Test Bank For Accounting 26th Edition Carl Warren James M Reeve Jonathan Duchac
CHAPTER 3:Â THE ADJUSTING PROCESS
- The system of accounting where revenues are recorded when they are earned and expenses are recorded when they are incurred is called the cash basis of accounting.
- True
- False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.03-01 – 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic
- Generally accepted accounting principles require accrual-basis accounting.
- True
- False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.03-01 – 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic
- The revenue recognition concept states that revenue should be recorded in the same period as the cash is received.
- True
- False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.03-01 – 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic
4.The matching concept requires expenses be recorded in the same period that the related revenue is recorded.
- True
- False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.03-01 – 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic
- For most large businesses, the cash basis of accounting will provide accurate financial statements for user needs.
- True
- False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.03-01 – 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 – Financial Statements
ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic
- An example of deferred revenue is Unearned Rent.
- True
- False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.03-01 – 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic
- Accruals are needed when an unrecorded expense has been incurred or an unrecorded revenue has been earned.
- True
- False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.03-01 – 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic
- If the debit portion of an adjusting entry is to an asset account, then the credit portion must be to a liability account.
- True
- False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.03-01 – 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.07 – Adjusting Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic
- Proper reporting of revenues and expenses in a period is due to the accounting period concept.
- True
- False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.03-01 – 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic
- The revenue recognition concept requires that the reporting of revenue be included in the period when cash for the service is received.
- True
- False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.03-01 – 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic
11.Revenues and expenses should be recorded in the same period to which they relate.
- True
- False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.03-01 – 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.04 – Cash vs. Accrual ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic
- The matching concept supports matching expenses with the related revenues.
- True
- False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
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