Expense 400
Cash 400
Salaries and Wages Payable 400
cash 400
Which of the following statements is incorrect con-
cerning the adjusted trial balance?
An adjusted trial balance proves the equality of
the total debit balances and the total credit bal-
ances in the ledger after all adjustments are made.
The adjusted trial balance provides the primary
basis for the preparation of financial statements.
The adjusted trial balance lists the account balances segregated by assets and liabilities.
The adjusted trial balance is prepared after the adjusting entries have been journalized and posted.
The trial balance shows Supplies $0 and Supplies Expense $1,500. If $800 of supplies are on hand at the
end of the period, the adjusting entry is:
debit Supplies $800 and credit Supplies Expense
$800.
debit Supplies Expense $800 and credit Supplies
$800.
debit Supplies $700 and credit Supplies Expense
$700.
debit Supplies Expense $700 and credit Supplies
$700.
Neutrality is an ingredient of:
Faithful Representation/Relevance
yes yes
no no
yes no
no yes
Which item is a constraint in financial accounting?
Comparability.
Materiality.
Cost.
Consistency.
